TIDMPTR
RNS Number : 7790L
Petroneft Resources PLC
15 January 2021
PetroNeft Resources plc
15(th) January 2021
PetroNeft Resources plc ('PetroNeft' or 'the Company')
Licence 67
Potential Acquisition of an additional 40% Interest
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 the
following update:
Highlights
-- Heads of Terms signed with Belgrave Naftogas (formerly Arawak
Energy Russia B.V.) to acquire an additional 40% interest in
Licence 67 for US$2.9 million.
Background
Over the last 12 months, PetroNeft has significantly increased
the focus on LIcence 67, as we look to develop the value of our
portfolio. We have increasingly seen the significant potential that
Licence 67 offers in terms of exploration and production. As a
means of moving the Licence forward, in a cost-effective and timely
way, a non-binding Heads of Terms has been executed between
PetroNeft and Belgrave Naftogas to acquire an additional 40%
interest in Licence 67, thereby increasing PetroNeft's interest
from 50% to 90%.
The terms of the proposed transaction are:
-- Consideration of US$2.9 million to be satisfied in the following way:
o Issuance of 80,000,000 PetroNeft ordinary shares to Belgrave
Naftogas (representing a 8.7% shareholding) for a value of US$1.2
million (US$0.015 per ordinary per ordinary share).
o Cash consideration of US$1.7 million which will be financed
through a 3 year loan from Belgrave Naftogas to PetroNeft with an
interest rate of 8% above Bank of England base rate. The loan and
interest to be repaid at the end of the loan. Up to 50% of the loan
can be converted by Belgrave Naftogas to PetroNeft ordinary shares
at 2p per ordinary share during Year 1; 2.5p per ordinary share
during Year 2; and 3p per ordinary share during Year 3.
-- Belgrave Naftogas to have the right to nominate a Director onto the PetroNeft Board.
-- Belgrave Naftogas to be carried by PetroNeft for their 10%
share of the Joint Venture costs up to repayment of the loan, after
which time Belgrave Naftogas will fund their share of the Joint
Venture costs.
PetroNeft will now work with Belgrave Naftogas to finalise and
implement a work programme for the development of Cheremshanskoye
and the further investigation of Ledovoye over the winter
months.
Licence 67 History
PetroNeft acquired Licence 67 during a state auction December
2009. The following year, Arawak Energy Russia B.V. (now Belgrave
Naftogas) exercised its right to acquire a 50% non-operated
interest from PetroNeft. The licence is located in a highly
prospective part of the Tomsk region being surrounded by
significant adjacent producing fields and served by a good road
network with all season roads crossing the licence.
Since the acquisition of the licence, the partnership has
acquired two 3D seismic surveys totaling 157km (2) over the
Cheremshanskoye and Ledovoye fields and drilled three wells, two on
the Cheremshanskoye field and one on the Ledovoye field, with all
the wells encountering oil. The last well was C-4 which was drilled
in 2018 and tested up to 399 barrels of fluid a day.
Following the drilling of the L-2a well on the Ledovoye field,
in 2016 Ryder Scott calculated 2P reserves for the field of 14
mmbbls and 3P reserves of 17.4 mmbbls.
In 2019 and following the successful C-4 well, the Russian State
Reserves Committee approved C1+C2 reserves (approximately
equivalent to International 2P reserves) for the Cheremshanskoye
field of 19.2 mmbbls. This qualifies the field for a small field
partial exemption of the state Mineral Extraction tax.
At the start of 2020 the partnership returned to the C-4 well to
carry out an extended test which resulted in the well flowing
naturally up to 496 barrels of oil per day and 1,200 barrels of oil
being produced and sold competitively on the market. An all season
road is currently being built linking the C-4 well to existing road
infrastructure which will ensure all year round production from Q1
this year.
At the beginning of 2020 Sarum Energy, a UK based company whose
majority shareholder is Alastair McBain (former CEO of Arawak
Energy) purchased Belgrave Naftogas from Vitol.
David Sturt, Chief Executive Officer of PetroNeft Resources plc,
commented:
"This potential acquisition is consistent with the Board and
Management's previously announced commitment of enhancing
shareholder value through boosting production, reserves and
revenue. As early as next month the asset is expected to transform
from being an exploration to a producing asset. This agreement will
add significant impetus to our plans to develop the Licence.
The significant premium on the share converts reflects both
PetroNeft Resources plc and Belgrave Naftogas's shared view of the
mismatch between the current share price of PetroNeft and the
intrinsic value of PetroNeft's underlying asset portfolio. We
expect that Belgrave Naftogas's nominated Director will combine
international experience and regional insight to boost the
financial and operating profile of our assets.
We will be working hard with Belgrave Naftogas to ensure that we
close the acquisition during the first quarter this year."
For further information, contact:
+97 55 1919
David Sturt, CEO, PetroNeft Resources plc 808
John Frain/Brian Garrahy, Davy (NOMAD and Joint +353 1 679
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
km(2) Kilometres squared
bopd Barrels of oil per day
------------------------------------------------------
2P Proven and Probable reserves under the Society
of Petroleum Engineers Petroleum Reserves Management
System
------------------------------------------------------
C1 + C2 Russian State Reserves C1 + C2, equivalent
to 2P (Proven and Probable)
------------------------------------------------------
mmbbls Million barrels
------------------------------------------------------
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