Reserves and Operations update

April 2, 2012

2 April 2012

PetroNeft Resources plc

(“PetroNeft” or the “Group” or the “Company”)

Reserves and Operations Update

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


· PetroNeft’s 2P reserves increase 36% to 131.7 mmbbls

o Sibkrayevskoye 49.83 mmbbls

· PetroNeft’s proved reserves (P1) increase 50% to 20.03 mmbbls

o Lineynoye 8.86 mmbbls

· Ledovaya No. 2a well achieves natural flow

· Arbuzovskoye pipeline construction completed; Development Programme on schedule

· Option to advance Sibkrayevskoye development later this year

· Production remains steady at 2,300 bopd

Ryder Scott Report as at 1 January 2012

Independent reserve auditor Ryder Scott has completed an assessment of PetroNeft’s petroleum reserves and resources on Licence 61 as at 1 January 2012. The principal changes from the previous year’s report were the addition of proved and probable reserves at the Sibkrayevskoye and North Varyakhskoye oil fields which were discovered in August and September 2011 respectively. The development drilling results at Lineynoye have confirmed that Lineynoye and West Lineynoye are one continuous oil field. The Pad 2 wells and fracture stimulation results led to a reserve write down in this area of the field, however, this reduction was more than compensated for by the successful exploration programme.

Sibkrayevskoye is the largest discovery made to date by PetroNeft and it is potentially larger than the new reserve booking of almost 50 mmbbls. Prior to drilling, Sibkrayevskoye was estimated to contain 44 mmbbls. The rig that was used to drill the discovery well has been moved to a new location for the purposes of drilling a delineation well which we hope to drill later in the year.

Ryder Scott has not yet updated the reserves in Licence 67, as studies are underway to better define the three new oil pools discovered at Cheremshanskoye, and testing has just been completed at Ledovaya 2a.

As a result of the new report on Licence 61, total proved and probable (2P) reserves net to PetroNeft have risen by 36% from 96.9 mmbbls to 131.7 million bbls. Total proved reserves (P1) have increased by 50% from 13.35 mmbbls to 20.02 million bbls.

Licence 61

The proved, probable and field related possible reserves at Licence 61 as at 1 January 2012 can be summarised as follows:

Oil field

Proved reserves


Proved and Probable reserves


Proved, Probable and Possible reserves (3P)
























North Varyakhskoye








Lineynoye and West Lineynoye are now considered to be one field. Ryder Scott did not review the Exploration prospect inventory in Licence 61 because there were no significant changes in the data.

Licence 67

The field related proved, probable and possible reserves net to PetroNeft at Licence 67 per the Ryder Scott report as at 1 January 2011 can be summarised as follows:

Oil field

Proved reserves


Proved and Probable reserves


Proved, Probable and Possible reserves (3P)




Ledovoye (Upper Jurassic)








Licence 67 – Ledovaya No. 2a testing

Testing of the combined J1-1 + J1-2 interval consisting of 5 m of net oil pay is now complete. The well achieved stabilised natural oil flow of 8.3 m3/day (52 bopd) on a 3 mm choke. The oil is good quality at 34 degree API. We are now in the process of temporarily suspending the well and reviewing our options for further delineation/development of the field.

Licence 61 Arbuzovskoye Pilot Development Programme

The Arbuzovskoye Pilot Development Programme is progressing on schedule and most items that needed to be moved or constructed this winter have already been completed. The production drilling rig has been moved from Lineynoye Pad 3 to Arbuzovskoye Pad 1. Construction of the power line from Lineynoye to Arbuzovskoye has been completed and commissioned. Construction of the 10 km pipeline has been completed, with pressure testing and commissioning commencing this week. Production through this new pipeline from Arbuzovskoye is scheduled to commence in Q2 2012.

Licence 61 - Lineynoye Field Development Programme

Current Group production remains steady at about 2,300 bopd. We are pleased with the water injection response on the Pad 1 wells and have initiated water injection into one well on Pad 2, with additional wells planned in the future.

As previously indicated, a number of studies have been defined that will help us to better understand the disappointing results from the Pad 2 wells. One of these will be a field wide pressure transient test of the field. This will commence when warmer weather allows us to shut-in the wells and not have the flow lines freeze. This data will then be used in the reservoir simulation of the field and to optimize water injection. We will also have an independent expert review the fracture stimulation results. These studies will take at least six months to complete and we believe they will make a significant contribution to ensuring the optimal development and production approach is adopted for current and future projects in Licence 61

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

“The Ryder Scott reserve report reinforces the exploration potential of our licences by recognising material new commercial reserves at Sibkrayevskoye. While additional seismic and drilling will be required to fully define the size of the field, it is currently the largest field discovered by the Company and will be an important element of our future development and production growth plans. We have selected a delineation well location, prepared a drilling pad and moved the drilling rig and supplies to location this winter so that we have the option of advancing the Sibkrayevskoye development later this year. We are also very pleased with the progress of our Arbuzovskoye development where we have been able to accelerate the pressure testing and commissioning of the pipeline.”

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

Richard Slape/Henry Fitzgerald-O’Connor, Canaccord Genuity Limited (Joint Broker)

+44 207 050 6500

Martin Jackson, Citigate Dewe Rogerson

+44 207 638 9571

Joe Murray/Ed Micheau, Murray Consultants

+353 1 498 0300

Qualified person

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 Note for Mining, Oil and Gas Companies issued by the London Stock Exchange in June 2009. 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 35 years experience in oil and gas exploration and development. The technical disclosure in this announcement complies with the SPE/PRMS Standard.

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.



Proved and probable reserves according to SPE/PRMS standards


Proved, probable and possible reserves according to SPE/PRMS standards

API gravity

The American Petroleum Institute gravity, or API gravity, is a measure of how heavy or light a petroleum liquid is compared to water.


Barrels of oil per day




Millions of barrels


Proved reserves according to SPE/PRMS standards


Probable reserves according to SPE/PRMS standards


Possible reserves according to SPE/PRMS standards


Exploration resources according to SPE/PRMS standards