Execution of Oil India Loan

RNS Number : 9654S

Petroneft Resources PLC

23 March 2016

 

PetroNeft Resources plc ('PetroNeft' or 'the Company')

Execution of Oil India Loan

PetroNeft (AIM: PTR) an oil & gas exploration and production company operating in the Tomsk Oblast, Russian Federation, and 50% owner and operator of Licences 61 and 67 is pleased to announce that the legal documentation for the first tranche of the proposed US$35m financing for Licence 61 to be provided by Oil India has now been executed. The first tranche relates to the 2016 funding requirement of US$10m. The funding is provided by way of an unsecured loan from Oil India to WorldAce Investments Limited, the joint venture company that ultimately owns Licence 61. Principal repayments will commence in Q4 2019.

The major points of the 2016 work programme are as follows:

·     South Arbuzovskoye Development Plan 

o  One vertical and up to 3 horizontal wells

·     Sibkrayevskoye Delineation and Optimization Studies

o  Additional delineation well (S-374) at Sibkrayevskoye to better define south-eastern portion of the field

o  Optimisation studies and approvals for Sibkrayevskoye Development which is due to commence in 2017

The planned 2017 work programme which will commence the development of the Sibkrayevskoye oil field is currently budgeted at US$25 million. Oil India have indicated their willingness to fund this with a second loan tranche on similar terms to the one announced today.

As advised in the Company's announcement of 21 March, the loan is conditional on the current management team remaining in place. Furthermore, should there be a change in management subsequent to the drawdown of the new loan this would constitute an event of default, requiring immediate repayment of amounts advanced and further requiring PetroNeft to provide its 50% share of funding.

Dennis Francis, Chief Executive Officer of PetroNeft Resources plc, commented:

"We are pleased to complete the legal documentation for the first tranche of the funding that Oil India have agreed to provide for the 2016/17 work programme and look forward to updating shareholders on the outcomes of the programme later in the year.

The fact that Oil India has agreed to provide this loan, providing essential development funds for Licence 61 in a very difficult market, is a strong vote of confidence in the current management team and the potential of Licence 61."

For further information, contact:

Dennis Francis, CEO, PetroNeft Resources plc	[phone]
Paul Dowling, CFO, PetroNeft Resources plc	[phone]
John Frain/Brian Garrahy, Davy (NOMAD and Joint Broker)	[phone]
Henry Fitzgerald-O'Connor, Canaccord Genuity Limited (Joint Broker)	[phone]
Martin Jackson/Shabnam Bashir, Citigate Dewe Rogerson	[phone]
Joe Heron / Douglas Keatinge, Murray Consultants	[phone]

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