TIDMPTR
RNS Number : 4609N
Petroneft Resources PLC
30 September 2021
PetroNeft Resources plc
Half-year consolidated results for the six months ended to 30
June 2021
30 September 2021
PetroNeft Resources plc ( further referred to as the "Company"
and together with its subsidiaries and joint venture , the "Group",
AIM: PTR) an oil & gas exploration and production company,
operating in the Tomsk Oblast, Russian Federation, and 90% owner
and operator of Licence 67 and 50% owner and operator of Licence 61
is pleased to announce its unaudited financial and operating
results for the half-year period ended 30(th) June 2021 ("H1 2021"
or the "Period").
David Sturt - Chief Executive Officer commented,
"Following the considerable challenges faced by the Company in
2020, I am very pleased to report significant progress during the
first half of 2021; production has increased, strict cost control
has been maintained, operating cash flows have been significantly
increased and the capital structure of the Group has been
improved.
It is particularly pleasing to see such an immediate impact from
Licence 67 where we increased our interest during the reporting
period. This asset has been operationally profitable during the
period, especially during Q2 once the C-4 well had been opened up.
We see significant potential for growth in this asset due to the
large number of additional drilling locations with very low OPEX
costs and reduced tax rate.
Thanks largely to the technical progress made by our Tomsk team
over the last two years, the outlook for the company has been
transformed. A decline in production was first arrested and now
reversed. Our corporate strategy has moved on from asset divestment
to asset enhancement. While there is much more to be done, we are
now in a position where the Company is moving forward with strength
and confidence. We have also brought Licence 67 on stream and have
increased our share in this asset. It is now realistic to view this
as a growing business. As society opens again, I relish the
prospect of more contact with our shareholders and further
informing them of our progress."
Year to date highlights
Strategic
Ø Strategic focus on building a financially sustainable company
to drive value creation through organic growth.
Ø Increased the ownership interest in Licence 67 to 90% by
completing the acquisition of an additional 40% interest in L
icence 67 on 5(th) March 2021.
Ø Established year-round production from Cheremshanskoye field
(Licence 67).
Ø Refreshed and strengthened the board, Alastair McBain, former
CEO of Arawak Energy and currently a significant shareholder of the
Company, became Non-Executive Chairman 29(th) January 2021,
Ø Successfully raised $4.6M through issuance of convertible
loans with $1.7M used for the acquisition of Licence 67.
Ø Substantial debt retired under three historic loan agreements,
with loan principal amounts declining from $5.9M to $3.044M and
then further reduced after the reporting period to $2.379M. The
conversion pricings, when agreed under the respective agreements,
were at a significant premium to the then market share price.
Ø Significant improvement in operating cash flows at both
Licence 67 and Licence 61, covering investment activities including
the Licence 61 fracking program and all-season road at the
Cheremshanskoye field.
Ø Independent reserves report commissioned (Miller and Lents),
nearing completion.
Operations
Ø Gross production increased 25.1% rising to 1,967 bopd (H1
2020: 1,573 bopd) and 41.5% quarter over quarter during the first 6
months of 2021, and to Q2 2,091 bopd from (Q2 2020: 1,476 bopd)
Gross Production per H1 2021 H1 2020 Q2 2021 Q2 2020
L61 and L67
Total Production (bopd) 1,967 1,573 2,091 1,476
-------- -------- -------- --------
Net to PetroNeft Resources
plc 1,065 790 1,166 739
-------- -------- -------- --------
Licence 61 H1 2021 H1 2020 Q2 2021 Q2 2020
Total gross production 319,511 285,020 162,936 133,496
-------- -------- -------- --------
Gross bopd 1,765 1,566 1,791 1,467
-------- -------- -------- --------
Net to PetroNeft Resources
plc
50% share bopd 883 787 896 739
-------- -------- -------- --------
Licence 67 H1 2021 H1 2020 Q2 2021 Q2 2020
Total gross production 36,586 1,200 27,307 0
-------- -------- -------- --------
Gross bopd 202 7 300 0
-------- -------- -------- --------
Net to PetroNeft Resources
plc
90% share bopd from
Q1 2021 (2020: 50%) 182 3 270 0
-------- -------- -------- --------
Ø Stable production performance at the new Cheremshanskoye
field, in production since February 2021 and currently > 300
bopd natural flow with no appreciable decline.
