March 6, 2007
PetroNeft Resources plc
Drilling has commenced on the No. 6 delineation well in the Lineynoye Oil Field.
PetroNeft Resources plc ("PetroNeft" or "the Company"), owner and operator of Licence 61, Tomsk Oblast, Russian Federation is pleased to provide this update on the progress on its 2006/07 three well drilling and seismic programmes.
PetroNeft is pleased to announce that drilling has commenced on the No. 6 well in the Lineynoye Oil Field. Due to unusually warm weather conditions in Western Siberia, there has been some delay in getting all necessary equipment to the drill sites on the Lineynoye and Tungolskoye Oil Fields on Licence 61. As a result, there has been some slippage in the planned time frame of commencement of drilling. However, this is not expected to have any significant impact on the cost of the wells, the timing of final results or the full completion of the three well drilling programme as planned for 2007. To ensure that all wells are completed as planned, a third rig is being mobilised to drill the Lineynoye No. 7 well.
The 2006/2007 Winter seismic programme is proceeding on schedule, with 450 kms, of a total of 540 kms, already acquired. The programme is expected to be completed in mid March.
Lineynoye and Tungolskoye Drilling Programme
The Lineynoye and Tungolskoye Oil Fields were originally found by a Soviet Exploration Company in the early 1970s. Independent Petroleum Consultants, Ryder Scott Company, have calculated the Proved and Probable Reserves of the two fields to be 33.5 million barrels of oil. The two planned delineation wells, Lineynoye No. 6 and Tungolskoye No. 4, are designed to confirm the reservoir data of the 1970s discovery wells and provide further input into a Final Development Feasibility Study, expected to be completed in the 3rd/4th quarter of 2007. The results of the high value exploration well, Lineynoye No. 7, will also provide input into the Final Development Feasibility Study.
Lineynoye No. 6 Well
The Lineynoye No. 6 well on Licence 61 was spudded on March 4th 2007. The principal target horizons for this well are Upper Jurassic sandstone reservoirs, at a depth of 2,390 metres. The total planned depth for the well is approximately 2,750 metres and it is anticipated that the well will be drilled, logged and tested within approximately 70 days of commencement.
Tungolskoye No. 4 Well
Site preparation and mobilisation of a second drilling rig to the Tungolskoye Oil Field has been completed and assembly of the rig is underway. Drilling is expected to commence on Tungolskoye No.4 well in late March/ early April. The principal target horizons for this well are again the Upper Jurassic sandstone reservoirs, at a depth of 2,490 metres. The total planned depth for the well is approximately 3,100 metres and it is anticipated that the well will also be drilled, logged and tested within approximately 70 days of commencement.
Lineynoye West Prospect. Lineynoye No. 7 Well
West Lineynoye, a high impact prospect, is estimated by Ryder Scott to contain Possible Reserves of approximately 67 million barrels of oil. In order to complete the scheduled drilling of this target during the currrent drilling season, a third rig has now been mobilised to the site and is expected to commence drilling in May. Drilling pad preparation is underway on the site. The principal target horizons for this well are again the Upper Jurassic sandstone reservoirs, at a depth of 2,375 metres. The total planned depth for the well is approximately 2,750 metres and it is anticipated that the well will also be drilled, logged and tested within approximately 70 days of commencement.
The 2007/2008 winter seismic programme, to acquire an additional 540 kms of high resolution 2D seismic data, is proceeding as planned. Approximately 450 kms of data has been acquired to date and it is currently expected that this acquisition will be completed by mid March. This programme is designed to upgrade the definition of known prospects on the licence. The results will be used in designing the 2007/2008 Winter drilling programme and will also be used in the Final Development Feasibility Study.
Development Feasibility Study
A Preliminary Feasibility Study for the development of the Lineynoye and Tungolskoye Oil Filelds has now been completed by a Russian Institution. The purpose of the Study is to evaluate the oil reserves and the economics of the oil fields and will be used as part of the approval process required for development in the Tomsk Oblast and the Russian Federation. As stated above, the results of all three wells and some of the current seismic acquisition, will be incorporated into a Final Feasibility Study, which will be used for final approval of the project and for development financing purposes.
Dennis Francis, Chief Executive Officer of PetroNeft Resources plc commented:
"We are delighted, given delays created by the unusually warm weather in Siberia this winter, to have our three well drilling programme back on schedule. Bringing in the third drilling rig should allow us to complete of our planned programme on schedule with no significant increase in cost
We remain excited about the prospects on License 61. The two wells at Lineynoye and Tungolskoye are designed to firm up our reserves base and help prove the production viability of these fields; whilst West Lineynoye is a high impact exploration well that could seriously change our reserves base.
We look forward to updating the market on the results of these wells and how they fit into our overall objective ? exploiting Licence 61 as an oil producing core area?
For further information, contact:
Dennis Francis, CEO, PetroNeft Resources plc
+1 713 988 2500
Desmond Burke, Director Investor Relations, PetroNeft Resources plc
+353 52 53226
John Frain/Brian Garrahy, Davy
+353 1 679 6363
Nick Elwes/Paddy Blewer, College Hill
+44 207 457 2020
The information contained in this announcement has been reviewed and verified by Mr. Dennis Francis, Director and Chief Executive Officer of PetroNeft, for the purposes of the Guidance Note for Mining, Oil and Gas Companies issued by the London Stock Exchange in March 2006. Mr. Francis holds a B.S. Degree in Geophysical Engineering and a M.S. Degree in Geology from the Colorado School of Mines. He has also graduated from the Harvard University Program for Management Development. He is a member of the American Association of Petroleum Geologists and the Society of Exploration Geophysicists. He has over 34 years experience in oil and gas exploration and development.
Forward Looking Statements
This announcement contains forward-looking statements. These statements relate to the Company?s future prospects, developments and business strategies. Forward-looking statements are identified by their use of terms and phrases such as ?believe?, ?could?, ?envisage?, ?potential? ?estimate?, ?expect?, ?may?, ?will? or the negative of those, variations or comparable expressions, including references to assumptions.
The forward-looking statements in this announcement are based on current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by those statements. These forward-looking statements speak only as at the date of this announcement.
4 March 2007