US$30m Bank Facility signed with Macquarie

May 28, 2010

28 May 2010

PetroNeft Resources plc

("PetroNeft" or the "Company")

US$30m Bank Facility signed with Macquarie

Facility provides immediate availability and long term business development support

PetroNeft Resources plc (AIM: PTR), owner and operator of Licences 61 and 67, Tomsk Oblast, Russian Federation, is pleased to provide an update on bank financing.

On 28 May 2010, PetroNeft signed a debt facility with Macquarie Bank Limited ("Macquarie") for up to US$30 million of which US$12 million is available immediately.

Under the terms of the facility, PetroNeft has granted Macquarie 1,000,000 warrants to subscribe for Ordinary Shares at a price of £0.3781 and exercisable over a period of four years. Should more than US$15 million be drawn Macquarie will be entitled to further warrants at prices to be based on the PetroNeft share price at time of drawdown.

The duration of the facility is up to three years.

The new facility replaces the $5 million initial facility signed in March 2010 and is designed to provide both working capital and the flexibility to advance the Group's exploration and development activities on licences 61 and 67 over the coming years.

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

"We are very pleased to have signed this loan agreement with Macquarie Bank. Macquarie's commitment and support as both a leading shareholder and debt provider is a real endorsement of PetroNeft and our exciting assets and we look forward to working with the team at Macquarie for many years to come. This facility will be of material assistance to the Company as we advance our plans for licences 61 and 67 and I look forward to updating shareholders with news of our progress in the coming months."

For further information, contact:

Dennis Francis, CEO, PetroNeft Resources plc

+1 713 988 2500

Paul Dowling, CFO, PetroNeft Resources plc

+353 1 443 3720

John Frain/Brian Garrahy, Davy (NOMAD and Joint Broker)

+353 1 679 6363

Elijah Colby, Canaccord Adams Limited (Joint Broker)

+44 207 050 6500

George Cazenove, Citigate Dewe Rogerson

+44 207 638 9571

Joe Murray/Ed Micheau, Murray Consultants

+353 1 498 0300

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.

Notes to Editors

PetroNeft Resources plc was established in 2005 to develop oil and gas assets in Russia and the Former Soviet Union and was admitted to the London AIM and Dublin IE Markets on 27th September 2006.

The main asset of the Company is a 100% interest in Licence 61, a 4,991 sq km oil and gas licence in the Tomsk Oblast in Russia, held through its wholly owned Russian subsidiary, Stimul-T. The Licence is located in the prolific Western Siberian Oil and Gas Basin and contains four known oil fields, Lineynoye, Tungolskoye, West Lineynoye and Kondrashevskoye, and over 25 exploration Prospects and Leads. In December 2009 the Company announced the acquisition of a second oil and gas licence in the Tomsk Oblast in Russia, Licence 67.

The Board and Management of PetroNeft is made up of highly experienced professionals, including former Marathon Oil Company executives, in the International and Russian Oil Exploration and Development business. The Russian Management team also has extensive local knowledge and experience in the exploration and development of oil and gas fields in the Tomsk Oblast.

Since acquiring Licence 61 in May 2005, the Company has carried out extensive reprocessing and reinterpretation, using modern technology, of over 2,500 line kms of vintage seismic acquired in Soviet times. It has also digitised and reinterpreted the logs of 14 wells drilled on the Licence since 1972. PetroNeft also has acquired over 1,000 line kms of new CDP-2D infill seismic and drilled six new exploration/delineation wells. This new seismic and six well drilling programme fully satisfied the exploration work obligation for the full 25 year licence term.

Reserve estimates on Licence 61 prepared by Ryder Scott as of 1 January 2010 were:

Proved reserves


10.4 million bbls

Proved and probable reserves


70.8 million bbls (P1+P2)

Proved, probable and possible reserves


531.3 million bbls (P1+P2+P3)

PetroNeft has also recently announced a crude oil transportation agreement with Nord Imperial, effective for 25 years, which significantly reduces the various permits and associated approvals required for pipeline construction as well as the costs. The new route, from Lineynoye to Kiev-Eganskoye runs adjacent to the Tungolskoye and Kondrashevskoye oil fields and will create useful synergies for future development phases.

On 21 September 2009 PetroNeft announced a US$27 million fund raising from international institutional investors which fully funds the Phase 1 Development Plan for the Lineynoye and West Lineynoye Fields. PetroNeft expects to have year-round production from the Licence in the third quarter of 2010 with production of 4,000 bopd by the end of 2010. Production from the Phase 1 project is expected to peak at around 12,000 bopd in 2012.