Petroneft Resources PLC Operations Update (9702H)

TIDMPTR

RNS Number : 9702H

Petroneft Resources PLC

20 March 2015

20 March 2015

PetroNeft Resources plc

("PetroNeft" or the "Group" or the "Company")

Operations Update

PetroNeft (AIM: PTR) an oil & gas exploration and production company operating in the Tomsk Oblast, Russian Federation, is pleased to provide an update on operations at Licence 61.

Highlights

Tungolskoye

-- Tungolskoye Development drilling contract awarded to Eurasia Drilling, one of the largest drilling companies in Russia

   -     Development will consist of up to 11 wells 

- Rig mobilization and construction of 25 km oil pipeline and utility line from Tungolskoye to Lineynoye Central Processing Facilities is now underway

-- T-5 well temporarily shut-in while exploration rig is disassembled and pump remedial works completed

Arbuzovskoye

   --    Arbuzovskoye 104 well now on production at an initial rate of 100 bopd 

-- Arbuzovskoye 107 well has confirmed 3.2 m of net oil pay and has been put on production at an initial rate of 100 bopd

-- Arbuzovskoye 108 well has confirmed 2.2 m of net oil pay and will be put on production shortly.

Sibkrayevskoye

   --    Sibkrayevskoye No. 373 appraisal well has spudded, result expected in April 2015 
   --    Acquisition of 1,000 km of high quality 2D seismic underway 

Lineynoye

   --    L-10 horizontal well to be drilled on the West Lineynoye L-8 structural lobe 

Production

   --    Current production about 2,000 bopd excluding T-5 well 

-- Year-end 2015production from Licence 61 is estimated to be between 3,500 and 4,000 bopd, based on our current drilling results and planned 2015 drilling programme

Tungolskoye Development

A contract for the drilling of up to 11 wells, up to five of which will be horizontal, has been awarded to SGK Drilling, a subsidiary of Eurasia Drilling, Russia's largest drilling contractor. SGK will use Schlumberger for measure-while-drilling and related services for the horizontal segments. A production drilling rig with top drive unit will be used for these wells, allowing longer horizontal segments with enhanced control. Mobilisation of the rig is underway and the first well is expected to spud in early May 2015.

The construction of a 25 km pipeline and power line to connect the Tungolskoye field back to the Lineynoye Central Processing Facility ("CPF") is underway. Over 20 km of pipe has been welded so far and it is expected that construction will be completed in April and that commissioning of the pipeline will be completed and in use by June 2015.

Further to the last update the Tungolskoye No-5 well stabilised at 415 bfpd on a 10 mm choke. The well was then shut-in for a pressure build-up test in late February. After the well was brought back online the cable connecting the Electric Submersible Pump failed so the well has been temporarily shut-in until the cable can be replaced. The drilling rig is presently being disassembled and will be moved out allowing our workover crew to gain access to the well head to replace the cable. We expect this to take several weeks. The pressure build-up test indicates the well is capable of over 400 bfpd based on the productivity index. The well had started making some water and we were in the process of conducting a step-rate test to maximize the oil production when the pump stopped. The well has accomplished its objectives and we have learned a lot from this well in terms of the planning, execution and orientation of future development wells and where to best focus the horizontal segments.

Arbuzovskoye

The Arbuzovskoye 104 well has now been brought into production at 100 bopd. As mentioned in our previous release logs indicated that this well contained 5.4 metres of net oil pay. This well was designed as an eventual water injector in this portion of the field and we are very pleased with the initial oil production.

The Arbuzovskoye 107 has been drilled and logs indicate that the well has 3.2 m of net oil pay in the Upper Jurassic J1-1 interval at a depth of -2,476m TVD. The well has been brought into production at an initial rate of 100 bopd.

