Petroneft to seek admission to AIM and IEX Markets

September 25, 2006

Irish registered Petroneft Resources Plc, the international oil and gas exploration and production company currently operating in Tomsk Oblast, Western Siberia is pleased to announce its intention to seek admission to the AIM Market of the London Stock Exchange and the IEX Market of the Irish Stock Exchange, raising $15.5m gross, which is expected to occur in September 2006.  Davy has been appointed to act as Nominated Adviser and Broker to Petroneft.





  • Petroneft, through wholly owned subsidiary "Stimul-T", currently owns 100% of Licence 61, covering an area of 4991 sq kms in Tomsk Oblast, Russian Federation.


  • The Licence is located in the prolific West Siberian oil and gas basin and has the potential to be a significant core production area for the company.   


  • 2 proven oilfields on the Licence identified by State Exploration Enterprises in the 1970's contain 33.54m barrels of oil 2P reserves (Proved and  Probable), and potential additional 37m barrels of oil in P3 (Possible) category of 38° to 40° API quality. - Verified by Ryder Scott competent persons report


  • In addition, considerable exploration upside offered by 20 established prospects and 5 exploration targets that Ryder Scott estimates contain  253m barrels of oil in P3 category and 100m barrels of oil in the P4 (Exploration Resource) category.


  • Total P1+P2+P3+P4 = 424m barrels of oil - as per Ryder Scott CPR


  • Highly qualified Western management team with over 16 yrs Russian hydrocarbons experience with Marathon Oil in Russia, and local Russian management with over 30 years experience in the Tomsk Oblast.


Placing - Raising $15.5m to fund operations:


  • On Admission Petroneft will have more than sufficient funds to cover its 2006/2007 programme


  • Full exploration and development schedule planned including:

*         2 wells to be drilled during 2006/07 season on established oilfields in order to further define reservoir parameters and production rates.

*         Production feasibility study underway to optimise field and export infrastructure design.

*         One high value exploration well to be drilled during 2006/07 season on the West Lineynoye Prospect estimated to contain  66.57m bls of oil

*         Seismic survey -500 kms of high resolution 2D seismic to be shot primarily in southern part of Licence as infill on already reappraised vintage seismic data. This will be combined with 515 kms of 2D seismic acquired last season to give a consistent basis for target interpretation over the total Licence area and identification of new prospects. - Approximately 2,650 line kms of archived data has already been reprocessed.





  • Grow reserves base through strategic field development


  • Create positive cash flow through early production


  • Determination of full upside potential of Licence - creating a core area for the company by exploration, including already established prospects on the Licence.


  • Assessment of new opportunities in the region, including acquisitions




Dennis Francis, CEO of Petroneft commented,


"The proposed AIM and IEX admission is a major step in the development of Petroneft and will provide us with the necessary funding flexibility to execute our work programmes.


We are fortunate to have acquired a Licence containing a very large area in the prolific West Siberian oil and gas basin.  The Licence already contains two existing oil fields along with a significant amount of low risk exploration potential.     


We will now look to develop Licence 61 as a "core area" through the determination of its full upside reserve potential and the timely monetisation of its existing Proved and Probable reserves. 


The 2006/07 winter season will be a busy one for us, with a number of demanding and value adding work programmes taking place. We will drill two delineation wells and one high impact exploration well;  continue seismic and exploration activities in addition to preparing a development plan for the Lineynoye and Tungolskoye fields by summer 2007.


Our operations are located in the Tomsk Oblast which is a significant centre for higher education with ready access to high quality oil field services and staff.


When considering the exploration upside of Licence 61 in addition to its Proved and Probable reserves, combined with our highly experienced international and local management, we believe that we have every reason to feel very confident about Petroneft's future.



                                                                                                                                                        September, 2006





Dennis Francis, CEO


Des Burke, Director




John Frain


College Hill


Nick Elwes


Paddy Blewer





Biographies of key personnel


G. David Golder (aged 58) Non-Executive Chairman

Mr Golder has over 36 years' experience in the petroleum industry and most recently was Senior Vice President of Marathon Oil Company ("Marathon") until his retirement in 2003.  From June 1996 to 1999, Mr Golder was seconded from Marathon to Sakhalin Energy Investment Company where he was Executive Vice President - Upstream. Located in Moscow, he managed all upstream activities which focused on the oil development and company infrastructure aspects of the Sakhalin II Project onshore and offshore Sakhalin Island. In addition, he managed the planning and implementation of the US$650 million development of the Piltun-Astokhskoye oil field and associated infrastructure. Mr Golder was Co-Chairman of the Joint Supervisory Board which oversaw the preparation and negotiation of the Sakhalin II Production Sharing Agreement. Mr Golder is currently President of David Golder Consulting, LLC and a member of the Society of Petroleum Engineers. He has a BSc degree in Petroleum & Natural Gas Engineering from Pennsylvania State University and has completed the Program for Management Development at Harvard University.


Dennis Francis, (aged 57) Chief Executive Officer

Mr Francis has over 35 years' experience in the petroleum industry and was with Marathon Oil Company for 30 years. He started work with Marathon as a geologist/geophysicist and held various international positions. In 1990, Mr Francis became USSR/FSU task force manager responsible for putting together a special task force to develop new opportunities for Marathon in Russia. Marathon and its partners ultimately won the first Russian competitive tender, which was to develop the Sakhalin II Project offshore Sakhalin Island. Mr Francis managed the progression of this project within Marathon. He represented Marathon as shareholder and was a director on the board of Sakhalin Energy Investment Company during the Phase I Project Development. He was also a member of the joint supervisory board with oversight responsibility for the Sakhalin II Production Sharing Agreement. He was a recipient of the Governor of Sakhalin Award for his efforts associated with the Sakhalin II Project and also managed Marathon's acquisition of the Khanty Mansiysk Oil Company in 2003. Mr Francis is a member of the American Association of Petroleum Geologists and Society of Exploration Geophysicists. He has a BSc degree in geophysical engineering and a MSc degree in geology both from the Colorado School of Mines. He has also completed the Program for Management Development at Harvard University.


