Operational Update

RNS Number : 2855I

Petroneft Resources PLC

01 April 2020

 

1^st April 2020

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

Operational Update

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 the commencement of year-round production from the Sibkrayevskoye field in Licence 61.

Highlights

· Connection of the Sibkrayevskoye field to the Central Processing Facility enabling year-round production on Licence 61.

Operations Update

Licence 61

PetroNeft has completed the construction of a 26 km line from the Sibkrayevskoye field to the Central Processing Facility which is now operational. This line enables the field to produce all year round, without the need for expensive trucking. 

Production from the Sibkrayevskoye field has historically only occurred during the winter season when oil could be trucked along ice roads to the Central Processing Facility at Lineynoye. During this time production from the two producing wells (S-373 and S-375s) has averaged 250 - 300 bopd. 

In addition to increased production and cash flow, the ability to produce throughout the year will provide valuable long term reservoir performance data. This information will be used to de-risk the forward investment strategy for this attractive field.

Our technical review last year revealed that the reservoir at Sibkrayevskoye is a complex channelised system with thick channels in the J1-2 sands that are producing in wells' S-373 and S-375s. These types of channels can be visualised on 3D seismic data in other fields in the region, so future development of this field will involve acquisition of 3D seismic data which will enable the company to better target the channel systems. This will reduce the risks of encountering poor reservoir quality zones in future development wells. We will be evaluating whether to acquire 3D seismic data once we have sufficient longer term production data from the two wells currently producing

Whilst we are very pleased with the completion of this project on schedule and significantly under budget, we are monitoring the ongoing turbulence in the energy sector caused by recent declines in the price of oil, the devaluation of the Russian ruble, combined with the worldwide effects of the COVID-19 outbreak. We continually evaluate all possible ways to cut costs, manage or defer capital projects, while maintaining a safe and secure environment for our employees in our offices and field operations.  

David Sturt, Chief Executive Officer of PetroNeft Resources plc, commented: 

"This is a significant achievement for the company, not only did we manage to build the pipeline during very challenging operational conditions, but we also achieved it well within budget.

The performance data from these two wells is going to provide vital reservoir data which will help to de-risk further capital allocation to this asset, especially now that we have an improved understanding of the geology of the field. This investment, combined with the recent successful re-entry of the c-4 well, demonstrates the Company's ability to implement low cost but highly operationally effective solutions to the development and optimisation of its resource base, despite wider industry challenges."

For further information, contact:

David Sturt, CEO, PetroNeft Resources plc	[phone]
John Frain/Brian Garrahy, Davy (NOMAD and Broker)	[phone]
Joe Heron /Douglas Keatinge, Murray Consultants	[phone]

The information contained in this announcement has been reviewed and verified by Mr. David Sturt, Chief Executive Officer and Executive Director of PetroNeft, for the purposes of the Guidance Note for Mining and Oil & Gas Companies issued by the London Stock Exchange in June 2009. Mr. Sturt holds a B.Sc. Degree in Earth Sciences from Kingston University and an MSc. in Exploration Geophysics from The University of Leeds. He is a member of the Petroleum Exploration Society Great Britain and has over 35 years' experience in oil and gas exploration and development.

Glossary

bopd	Barrels of oil per day

 

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