The Arbuzovskoye 108 well has just been drilled and logs indicate the well has 2.2 m of net oil pay in the Upper Jurassic J1-1 interval at a depth of -2,476 m TVD. The well will initially be completed as an oil producer and then later converted to a water injector in this portion of the field. The well will be put on production shortly and is the last well to be drilled from Pad 1 at this time.

The Arbuzovskoye drilling campaign has successfully confirmed oil in the southern lobe of the structure and the oil-down-to has been extended to the spill point of the structure. Additional seismic will be acquired on the field this winter as part of the 1,000 km seismic acquisition programme and we expect to develop the southern lobe of the structure in 2016 with a combination of vertical and horizontal wells. We expect good results here based on the superior reservoir properties that we have at Arbuzovskoye. This will be a quick tie-in to Arbuzovskoye Pad 1 and the Lineynoye CPF.

Sibkrayevskoye

The Sibkrayevskoye No. 373 appraisal well is currently being drilled. It is expected to be completed in late April 2015. The well is designed to follow-up on the S-372 discovery well and to further delineate the Sibkrayevskoye oil field. Ryder Scott estimates the 2P reserves at over 50 mmbbls, making this the largest oil field discovered on License Block 61 to-date. Additional seismic data is also being acquired over the structure this winter as part of the 1,000 km 2D seismic acquisition programme which is currently underway. A development decision is expected in Q3 2015 with a view to the field being brought into production in 2016.

Lineynoye

The Company plans to drill a horizontal well (No. L-10) in the J1-1 sandstone interval on the West Lineynoye L-8 structural lobe. The well will be up-dip from the L-8 exploration well which is currently producing 50 bopd from a vertical section of the J1-1 sandstone. The rig and supplies for this well are currently being mobilized and it is expected that the well will be spudded in May 2015 and completed in July/August 2015. The well can immediately be tied-into the Lineynoye CPF.

Production

Current gross production at Licence 61 is about 2,000 bopd, without T-5. Based on results to date and the drilling programme for the coming year we expect gross production to almost double and reach between 3,500 and 4,000 bopd by the end of 2015.

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

"We are delighted with the SGK Drilling contract for the 11 well campaign at Tungolskoye where we plan a number of longer horizontal segments.

We are also pleased with our Arbuzovskoye Pad 1 drilling campaign.. We have achieved excellent results in all of the wells but we are particularly pleased with the A-103 well, which has confirmed oil in the southern lobe of the Arbuzovskoye field. This will be a fast track production project for 2016.

Current production is about 2,000 bopd and based on recent results, we expect to almost double this figure by the end of the year."

For further information, contact:

 
                                                           +1 713 988 
 Dennis Francis, CEO, PetroNeft Resources plc                    2500 
                                                           +353 1 647 
 Paul Dowling, CFO, PetroNeft Resources plc                      0280 
 John Frain/Brian Garrahy, Davy (NOMAD and Joint           +353 1 679 
  Broker)                                                        6363 
 Henry Fitzgerald-O'Connor, Canaccord Genuity Limited     [phone] 
  (Joint Broker)                                                 8000 
                                                          [phone] 
 Martin Jackson/Shabnam Bashir, Citigate Dewe Rogerson           9571 
                                                           +353 1 498 
 Joe Heron / Douglas Keatinge, Murray Consultants                0300 
 

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 and Oil & Gas Companies issued by the London Stock Exchange in June 2009. 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 40 years' experience in oil and gas exploration and development.

Glossary

 
 2P reserves   Proved and probable reserves as defined by 
                the standards of the Society of Petroleum Engineers 
------------  ----------------------------------------------------- 
 bfpd          Barrels of fluid per day 
------------  ----------------------------------------------------- 
 bopd          Barrels of oil per day 
------------  ----------------------------------------------------- 
 m             Metres 
------------  ----------------------------------------------------- 
 mmbbls        Million barrels 
------------  ----------------------------------------------------- 
 TVD           True vertical depth 
------------  ----------------------------------------------------- 
 

This information is provided by RNS

The company news service from the London Stock Exchange

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