PetroNeft Resources production growth across licences exceeds expectations

PetroNeft Resources plc (LON: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, has announced the following operational update.

Highlights

·    Licence 61

o Increase in production performance with 1,847 bopd during January (1,727 bopd January 2020) – up 6.95% year on year.

o Good progress on preparations for fracking program on track with two well program to start during first week in February.

·    Licence 67

o Operations to commence year-round production from the C-4 well at the Cheremshanskoye field on course to commence during second week in February.

o Construction of a road linking C-4 to an all-season road on target for completion in Q2.

Licence 61

Production at Licence 61 has continued to perform strongly in spite of severe cold weather being experienced in the field with temperatures below minus 50 degrees centigrade. To date production for January (up to the 25th January) has increased 6.9% compared to the full January 2020 daily production rate, in spite of L-115 production being taken off line to prepare the well for the fracking program, this has resulted in an approximate loss of 100 barrels of oil in total. We continue to see good production performance particularly from the Lineynoye and Sibkrayevskoye fields as well as a leveling off of the production decline at the Arbuzovskoye field.

Work is progressing on a two well fracking program to start during the first week of February. The first well to be fracked is the L-115 well on the Lineynoye field. The well was previously fracture stimulated when first drilled in 2010 but it was only a relatively small frack of 30 tons as it was limited by logistics with the proppant being helicoptered in. This time we are aiming to carry out a larger 50 ton frack which is more in line with that which achieved such good results on the other Lineynoye PAD 1 wells. The aim of the frack is to investigate if we can improve production from older wells on the field. On success there are a number of other good follow up candidates which can be fracked during the next 2021/22 winter season.  This method of production enhancement offers the opportunity to deliver material production gains at very low cost.

The second well to be fracked is the S-373 well at the Sibkrayevskoye field. This field has performed very well throughout 2020 since we connected it to the central processing facility in Q1 2020. We see similar geology in this field to the wells at PAD 1 in the Lineynoye field where the previous fracking results were excellent. The aim of fracking this well is to increase production but crucially it will also provide information which can lead to an improved understanding of the optimum forward development plan for the field.

Licence 67

At Licence 67 operations are also progressing well. Construction of the road from the C-4 well to the all-season road at the C-3 well location has commenced and is already approximately 30% complete. This road is on schedule for completion by the end of the current winter season and will allow year-round production from the field, thereby providing an additional revenue stream for the Company.

Work on putting the C-4 well on year round production is also progressing with production planned to commence no later than the second week of February. Initially the production will be exported utilising a winter road which is already in place.

In addition to the operations on the Cheremshanskoye field, we are also preparing to mobilise a work over rig to the Ledovoye L-2a well to commence work over of the well during February. The aim is to establish commercial oil flows from the Upper Jurassic J1-1 horizon.  This focus on the Jurassic offers the potential to deliver additional production at relatively low investment levels.  On success we will produce the well for an initial three month period at the same time as working on gaining state reserves approval for the field which on success will enable the well to be on year round production from the end of this year.

David Sturt, CEO PetroNeft commented:

” Our success of achieving production growth across our licences has exceeded expectations and is a testament to the hard work and expertise of our local team.

This is an extremely exciting time for the company.  In the coming weeks, we will continue our low cost but carefully considered programme of operations.  Each of these operations have the potential to increase production and further improve revenues.

Looking forward we hope to be able to report positive news as this program unfolds throughout 2021.”

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