Admission to trading on AIM and IEX

September 27, 2006

Petroneft Resources Plc, an international oil and gas exploration and production company developing hydrocarbon acreage in Tomsk Oblast, Western Siberia, is pleased to announce its admission to the AIM market of the London Stock Exchange and the IEX market of the Irish Stock Exchange.  The Company has raised gross proceeds of €12.2 million (US$15.5 million) by placing 41,480,174  new ordinary shares at a placing price of  €0.295 (£19.8p) per ordinary share, indicating a market capitalisation for the Company of approximately €52.1 million (£35 million).  Davy is acting as nominated adviser, IEX adviser and broker to Petroneft.


Petroneft Resources plc was established for the purpose of acquiring and developing hydrocarbon acreage in Western Siberia.  The Group's principal asset is a 100 per cent interest in Licence 61, an exploration and production licence located in the Tomsk Oblast of Western Siberia.  The Licence was acquired by the Group in 2005 and covers a geographical area of 4,991 km2 in the eastern section of the prolific West Siberian Oil & Gas Basin in Russia. The Licence is valid until 2030 and may be extended based on an approved development plan.


Licence 61 is a Core Area which contains two proven oil fields, referred to as Lineynoye and Tungolskoye and, in addition, has upside reserve potential contained in 25 additional prospects and potential prospects identified by seismic surveys.  The Group's work programmes and activities are focused on the development of this core area through the determination of its full upside reserve potential and the timely monetisation of its existing Proved and Probable reserves, currently estimated at 33.5 million barrels of oil.


Ryder Scott Petroleum Consultants estimates a total reservs level of (P1+P2+P3+P4) of 424m barrels of oil in its competent persons report: illustrating the considerable potential of Licence 61.  The details of these reserve figures are as follows:


*         Lineynoye and Tungolskoye Oil Fields;

Proved (P1) + Probable (P2) =        33.5 million barrels

Possible (P3) =                                 37.1 million barrels

Total (P1+P2+P3) =                            70.6 million barrels


*         Twenty Prospects and Five Potential Prospects (Leads);  

Possible (P3) =                                    253 million barrels

Exploration Resources (P4) =          100 million barrels



The Group's senior management team has substantial experience and knowledge of acquiring, exploring and developing hydrocarbon assets and in particular of acquisition, exploration, development, production and marketing requirements in Russia.


With a geographical focus principally on Russia, the Group intends to continue to identify and evaluate exploration and production acquisition and development opportunities, by taking advantage of the Directors' and senior management's industry relationships, experience and expertise developed in Russia over the last 16 years, in order to develop and diversify the Group's asset portfolio.



Details of placing


Placing Price

€0.295 (£19.8p)

Number of New Ordinary Shares


Directors' Participation in the Placing


Number of Ordinary Shares in issue before Admission


Number of Ordinary Shares in issue following the Placing and Admission


Number of Options in issue on Admission


Number of Warrants in issue on Admission


Number of Ordinary Shares on a fully diluted basis following the Placing


Placing Shares as a percentage of the Enlarged Share Capital


Directors % of Enlarged Share Capital subject to 12 month lock in


Other shareholders' % of Enlarged Share Capital subject to 6 month lock in


Other Shareholder's % of Enlarged Share Capital subject to orderly market arrangement


Estimated cash proceeds of the Placing receivable by the Company (net of expenses)

€11.2 million

Market capitalisation of the Company at Admission at the Placing Price

€52.1 million (£35 million)

AIM / IEX symbol


ISIN for the Ordinary Shares



Dennis Francis, Chief Executive Officer of Petroneft, commented,


"We are delighted to have received such a positive backing from international capital markets for our oversubscribed IPO. These funds will be used to execute a 3 well operational programme designed to prove up our reserves base and take the first step towards production. We look forward to updating the market on our progress.


Tomsk Oblast is a world class petroleum province, with high quality staff and infrastructure in place on the ground. We are confident that our unique combination of experienced international management, top quality local operational staff and a supportive shareholder register gives us every confidence for the future."






Dennis Francis, CEO



Des Burke, Director

+353 87 0506502




+353 1 679 6363


John Frain



Brian Garrahy




College Hill

+44 207 457 2020


Nick Elwes



Paddy Blewer



Further Information


Further information on the Company and the securities subject to Admission are contained in an admission document dated 21 February 2006 (the 'Admission Document').  Terms defined in the Admission Document have the same meaning in this announcement.  Copies of the Admission Document are available to the public, free of charge, at the offices of Davy, Davy House, 49 Dawson Street, Dublin 2, Ireland and the offices of White & Case, 5 Old Broad Street, London, EC2N 1DW, United Kingdom from the date of this document until at least one month after Admission.



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".