Petroneft Resources PLC Operations Update (2096D)

TIDMPTR

RNS Number : 2096D

Petroneft Resources PLC

05 July 2016

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 announce the completion of a successful three well initial development programme on the southern extension of Arbuzovskoye in Licence 61 and the addition of a fourth well based on the positive results.

Highlights

Third successful well drilled at South Arbuzovskoye

Fourth well added as follow-up

Record production achieved

Production

-- Current gross production from Licence 61 increased to about 3,500 bopd (1,750 bopd net to PetroNeft).

   --     Increase due to three strongly performing new wells at Arbuzovskoye. 
   --     This is the all-time record high production for the Licence area. 

Arbuzovskoye Well A-213 - Vertical Production Well

               --     Initial well discovered oil for the first time in the secondary J1-2 interval at Arbuzovskoye. 
               --     Perforations have now been added to the J1-1 interval. 
               --     The combined production from the J1-1 and J1-2 intervals is greater than 350 bopd. 

Arbuzovskoye Well A-214 - Horizontal Production Well

               --     Initial horizontal well with record 931 m net pay. 
               --     Current rate of production in excess of 750 bopd with 5 % water. 

Arbuzovskoye Well A-215 - Horizontal Production Well

               --     Recently completed horizontal well with 809 m net pay. 
               --     Current rate of production is 650 bopd with 5 % water. 

Arbuzovskoye Well A-216 - New Deviated Production Well

               --     New well added to programme based on results of initial three wells. 
               --     Spudded on 20 June 2016 
               --     Results anticipated later this month. 

Sibkrayevskoye Well S-374 - Vertical Delineation Well

               --     Spudded on 3 July. 
               --     Results expected in August. 

South Arbuzovskoye Development

As previously announced, the initial well in the programme was the A-213 vertical well. This well discovered oil in the J1-2 interval for the first time at Arbuzovskoye. The well was initially produced in just the J1-2 interval. Since the previous update perforations were added to the J1-1 interval on 14 June. The combined production from the J1-1 and J1-2 intervals in the well is now over 350 bopd which is well above the Company's original expectation of an initial rate of 125 bopd.

As also previously announced, the first horizontal well in the programme was A-214. This well had a record net pay of 931 m for Licence 61. The well is producing approximately 750 bopd and demonstrating positive pressure characteristics.

The second horizontal well, A-215, was spudded on 21 May 2016 and has been successfully completed with a horizontal segment of 1,007 m in the Upper Jurassic J1-1 interval at a depth of approximately -2,457 to -2,475 m TVDSS. Based on log data it is estimated that 809 m of the horizontal section is effective net pay. The A-215 well was brought online on 24 June and the current flow rate is around 650 bopd. The well has cleaned up and is producing about 5% water. The intake pressure in the well is relatively stable, which indicates that additional production capacity may exist.

The pressure data from both the A-214 and A-215 horizontal wells indicates that the wells are pump constrained and could produce at a higher rate; however, the current plan is to keep producing in this mode and monitor the wells to optimise long term production performance. This will lessen the decline rate in the horizontal wells.

The Arbuzovskoye well A-216 was spudded on 20 June 2016. Well A-216 is a deviated (vertical in the reservoir) production well located to the south of well A-213. The well was not in the original firm work programme but has been added based on the good results of the A-213, A-214 and A-215 wells. It provides an additional drainage point on the southern end of the structure and targets the J1-1 and J1-2 intervals as seen in the A-213 well. Core taking in the J1-1 and J1-2 intervals in the well will provide additional data on the reservoir as well as the oil water contact in the J1-2 sandstone. The results of this well should be available later this month.

Production

Current gross production from Licence 61 is about 3,500 bopd (1,750 bopd net to PetroNeft). This represents record production for the Licence area and has resulted from the good results of the initial three wells at Arbuzovskoye, despite the high decline rate encountered at Tungolskoye and the shut-in of the S-373 well for the summer months following the end of the winter road season. The production results thus far at South Arbuzovskoye confirm that while there is some decline, it is not of the magnitude of decline experienced at Tungolskoye. This is due to the excellent reservoir properties and the thickness of the reservoir at Arbuzovskoye as compared to Tungolskoye.

Sibkrayevskoye Development

The S-374 delineation well was spudded on 3 July 2016. This is a delineation well on the southern portion of the field designed to further de-risk the development and move P3 to P2 reserves. All of the necessary studies and approvals are being completed in order to commence development of Sibkrayevskoye in Q1 2017.

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

"Licence 61 production has achieved a record rate of 3,500 bopd due to the successful programme at South Arbuzovskoye. Also, in light of this success, we have added one further well to the programme that is not yet on production. The production reflects both the good reservoir properties at South Arbuzovskoye and our ability to target the most productive parts of the reservoir with horizontal wells. This exceptional technology will help us to economically and efficiently develop the significant reserve base and exploration potential of Licence 61.

In the near term we look forward to completion of the A-216 well at South Arbuzovskoye which will add production and the S-374 delineation well at Sibkrayevskoye which will further define the field with the objective of moving P3 to P2 reserves."

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 
------------  --------------------------------- 
 Atm           Atmospheres of pressure, metric 
                pressure unit. 
------------  --------------------------------- 
 bopd          Barrels of oil per day 
------------  --------------------------------- 
 M             metres 
------------  --------------------------------- 
 MD            Measured depth 
------------  --------------------------------- 
 P2 reserves   Probable reserves as defined by 
                the standards of the Society of 
                Petroleum Engineers 
------------  --------------------------------- 
 P3 reserves   Possible reserves as defined by 
                the standards of the Society of 
                Petroleum Engineers 
------------  --------------------------------- 
 TVDSS         True vertical depth subsea 
------------  --------------------------------- 
 

This information is provided by RNS

The company news service from the London Stock Exchange

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July 05, 2016 02:00 ET (06:00 GMT)