Dr David Sanders, (aged 57) Vice President and General Legal Counsel

Dr Sanders is an attorney of law and has over 30 years experience in the petroleum industry, including 15 years of doing business in Russia.  In 1988, Dr. Sanders joined Marathon Oil Company where he analysed and reviewed joint venture agreements for worldwide production until his assignment in 1991 to the negotiating team for the Sakhalin II Project in Russia. In 1994, he was seconded for one year as an attorney to Sakhalin Energy Investment Company in Moscow. He then provided commercial guidelines and transactional analysis of numerous Russian projects to Marathon's CIS Joint Ventures Group and later became the lead negotiator for Russian projects in Marathon's Business Development-Commercial & Negotiations Group. Dr Sanders has a degree in electronics from Pennsylvania Institute of Technology, a liberal arts degree from the University of Houston and a doctorate of jurisprudence from South Texas College of Law. He is a member of the State Bar of Texas and of the American Bar Association.


Desmond Burke, (aged 59) Director of Planning and Investor Relations

Mr Burke has over 30 years of experience as an exploration geologist and as an executive of publicly quoted companies in Ireland, Canada and Australia. From 1983 to 1993, he was managing director of Burmin Exploration and Development plc ("Burmin"), a company that was admitted to trading on the Exploration Securities Market (`ESM') of the Irish Stock Exchange in 1987. During that period Mr Burke was also president of Aranlee Resources Ltd, Burmin's Canadian subsidiary, listed on the Vancouver Stock Exchange, and managing director of Burmin's Australian subsidiary, Ashling Resources NL. Following the merger of Burmin with Sipa Resources NL, an Australian company, in 1994, Mr Burke became a director of Sipa. From 1995 to 2000, Mr Burke was managing director of Ormonde Mining plc, which was admitted to trading on the ESM in 1996 and on the Vancouver Stock Exchange in 1998. Mr Burke graduated from University College Dublin with a BSc in geology, botany and zoology and an MSc in mineral exploration from the University of London Imperial College.


Thomas Hickey, (aged 38) Non-Executive Director

Mr Hickey is a chartered accountant and has been Chief Financial Officer and a director of Tullow Oil plc since 2000. Prior to joining Tullow Oil plc he was an Associate Director of ABN AMRO Corporate Finance (Ireland) Limited, which he joined in 1995. In this role, he advised public and private companies in a wide range of industry sectors in the areas of fund raising, stock exchange requirements, mergers and acquisitions, flotations and related transactions. Mr. Hickey has a degree in Commerce from the University College Dublin and a Fellow of the Irish Institute of Chartered Accountants.


Vakha A. Sobraliev, (aged 52) Non-Executive Director

Mr Sobraliev has over 30 years experience operating and managing energy service companies and state operating units exploring for and exploiting oil resources in the Western Siberian Oil and Gas Basin. Mr Sobraliev is currently a shareholder and General Director of  Tomskburneftegaz, LLC an oil and gas well drilling and services company operating in Western Siberia. This company owns over 15 exploration and production drilling rigs and associated support equipment and mechanical repair facilities. From 1975 to 2000, Mr Sobraliev worked for Tomskneft and Strezhevoy Drilling Boards in various drilling and economic capacities including chief engineer and chief accountant. He has degrees in mining engineering and economics from Tomsk Polytechnic Institute and the Tomsk State University respectively. Mr Sobraliev is a resident of Tomsk, Russia.



Senior Management


Alexey Balyasnikov (aged 61) General Director of Stimul-T

Mr Balyasnikov has over 32 years of experience in the Russian oil and gas industry. He worked for Marathon in various capacities, including as head of Marathon's representative office in Moscow, from 1990 to 2004. Most recently he has worked for Petroneft LLC on numerous projects including under contract to Foster Wheeler Energy LTD as Russian Project Manager of a large due diligence project for TNK-BP in Western Siberia. Prior to joining Marathon, Mr Balyasnikov was a senior geophysical researcher for the Moscow Research Institute.  Mr Balyasnikov has a degree in geophysics from St. Petersburg University. He is a native Russian speaker who is fluent in English.


Alexander Frenovsky (aged 58) Executive Director of Stimul-T

Mr Frenovsky, a former general director and chief engineer of JSC Tomskneftegazgeologia, the former Russian state enterprise that discovered and delineated the oil and gas fields in the Tomsk Region. Mr Frenovsky has over 34 years' experience in the oil industry and has received a state medal "For Development of the Subsurface and Oil and Gas Complex of West Siberia" and the "Merited Worker of Geological Exploration" badge of honour. He participated in the discovery of fields in the Tomsk Region and took part in the development of  15 of the oil fields. Mr Frenovsky graduated in 1971 from the Oil University in Ufa, Russia, with a specialisation in the "drilling of oil and gas wells".


Dr Nikolay Karapuzov (aged 61) Chief Geologist and Geophysicist of Stimul-T

Dr Karapuzov was chief geophysicist/chief geologist of JSC Tomskneftegazgeologia, where heworked for 35 years and directly participated in the discovery of 17 oil fields in the area.  Dr Karapuzov has been awarded the title "Honourable Geologist of Russia" by the Russian government for his contribution to the development of the subsurface in Tomsk Region. Dr Karapuzov graduated from Voronezh State University in 1970 with specialisation in "geophysical methods of prospecting and exploration of hydrocarbons".