New Oil Field discovery at Ar

RNS Number : 8304V

Petroneft Resources PLC

09 November 2010

 



PetroNeft Resources plc ("PetroNeft" or the "Company")

New Oil Field discovery at Arbuzovskaya

PetroNeft Resources plc (AIM: PTR), the owner and operator of Licences 61 and 67, Tomsk Oblast, Russian Federation, is pleased to announce the discovery of a new oil field at Arbuzovskaya in Licence 61.

Highlights:

·      Arbuzovskaya No. 1 well discovers oil in main Upper Jurassic target

·      Approximately five metres of net oil pay in J1 interval

·      Open hole inflow test of 289 bopd (unstimulated)

·      Drilling continuing with secondary targets of Middle and Lower Jurassic

Arbuzovskaya No. 1 well

The Arbuzovskaya No. 1 well at the Arbuzovskaya (formerly Varyakhskaya) prospect located 10 kilometres east of the Lineynoye oil field in Licence 61 was spudded on 10 October 2010. The Upper Jurassic J1, oil reservoir horizon was intersected at 2,566 metres measured depth. Logs indicate that the J1 interval consists of 19.0 metres of sandstone and shale. Approximately 5.0 metres of the upper most part of this interval is considered to be continuous net pay with good reservoir properties and oil saturation throughout. An open hole test was conducted over this interval and tested at a pro-rated inflow of 289 bopd unstimulated. The oil is high quality with an API gravity of 40 degrees which is consistent with other fields in the Licence area. 

The well will now be drilled to basement, at approximately 2,900 metres, targeting higher risk secondary objectives in the Middle and Lower Jurassic intervals. The well should be completed by the end of November at which stage the Company will update shareholders with the final results of the well as part of the operations update due around that time.  This discovery well adds a fifth oil field to the northern group of fields and will be included in Phase 2 of the development.

Arbuzovskaya is the first well of a five well exploration programme designed to potentially double the Company's 2P reserve base within the next 12 months.

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

"We are delighted to commence our new exploration campaign with the discovery of a fifth oil field at Licence 61. This is an especially important discovery, because of the good flow rate it confirms the wider prospectivity of a number of additional structures east of the existing producing Lineynoye oil field which can be easily tied in to the central processing facilities and pipeline at Lineynoye."

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]
Charles Berkeley/Henry Fitzgerald-O'Connor, Canaccord Genuity (Joint Broker)	[phone]
Martin Jackson/Kate Lehane, Citigate Dewe Rogerson	[phone]
Joe Murray/Ed Micheau, 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, Oil and Gas Companies issued by the London Stock Exchange in March 2006.  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 35 years experience in oil and gas exploration and development.

Forward Looking Statements

This announcement contains forward-looking statements. These statements relate to the Company's future prospects, developments and business strategies. Forward-looking statements are identified by their use of terms and phrases such as 'believe', 'could', 'envisage', 'potential', 'estimate', 'expect', 'may', 'will' or the negative of those, variations or comparable expressions, including references to assumptions.

The forward-looking statements in this announcement are based on current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by those statements. These forward-looking statements speak only as at the date of this announcement. No statement in this announcement is intended to constitute a profit forecast or profit estimate for any period.

Glossary

1P	Proved reserves according to SPE/PRMS standards
2P	Proved and probable reserves according to SPE/PRMS standards
3P	Proved and probable and possible reserves according to SPE/PRMS standards
bopd	Barrels of oil per day
C1	Proved resources according to Russian standards
C2	Probable resources according to Russian standards
C3	Possible resources according to Russian standards
km	Kilometres
mmbo	Million barrels of oil
P3	Possible reserves according to SPE/PRMS standards

Notes to Editors

PetroNeft Resources plc was established in 2005 to develop oil and gas assets in Russia and the Former Soviet Union and was admitted to the London AIM and Dublin ESM Markets on 27th September 2006.

The main asset of the Company is a 100% interest in Licence 61, a 4,991 sq km oil and gas licence in the Tomsk Oblast in Russia, held through its wholly owned Russian subsidiary, Stimul-T. The Licence is located in the prolific Western Siberian Oil and Gas Basin and contains four known oil fields, Lineynoye, Tungolskoye, West Lineynoye and Kondrashevskoye, and over 25 exploration Prospects and Leads. In December 2009 the Company announced the acquisition of a second oil and gas licence in the Tomsk Oblast in Russia, Licence 67 ([containing C3 Reserves of 55 mmbls]).

The Board and Management of PetroNeft is made up of highly experienced professionals, including former Marathon Oil Company executives, in the International and Russian Oil Exploration and Development business. The Russian Management team also has extensive local knowledge and experience in the exploration and development of oil and gas fields in the Tomsk Oblast.

Since acquiring Licence 61 in May 2005, the Company has carried out extensive reprocessing and reinterpretation, using modern technology, of over 2,500 line kms of vintage seismic acquired in Soviet times. It has also digitised and reinterpreted the logs of 14 wells drilled on the Licence since 1972.  PetroNeft also has acquired over 1,000 line kms of new CDP-2D infill seismic and drilled six new exploration/delineation wells.  This new seismic and six well drilling programme fully satisfied the exploration work obligation for the full 25 year licence term.

Reserve estimates on Licence 61 prepared by Ryder Scott as of 1 January 2010 were:

Proved reserves	(1P)	10.4  million bbls
Proved and probable reserves	(2P)	70.8  million bbls (P1+P2)
Proved, probable and possible reserves	(3P)	531.3  million bbls (P1+P2+P3)

In August 2009 PetroNeft announced a crude oil transportation agreement with Nord Imperial, effective for 25 years, which significantly reduces the various permits and associated approvals required for pipeline construction as well as the costs.  The new route, from Lineynoye to Kiev-Eganskoye runs adjacent to the Tungolskoye and Kondrashevskoye oil fields and will create useful synergies for future development phases.

On 21 September 2009 PetroNeft announced a US$27 million fund raising from international institutional investors which fully funds the Phase 1 Development Plan for the Lineynoye and West Lineynoye Fields.

On 28 May 2010, PetroNeft announced a US$30 million debt facility with Macquarie Bank.

In August 2010, following the completion of a 60 km pipeline and of the construction of oil storage and processing facilities, PetroNeft announced the commencement of year-round oil production from the Lineynoye oil field, with the Company expecting production of 4,000 bopd by the end of 2010.  Production from the Phase 1 project is expected to peak at around 12,000 bopd in 2012.

In October 2010 PetroNeft announced a $43 million fund raising from international institutional investors which fully funds a five well exploration programme for 2010/11 and will assist the Company with business development opportunities.

 

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