Petroneft Resources PLC Operational Update (7739V)

TIDMPTR

RNS Number : 7739V

Petroneft Resources PLC

12 August 2015

12 August 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, and 50% owner and operator of Licences 61 and 67 is pleased to provide an update on operations at Licence 61.

Highlights

West Lineynoye

   --    L-10 horizontal well brought online at a sustained rate of 230 bopd. 
   --   L-10 result confirms short segment horizontal drilling greatly increases flow rates. 

Tungolskoye

   --   T-503 horizontal well continues to produce at a sustained rate of over 500 bopd. 
   --   T-502 horizontal segment drilling in progress. 
   --   T-508 control well and water injector drilled in 17 days. 

Production

   --    Current gross production from Licence 61 is about 2,600 bopd. 
   --    Represents a 41% increase in production thus far this year. 

West Lineynoye Development

The L-10 well at West Lineynoye was successfully completed with a horizontal segment of about 282 metres in the Upper Jurassic J1-1 horizon at a depth of approximately -2,365 metres TVD. Of the 282 metre horizontal segment it is estimated that approximately 125 metres is effective net pay. The well was brought online on 4 August and the average flow rate over the last five days has been approximately 230 bopd. The well has cleaned up substantially and the current water cut is less than 5%. The adjacent L-8 vertical well is producing about 50 bopd from the same reservoir interval and the L-10 confirms the ability to use short segment horizontal drilling to greatly increase the flow rates.

The L-10 horizontal segment has been drilled with a standard Russian exploration rig without a top drive unit. Based on the well design, we are confident that we can effectively drill and successfully complete horizontal production wells with similar drilling rigs. There are over 9 locations similar to L-10 that could be developed in the coming years with one or two well drilling programmes adjacent to existing infrastructure. The very good result of L-10, both from a drilling and production performance perspective, is a significant step to tying in these close to existing infrastructure projects in a highly cost effective manner.

Tungolskoye Development

The T-503 well at Tungolskoye continues to produce over 500 bopd. The average water cut has now reduced to less than 5%.

The T-508 vertical well was drilled in just 17 days. The primary purpose of this well was to provide the necessary stratigraphic information for the drilling of the T-502 horizontal well which is in progress. The T-508 well penetrated the top of the J1-1 reservoir at -2,517 m TVD. The reservoir was water bearing in this location and the well will be completed as a water injector to provide pressure support for the T-503 and T-502 horizontal wells. The well has defined the J1-1 water-up-to for the field at around -2,517 m TVD which is about 5 m higher than previous estimates for the top oil water transition zone. This is likely to result in a reserve decrease for Tungolskoye, however, we expect reserve additions at Arbuzovskoye and Sibkrayevskoye to more than compensate for this.

The horizontal segment in the T-502 well is currently being drilled and is expected to be completed later this month. This well is located on the eastern crest of the structure targeting the J1-1 sandstone using the T-5 and T-508 wells for geo-steering guidance.

Production

Current gross production at Licence 61 is about 2,600 bopd. This represents a 41% increase in production thus far this year.

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

"We are very pleased with the L-10 well result, which again clearly demonstrates the potential for materially enhanced flow rates from horizontal production wells. This well also demonstrates that with proper planning, we can drill similar wells in a cost effective manner with a standard Russian exploration drilling rig. This significantly increases our inventory of ready to drill wells in today's low oil price market.

Our operational progress is gathering momentum and this is evident in our sustained drilling and production growth. We are now looking forward to the T-502 horizontal well result in the coming weeks. Production has increased by over 40% in 2015 and we will continue to focus on production growth."

For further information, contact:

 
 Dennis Francis, CEO, PetroNeft Resources    +1 713 988 
  plc                                              2500 
 Paul Dowling, CFO, PetroNeft Resources      +353 1 443 
  plc                                              3720 
 John Frain/Brian Garrahy, Davy (NOMAD       +353 1 679 
  and Joint Broker)                                6363 
 Henry Fitzgerald-O'Connor, Canaccord           +44 207 
  Genuity Limited (Joint Broker)               523 8000 
 Martin Jackson/Shabnam Bashir, Citigate        +44 207 
  Dewe Rogerson                                638 9571 
 Joe Heron / Douglas Keatinge, Murray        +353 1 498 
  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 
------------  --------------------------------- 
 bopd          Barrels of oil per day 
------------  --------------------------------- 
 TVD           True vertical depth 
------------  --------------------------------- 
 

This information is provided by RNS

The company news service from the London Stock Exchange

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