PetroNeft signs Turnkey Drilling Contract for Three Wells in 2006/2007 Winter season

Announcement

PetroNeft signs Turnkey Drilling Contract for Three Wells
commencing in 2006/2007 Winter Season

PetroNeft Resources Plc's wholly owned Russian subsidary LLC "Stimul-T" today signed a turnkey drilling contract with LLC  "Nizhnevartovskservis"  to drill three wells next winter on its 100 % owned License 61 (Tungol) in the Tomsk Region.

Under the terms of the contract two Russian exploration drilling rigs (BU 3D-76) will be mobilized to the Tungolskoye and Lineynoye field areas this winter.  This will allow the company to commence drilling operations earlier this coming winter and permit using two drilling rigs rather than three to carry out the planned three well exploration and delineation program.

Two delineation wells are planned on the Lineynoye and Tungolskoye oil fields to confirm the reservoir properties of the early 1970's Soviet discovery wells on the two fields.  A recent report by Ryder Scott, Petroleum Consultants, has attributed proved and probable reserves of 27.8 million barrels of oil to the Lineynoye and Tungolskoye oil fields.  One additional exploration well is planned on a significant exploration prospect in the Lineynoye area.  

Mobilization of the rigs to the drilling sites will commence immediately with rig building operations starting in October/November 2006.   Drilling will start in December 2006 with completion of all wells planned by July 2007.

Commenting on the contract, PetroNeft CEO, Dennis Francis noted:

"This is an important contract for PetroNeft as it locks up two drilling rigs in a tightening market and helps to ensure that our planned activities are completed on time next year.  Importantly, we also save significantly on mobilization costs and reduce the complexity of our operations by eliminating one drilling rig."