TIDMPTR
RNS Number : 0936B
Petroneft Resources PLC
08 June 2021
PetroNeft Resources plc
8(th) June 2021
PetroNeft Resources plc ('PetroNeft' or 'the Company')
Licence 67 Operational Update
PetroNeft (AIM: PTR) an oil & gas exploration and production
company, operating in the Tomsk Oblast, Russian Federation, and 90%
owner and operator of Licences 67 and 50% owner and operator of
Licence 61 is pleased to announce the following operational
news.
Highlights
o Production from the Cheremshanskoye field has provided the
Company with strong operational cash flows. The well has shown
virtually no decline since the start of production. The choke size
was recently increased to 10mm and the rate increased to 320
bopd.
o Workover operations on the L-2a well at the Ledovoye field
also at Block 67 have been carried out successfully, producing an
oil flow through a perforated liner which should enable the Company
to book Russian state reserves, leading to the creation of
development options for this field.
Cheremshanskoye Update
Production from the C-4 well on the Cheremshanskoye field
remains strong with virtually no decline. The rate has also been
increased from 300 bopd to 320 bopd by increasing the choke size to
10mm. Since bringing the field on stream at the end of February it
has produced a total of over 27,000 bbls from the C-4 well through
May. Production in May was over 9,000 bbls. The oil produced from
this field benefits from a partial exemption of the Mineral
Extraction Tax, with the continued improvement in oil price, this
reduction in Mineral Extraction tax is estimated to now be over
$4/bbl in May alone.
The forward plan is to continue to monitor reservoir performance
and at an appropriate time install a pump to optimise production
and further increase revenue.
The C-4 well, which is located on the northern margin of the
Cheremshanskoye field, was drilled during 2018 and tested oil at a
combined 179 bopd from Upper Jurassic J1-1 and J1-3 clastic
reservoirs from 2,630.8 m to 2,633.8 m and 2,644 m to 2,655 m.
The well was successfully re-entered in Q1 2020 to perform an
extended well test. During this test, the well flowed at various
choke sizes from the same Upper Jurassic J1-1 & J1-3 clastic
reservoirs and flowed naturally at up to a maximum 476 bopd on a
10mm choke size.
The Cheremshanskoye field reserves are 19.26 mmbbls C1+C2 which
were approved by GKZ (Russian State Reserves Committee) January
2019.
Ledovoye Update
The L-2a well is located along the northern margin of the
licence at the Ledovoye field. This L-2a well was drilled by the
Company in 2011 and was designed to twin the successful L-2 well
which was drilled in 1973 and flowed oil to surface during a short
open hole test recovering 34.5 bbls of oil in 40 minutes,
equivalent to more than 1,000 bopd. The L-2 well suffered from
operational problems that prevented a cased hole test.
At the time of drilling of the L-2a well (2011), 5 m of net oil
pay was identified within the Upper Jurassic J1-1 and J1-2
reservoir intervals. The well flowed 8.3 m3/day (52 bopd) on a
small 3 mm choke, but did not have a cased hole test, this being a
requirement for reserves to be approved by GKZ (Russian State
Reserves Committee) and for development of the field.
The well was successfully re-entered in recent weeks and a liner
cemented in place. The Upper Jurassic J1-1 and J1-2 intervals were
perforated from 2645.5 m to 2627.5 m and 2630 m to 2632 m. During
several swabbing cycles the well started to flow a mixture of oil
and water. A total of approximately 132 bbls of oil was recovered
with a gravity of 33 API along with 306 bbls of water from 4 swab
cycles. Inflow from the formation ranged from 100 bopd to 300 bopd.
The high water content currently precludes oil from being produced
at this field as there are no separation facilities on site. A
decision was therefore made to suspend the well until separation
facilities are in place.
This successful re-entry and test through a liner now should
provide sufficient data to enable the company to seek GKZ approval
of the field reserves. Once we receive this approval, we will
review possible options for the future development of this
field.
Strong Cash Flow and the AOR Refinery Loan Facility
In December 2020, an Offtake contract was signed with the
Alexandrovskoye Oil Refinery ("AOR") that included a circa $1M of
advance payment against future oil shipment from the C-4 well on
the Cheremshanskoye field to cover infrastructure development on
Licence 67.
AOR is a company located at Alexandrovskoye town in the
north-western part of the Tomsk region located 230 km from the
Cheremshanskoye oil field. In 2020 AOR purchased all the oil
produced from the C-4 well during the extended well test at
competitive market rates.
Due to a combination of strong performance from the C-4 well at
Cheremshanskoye combined with the improving oil price, the Company
did not need to call the advance payment for the Offtake Contract
thereby saving financing charges.
The $1M advance payment under the Offtake Contract remains in
place should the Company decide to utilize this capital.
The Company recently increased its interest in Licence 67 from
50% to 90%.
David Sturt, CEO PetroNeft commented:
"The production from the Cheremshanskoye field is extremely
encouraging, and clearly demonstrates the quality and potential of
this asset.
It is satisfying to now have a cased hole test at the Ledovoye
field. This successful re-entry crucially enables us to be able to
seek State Reserves Committee (GKZ) approval - a major necessary
milestone before we can progress development of the field.
Licence 67 continues to deliver following our successful
acquisition of an additional 40% interest taking us from 50% to
90%.
The strong operational performance, combined with the improving
oil price, has significantly improved the finances of the Company
which has enabled us to fund construction of the road and re-entry
of the Ledovoye L-2a well without the need to call down agreed
financing arrangements which now remain in place should we need the
capital in the future.
While we remain at the early stages of rebuilding, this
achievement is a tangible demonstration of our improved financial
position over the last 12 months. This progress has been based on a
laser-like focus on reducing costs and harnessing local expertise
to maximise the return from our assets. This approach will continue
in the months ahead."
For further information, contact:
+44 7903 869
David Sturt, CEO, PetroNeft Resources plc 6-8
+353 1 679
John Frain/Ciara O'Mongain, Davy (NOMAD and Broker) 6363
+353 1 498
Joe Heron / Douglas Keatinge, Murray Consultants 0300
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
mm Millimetre
bopd Barrels of Oil Per Day
---------------------------------------------
bbls Barrels
---------------------------------------------
m Metre
---------------------------------------------
C1 + C2 Russian State Reserves C1 + C2 is equivalent
to 2P (Proven + Probable)
---------------------------------------------
M Million
---------------------------------------------
API American Petroleum Institute
---------------------------------------------
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