Ø Highly successful fracking campaign at Licence 61 (wells'
S-373 & L-115), production at both wells significantly
exceeding expectations
Ø Stable production performance from legacy fields at Licence
61.
Ø Mini Oil Processing unit operational under test regime
producing sufficient diesel to meet all the Group's internal needs
and to supply excess volumes to the local market, thereby reducing
costs and providing a valuable additional revenue stream.
Financial performance of Licences
Licence 61 (100% Units H1 2021 H1 2020 Q2 2021 Q2 2020
basis)
Revenue $'000 14,412 8,043 7,954 2,709
------- --------- -------- -------- --------
Cost of Sales $'000 (14,356) (8,987) (7,384) (3,598)
------- --------- -------- -------- --------
Gross Profit $'000 56 (944) 570 (889)
------- --------- -------- -------- --------
Administrative Expenses $'000 (1,623) (1,533) (805) (759)
------- --------- -------- -------- --------
Operating Profit
/ (Loss) $'000 (1,567) (2,496) (235) (1,648)
------- --------- -------- -------- --------
Average realized
price $/bbl 44.3 27.2 47.3 19.3
------- --------- -------- -------- --------
Cash operating costs* $/bbl 15.6 16.0 14.0 13.8
------- --------- -------- -------- --------
Licence 67 (100% Units H1 2021 H1 2020 Q2 2021 Q2 2020
basis)
Revenue $'000 1,629 - 1,305 -
------- -------- -------- -------- --------
Cost of Sales $'000 (1,287) - (928) -
------- -------- -------- -------- --------
Gross Profit $'000 342 - 342 -
------- -------- -------- -------- --------
Administrative Expenses $'000 (171) (0.2) (136) -
------- -------- -------- -------- --------
Operating Profit
/ (Loss) $'000 171 (0.2) 206 -
------- -------- -------- -------- --------
Average realized
price $/bbl 44.5 35.8 47.7 n/a
------- -------- -------- -------- --------
Cash operating costs* $/bbl 8.5 162.2 5.7 n/a
------- -------- -------- -------- --------
Group Financial Results
Ø Consolidated revenue $2.5M (H1 2020: $1M), for the first time
including Crude oil revenues of $1.6M following the consolidation
of Russian BD Holdings B.V. (Licence 67) in March 2021. These sales
show a subsequent month over month increase through to the end of
June 2021.
Ø Consolidated gross profit: $0.647M (H1 2020: $0.192M) and an
improved Gross margin driven by a strong performance in Russian BD
Holdings BV's operations.
Ø Consolidated loss for the period - $2.2M (H1 2020: $2.7M), a
significant improvement in bottom line reported results in a very
busy corporate activity period for the Company. The reported
results include one off accounting adjustments both for the extra
40% acquisition and the convertible debt retirement programs.
Excluding these adjustments consolidated earnings for the interim
period were $2.0M (H1 2020: $2.7), which demonstrates continued
operational improvements across all subsidiaries and the Licence 61
joint venture.
Ø Consolidated cash balance: $1.1M (31 December 2020: $0.1M).
Improvements in cash generation from existing operations and
funding through the convertible debt program.
Ø Gross Debt: $7.76M (31 December 2020: $4.15M). During the
Period, the Group raised $4.6M from convertible loans issuances and
then reduced the debt by retiring $2.9M of the convertible loans
through the issuance of shares.
Outlook
Ø Evaluating options to develop the significant portfolio of
low-risk appraisal/development opportunities including the
Cheremshanskoye and Ledovoye fields in Licence 67 and the Northern
Hub (Sibkrayevskoye and, West Lineynoye fields and Emtorskaya
structure) in Licence 61
Ø Further production enhancement operations being planned to
include: an expanded fracking campaign, further waterflood
optimization, and re-working Tungolskoye wells to try to
re-establish commercial production.
Ø Growing confidence in the fundamentals of the industry whilst
operating within a supportive regulatory and fiscal regime.
For further information, contact:
David Sturt, CEO, PetroNeft Resources plc +353 1 647 0280
John Frain/Ciara O'Mongain, Davy (NOMAD and Broker) +353 1 679 6363
Joe Heron/Douglas Keating, Murray Consultants +353 1 498 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
bopd Barrels of oil per day
M Million
* Cash operating costs - non-IFRS measure representing operating
costs of each operating asset on a stand-alone basis, excluding
holdings' overheads, Minerals Extraction Tax, depreciation,
depletion and amortization and other non-EBITDA items.
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