February 10, 2009
Winter Oil Production
PetroNeft has commenced winter oil production, having negotiated favourable crude oil sales agreements for this production with two refineries at Parabel in the Tomsk Region. Recent changes by the government in the methodology of calculating the Mineral Extraction Tax has improved our return from these domestic sales.
Oil is being produced from the L-1, L-6 and L-7 wells and will continue for the remainder of the winter months, while it can be transported by truck to the buyers. The L-6 and L-7 wells are on electrical submersible pumps and the L-1 well is free flowing. None of the production intervals have been stimulated to date. Current production is approximately 660 bopd of high quality 40°API crude oil with no water. Winter production is enabling the Company to gather additional well flow data while providing some revenue.
Dennis Francis, Chief Executive Officer of PetroNeft Resources plc commented:
"We are encouraged by these domestic sales which will allow us to gather additional field production data this winter.
We have been able to increase the flow rates of all of the wells from previous test results, which is very encouraging. This data will help us to design the fracture stimulation programme for the field development, which when implemented with the proper lift system will allow for significantly increased production rates."
For further information, contact:
Dennis Francis, CEO, PetroNeft Resources plc,
+1 713 988 2500
Paul Dowling, CFO, PetroNeft Resources plc
+353 1 4433720
Desmond Burke, Director Investor Relations, PetroNeft Resources plc
+353 52 53226
John Frain/Brian Garrahy, Davy - Nomad and Joint Broker
+353 1 679 6363
Jonathan Marren/Matt Goode, KBC Peel Hunt - Joint Broker
+44 207 418 8900
Nick Elwes/Paddy Blewer, College Hill
+44 207 457 2020
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.