Operational Update

May 17, 2007

PetroNeft Resources plc

Operational Update


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 programme and related field development planning.

Lineynoye and Tungolskoye Drilling Programme

The Lineynoye and Tungolskoye Oil Fields were originally found by a Soviet Exploration Company in the early 1970s.  The current appraisal drilling programme, which comprises two wells, is 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 be incorporated into the Final Development Feasibility Study.

Tungolskoye No. 4 Well
The Tungolskoye No. 4 well on Licence 61 was spudded on May 16, 2007.  The principal target horizons for this well are Upper Jurassic sandstone reservoirs starting at a depth of 2,490 metres. The total planned depth for the well is approximately 3,100 metres.  It is anticipated that the well will be drilled, logged and tested within approximately 70 days of commencement.

Lineynoye No. 6 Well

The Lineynoye No. 6 well on Licence 61 was spudded on March 4, 2007.  Results of the initial petrophysical analysis were released on April 24, 2007, where oil was confirmed in the Upper Jurassic J1 sandstone reservoir interval in two stratigraphic units.  Flow testing of this well is currently in progress and results will be published as soon as they are available (potentially within the next couple of weeks).

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. A third rig which was mobilised to the site for this well is currently being assembled and is now expected to commence drilling in June. The principal target horizons for this well are again the Upper Jurassic sandstone reservoirs starting 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.

Development Planning

Pipeline Design, Survey and Approvals Contract

On May 7, 2007, PetroNeft entered into a contract with "ETC Service" LLC for the design, survey and approval of an export pipeline from the Lineynoye and Tungolskoye fields to the Transneft pipeline at the Raskino pumping station.  The contract also includes the design and approvals for the custody transfer point at the Transneft regional pipeline tie-in point.  The award of this contract is a critical step in the ultimate development and commercialisation process in respect of current and potential future discoveries on Licence 61. PetroNeft is committed to an early production date to provide positive cashflow and add value to shareholders.


Dennis Francis, Chief Executive Officer of PetroNeft Resources plc commented:

'We are pleased to have spudded the second well in our three well drilling program and look forward to announcing the results of the Lineynoye No. 6 flow testing program in the near future.  In parallel with the ongoing drilling and technical work, the signing of the Pipeline Design, Survey and Approvals Contract maintains the Lineynoye and Tungolskoye Field Development Project on schedule for first production starting in 2009." 

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.