PetroNeft (AIM: PTR) owner and operator of Licences 61 and 67, Tomsk Oblast, Russian Federation, is pleased to announce an operations update.
Highlights
Drilling operations re-commenced
Production currently 2,300 bopd, workovers planned once winter roads available
Continued progress on re-financing as discussions widen to include additional parties
Drilling programme
The Board has recently approved a proposal received from Tomskburneftegas ("TBNG"), a drilling contractor owned by Non-Executive Director Vakha Sobraliev, to undertake agreed drilling operations under a deferred payment arrangement. Drilling operations have now re-commenced with the recent spudding of the Lineynoye No. 9 ("L-9") delineation well. Under these arrangements, TBNG will not receive any payment until after the Company completes its re-financing arrangements to the satisfaction of the Board. All other elements of the commercial agreement relating to this operation are consistent with prior turnkey drilling contracts between PetroNeft and TBNG. The overall value of the contract is of the order of $1.95 million and the operation is utilising existing equipment and supplies available at the L-9 location.
L-9 is a delineation well on the westernmost lobe of the Lineynoye field and is recommended by the Russian authorities as an important
component of the overall development of the Lineynoye field. Should the Lineynoye No. 9 well be successful it will be possible to commence production from it utilising winter roads.
Once the re-financing is completed, plans are 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.
Production
Production has declined slightly over the past few months to about 2,300 bopd due to several wells requiring workovers. Once winter roads become available, supplies will be trucked in and the workovers performed. Our water injection programme continues to function effectively and overall well performance is in accordance with expectations.
Financing
Continued progress is being made on both the re-financing and planned farmout of Licence 61. While progress has been slower than expected we continue to move forward on both fronts, particularly as regards the re-financing with additional parties having shown interest since our last announcement.
Dennis Francis, Chief Executive Officer of PetroNeft Resources plc, commented:
"We are pleased with this agreement with our drilling contractor (TBNG) which allows us to continue with our drilling programme in a cost effective manner for the benefit of our shareholders.
We continue to make encouraging progress on the re-financing and farmout fronts and we appreciate shareholders continued patience and support while these negotiations are completed."
