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Petroneft Resources - Operational Update and Board Changes

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 following:


Operational Highlights


·    Contract awarded and construction commenced on mini oil processing facility on Licence 61, completion due in 2020.


·    Operations commence on Licence 67 with construction of winter road linking the C-4 and C-3 wells to the road and contract awarded for work over rig for the C-4 well work over which will start in January.


Board Changes:


·    Maxim Korobov has elected to resign from the Board. Pavel Tetyakov, the Company's Vice President of Business Development and Daria Shaftelskaya join the board with immediate effect.

Operations Update


Licence 61


On Licence 61, we have signed the contract for the construction of the mini oil processing facility with a Russian manufacturer who have considerable experience building similar facilities within the Tomsk region. The facility has a payback period of less than one year and is predicted to reduce operating costs by at least $1/bbl due to substantially reducing third party fuel purchases.


To increase production, the Sibkrayevskoye field is being placed in year-round production during 2020. Historically the field has produced between 200-250bopd for three months during the winter season when ice roads have enabled the oil to be trucked out. Work has already started on connecting the field to the central processing facility and completion is expected during second quarter 2020. As well as the additional production, having the field in year round production will provide crucial longer term reservoir performance data which will de-risk further development of the field.


Licence 67


As announced earlier, the company plans to place the Cheremshanskoye field (19.26mmbbls C1+C2, approximate to 2P) into production during 2020 by re-entering the C-4 and C-3 well.  Work has already started on this program with the construction of the winter road linking the C-4 and C-3 wells to an all-weather road and the award of the work over rig contract. Construction of the winter road will be complete by the middle of January enabling the work over rig to be mobilised to the C-4 well initially with re-entry of the well expected before the end of January. This will be followed by a testing program and then based on success, an ESP will be placed into the well and then the well will be produced for a two to three month period. On successful completion of this phase, an all-weather road will be built connecting the C-4 well to the all season road which will then enable all year round production. The all season road will be completed by the end of the second quarter 2020.


Board Appointments


As previously guided, Daria Shaftelskaya has been appointed to the board as a non-executive director, she joins the Board with immediate effect. She brings her strong finance background and in addition, being from Tomsk, good regional knowledge.


Maxim Korobov has elected to retire from the board after four years. During this time he has been a considerable asset to the company due to his experience and knowledge, in addition he has continued to provide support through each fund raising, including the most recent one; we wish Maxim well and thank him for his excellent service.


Pavel Tetyakov will also be joining the board with immediate effect as executive director. Pavel has been working with PetroNeft as Vice President, Business Development since 2016. He brings with him considerable experience having worked previously with PetroKazakhstan and involved in the building of Exillon Energy in addition to top management positions in a number of private and public oil companies with operations in Russia.


David Sturt, Chief Executive Officer of PetroNeft Resources plc, commented: 


"Following on from our recent capital raise, I am very pleased that we have been able to accelerate our operational plans on both licence 61 and 67. 2020 is going to be an exciting year for the company as we move forward with plans to start producing oil from Licence 67 at the same time as focusing on an investment plan on Licence 61 which improves operating costs and increasing production without the need to deploy any drilling capital.


I am also delighted that the board has been further strengthened with the appointments of Daria and Pavel. I have successfully worked with Pavel on several projects including building a successful exploration and appraisal program at PetroKazakhstan and building from scratch what became Exillon Energy. Daria will bring additional financial expertise and exceptional local knowledge of operating in the Tomsk region."


David Golder, Chairman of PetroNeft Resources plc, commented: 


"I am pleased to welcome both Daria and Pavel to the board. Their significant experience and knowledge of the Russian Oil Industry will considerably expand the knowledge of the Board. I would also like to take this opportunity of thanking Maxim for his considerable effort over the last four years and his continued support for the business."

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