Operations Update

RNS Number : 7785X

Petroneft Resources PLC

16 January 2014

 



16 January 2014

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.

Highlights

·    Delineation drilling results at Lineynoye No. 9 indicate the J1-1 interval is oil saturated and in line with expectations.

·    Average Production remains at about 2,300 bopd, with additional workovers planned.

·    Farmout negotiations well advanced with an international oil company.

Drilling programme

The Lineynoye No. 9 ("L-9") delineation well on the westernmost lobe of the Lineynoye field has confirmed the presence of oil in the primary J-1 reservoir interval.  Based on the initial review of core and log data the J1-1 reservoir interval contains about 2.0 metres of net oil pay. 

The J1-1 results are consistent with our estimates for this portion of the field. We were also pleased to find a thicker than expected J1-2 sandstone (10+ metres) although it appears to be water bearing at this location.  However, this reservoir interval could be oil saturated to the south where it is located higher on the structure.  The L-9 well has been drilled to basement and a cased hole test will be performed on the J1-1 interval later this winter utilizing a workover rig once the main drilling rig has been moved off site. 

The L-9 delineation well was recommended by the Russian authorities during the pre-development review of the field. The well was drilled at the sole expense of our drilling contractor (TBNG) who will not be reimbursed until the planned re-financing/farmout of the licence has been completed.

Once the farmout of the Licence or re-financing is completed, plans are also in place to drill additional production wells at Arbuzovskoye and delineation wells at Tungolskoye and Sibkrayevskoye, where significant upside potential and near-term developments are possible.  Both of these fields have in excess of 10 metres of net pay and are high priorities for future development.

Production

Average Production declined slightly over the past month but is now back above 2,300 bopd due to the completion of several recent successful workovers. Additional workovers are planned this winter now that winter roads are available to truck additional supplies to the field and it is anticipated that this work will return average production from these wells to at or above their previous levels. Our water injection programme continues to function effectively and overall well performance is in accordance with expectations.

Farm out process

Significant progress has been made over the last month with a large international oil and gas company on the planned farm-out of Licence 61. While the terms are currently subject to confidentiality clauses, commercial negotiations are now substantially complete and it is hoped to finalise this transaction during the first quarter of 2014 following the completion of final confirmatory due diligence, which is currently in progress. Discussions with a number of other parties regarding re-financing and farmout are also ongoing but are less advanced than this proposal.

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

"The results on the L-9 well are consistent with our expectations and support our overall development priorities for the Licence area. We are pleased to have completed the L-9 obligation well in a cost effective manner and to be in a position to move the drilling rig to Tungolskoye this winter.  This allows us to maintain the development schedule, which is critical to our farm-out and re-financing negotiations.

We have made significant progress on the planned farm-out of Licence 61 over the last month and we look forward to updating shareholders in more detail when appropriate. We appreciate shareholders continued patience and support while these negotiations are being completed."

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]

 

END

 

 

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