Operations update

November 23, 2012

23 November 2012

PetroNeft Resources plc

(“PetroNeft” or the “Company”)

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 at Licence 61.


· Arbuzovskoye well 109 successfully completed and put into production

· The well is just beginning to stabilise after experiencing flow line problems caused by the very cold weather. We expect the initial flow rate of 100 bopd to increase somewhat

· There is no water production associated with the well

· Arbuzovskoye well 111 drilling ahead

· Group production is currently 2,500 bopd; however, 4 production wells are currently off line for remedial work on pumps

· The 4 off line wells plus well 111 are expected to be all on line by year end.

Licence 61 - Arbuzovskoye Pilot Development Programme

Arbuzovskoye well 109, the third of ten planned new production wells on the Arbuzovskoye oil field, has been successfully completed and brought into production at an initial rate of 100 bopd with no visible water cut.

Due to very cold weather in the field we experienced some early flow line problems with the well when it was cleaning up caused by freezing of the completion water. Well stabilisation is now underway and we expect the well rate to improve somewhat in the coming period. The average production level from the first three wells at Arbuzovskoye is running ahead of initial targets.

Arbuzovskoye well 111 (previously known as location #12), the next well in the drilling sequence, is currently drilling ahead.

Arbuzovskoye contains 2P reserves in excess of 13 million barrels of oil according to independent reserve auditors Ryder Scott and is the Company’s second production development.

Licence 61 - Production

Total oil production, comprising both the Lineynoye and Arbuzovskoye oil fields is currently 2,500 bopd. The rate is reduced due to 4 wells at the Lineynoye oil field being currently off-line while remedial work is carried out on the down-hole pumps. All these wells, along with the Arbuzovskoye 111 well, are expected to be on line before the end of the year.

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

“While well 109 is very economic at this initial flow rate we do expect the rate will improve somewhat as we optimise the well. Importantly, the well is producing 100% oil with no water so we are continuing to confirm our understanding of the size of the field. While some operational challenges and variation in results should always be expected, we look forward to completing further wells in Arbuzovskoye over the coming months as we continue to focus on materially increasing our production profile and cash flows.

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

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

+44 207 523 8000

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.


2P reserves

Proved and probable reserves according to SPE standards


Barrels of oil per day