Operations Update

RNS Number : 6829N

Petroneft Resources PLC

11 September 2013

 

11 September 2013

PetroNeft Resources plc

("PetroNeft" or the "Group" or the "Company")

Operations Update

PetroNeft (AIM: PTR) owner and operator of Licences 61 and 67, Tomsk Oblast, Russian Federation, is pleased to announce an operations update in advance of today's Annual General Meeting of shareholders.

Highlights

·     Production steady at 2,500 bopd

·     Beginning to see positive impact of pressure maintenance at Arbuzovskoye

·     Strong realised oil prices

·     Encouraging progress on financing

Production

We are very encouraged by the stability of production in recent months, which is currently steady at 2,500 bopd. The pressure maintenance programme that commenced at Arbuzovskoye in April 2013 is continuing and is working well. In recent weeks, we have begun to see some positive impact in the production well nearest to the injection well - similar to the response seen earlier at Lineynoye. This should expand to other nearby production wells in the coming months. Production at Lineynoye also remains very stable with little decline evident. We have also benefitted from strong realised oil prices in recent months.

Financing

Discussions continue on both the re-financing and planned farmout of Licence 61 with particularly good progress on concluding a re-financing of the existing Macquarie Bank facility. We are encouraged by progress in recent weeks.

We continue to make the principal repayments of $650,000 per month to Macquarie Bank from operational cash flows. The current balance on this facility, net of cash held by Macquarie in the Debt Service Reserve Account, is US$13.6 million.

Future drilling programme

Subject to the successful completion of re-financing of the bank debt, or a farmout, plans are in place for re-commencement of drilling operations later this year. This plan includes a delineation well at West Lineynoye, commencement of drilling additional production wells at Arbuzovskoye and, in 2014, delineation wells at Tungolskoye and Sibkrayevskoye where significant upside potential and near-term developments are possible.

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

"We are pleased with the stability of production in recent months and the initial response from the water injection that is becoming evident at Arbuzovskoye.

We have made good progress on the re-financing and farmout fronts in the last month. We appreciate shareholders continued patience and support while these negotiations are completed. The successful completion of either of these objectives will enable us to recommence our drilling programme and return to building production."

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, Citigate Dewe Rogerson	[phone]
Joe Murray/Ed Micheau, Murray Consultants	[phone]

 

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