Operations Update

RNS Number : 9667Z

Petroneft Resources PLC

02 June 2016

 

2 June 2016

PetroNeft Resources plc

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

Operations 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 provide an update on operations at Licence 61.

Highlights

Arbuzovskoye Well A-214 Horizontal Production

            ·     Completed drilling 1,000 m horizontal section with bottom hole at 4,008 m MD.

            ·     Evaluation of pipe conveyed logs indicate 931 m net pay.

            ·     Current rate of production is 800 bopd with less than 5% water.

Arbuzovskoye Well A-213 Vertical Production

            ·     Two oil zones with 6.9 m net pay.  Oil tested in J1-2 interval for the first time at Arbuzovskoye.

            ·     Lower J1-2 zone with 2.9 m net pay currently producing a stable rate of 130 bopd.

            ·     Upper J1-1 zone with 4.0 m net pay expected to come on production by the end of June.

Sibkrayevskoye Well S-374 Planned Vertical Delineation

            ·     Pad constructed and all materials in place.

            ·     Rig construction is underway with drilling commencement scheduled in July.

Production

·     Current gross production from Licence 61 is about 3,000 bopd.

            ·     This is up sharply due to very encouraging results on the A-214 and A-213 wells recently drilled at
                 Arbuzovskoye field.

Arbuzovskoye Development

The A-214 well at Arbuzovskoye was spudded on 22 April 2016.  It has been successfully completed with a horizontal segment of about 1,000 m in the Upper Jurassic J1-1 and J1-2 intervals at a depth of approximately -2,457 to -2,467 m TVDSS. Based on log data it is estimated that 931 m of the horizontal section is effective net pay.  This compares to 663 m of net pay in T-503 which was the best horizontal well at Tungolskoye.  The well was brought online on 22 May and the current flow rate is around 800 bopd. The well has cleaned up and is producing less than 5% water. The pressure in the well has been stable at around 175 atm, which indicates additional production capacity, however we intend to continue in this mode for a period to monitor its performance.

The Arbuzovskoye A-213 well was spudded on 1 April 2016.  It was drilled as a vertical well from Pad 2 in the southern part of the field.  The log and core data indicate that the well has 4.0 m of net oil pay in the primary Upper Jurassic J1-1 interval at a depth of -2,460 m TVDSS and another 2.9 m of net pay in the J1-2 interval starting at a depth of -2,466 m TVDSS.  The well was initially perforated in just the J1-2 interval and production has now stabilised at about 130 bopd for the past two weeks.  The J1-1 interval in the A-213 well will be perforated in the coming weeks and should add additional production from this well by the end of June.

In follow-up to the successful J1-2 oil production, we intend to re-evaluate all of the wells at Arbuzovskoye based on the A-213 result.  As this is the first production from the J1-2 interval at Arbuzovskoye, we will need to quantify the additional reserves in the new oil pool and register them with the Russian State Reserve Committee.

The second horizontal well at Arbuzovskoye, A-215, is currently being drilled and is expected to be completed in about one month.

Sibkrayevskoye Development

Preparations are underway to drill the S-374 delineation well this summer.  The pad has been constructed and all of the materials are in place.  The drilling rig is currently being assembled with drilling commencement scheduled in July.  This is a delineation well on the southern portion of the field designed to further de-risk the development and move P3 to P2 reserves.  All of the necessary studies and approvals are being completed in order to commence development of Sibkrayevskoye in Q1 2017.

Production

Current gross production from Licence 61 is about 3,000 bopd.  This is up sharply due to the good results of the initial two wells at Arbuzovskoye, despite the high decline rate at Tungolskoye and the shut-in of the S-373 well for the summer months following the end of the winter road season.  The excellent properties and the thickness of the reservoir at Arbuzovskoye mean that although some decline is likely, we do not expect this to be of the magnitude previously experienced at Tungolskoye.

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

"This last month has been an extremely exciting time for the Company with two very good well results at South Arbuzovskoye boosting production and revenues.  We have produced oil for the first time from the J1-2 interval in the A-213 well which will increase the oil reserves and flow rates at South Arbuzovskoye.  In addition, our first horizontal well (A-214) has an initial flow rate of over 800 bopd which is the best flow rate thus far in the licence area.  We will need to monitor the well carefully over the coming months to gauge the decline but the initial results are very encouraging."

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]

The information contained in this announcement has been reviewed and verified by Mr. Dennis Francis, Director and Chief Executive Officer 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. Francis holds a B.S. Degree in Geophysical Engineering and a M.S. Degree in Geology from the Colorado School of Mines. He has also graduated from the Harvard University Program for Management Development. He is a member of the American Association of Petroleum Geologists and the Society of Exploration Geophysicists. He has over 40 years' experience in oil and gas exploration and development.

Glossary

2P reserves	Proved and probable reserves as defined by the standards of the Society of Petroleum Engineers
atm	Atmospheres of pressure, metric pressure unit.
bopd	Barrels of oil per day
m	metres
MD	Measured depth
P2 reserves	Probable reserves as defined by the standards of the Society of Petroleum Engineers
P3 reserves	Possible reserves as defined by the standards of the Society of Petroleum Engineers
TVDSS	True vertical depth subsea

 

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