Operations update

February 8, 2013

8 February 2013

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, provides the following update on its operations at Licence 61.


· Arbuzovskoye well 112 successfully completed

· No water production associated with the well

· Initial oil flow rate of 140 bopd, well presently shut-in for pressure build up testing

· Well 105 currently drilling ahead

· Production from two Arbuzovskoye wells temporarily reduced by c300 bopd due to mechanical issues; expected to be fixable by workover or pressure maintenance

· Total production running at 2,600 bopd; excludes 400+ bopd potential from well 112 and the two mechanically reduced Arbuzovskoye wells

Licence 61 - Arbuzovskoye Pilot Development Programme

Arbuzovskoye well 112 has been successfully tested at an initial rate of 140 bopd with no visible water cut. The well is currently shut-in for long term pressure build up testing before it is put into long-term production.

Arbuzovskoye well 105, the next well in the drilling sequence, is currently drilling ahead.

Well 112 is the fifth new production well in the Arbuzovskoye oil field and to date each well has displayed little or no visible water cut. Overall, the average initial production rates from the first five wells in the programme have exceeded targets of 150-200 bopd per well.

This winter, the Company has faced unusually extreme temperatures at Licence 61, reaching as low as -49 degrees Celsius, which has slowed operations significantly.

In recent weeks, the Company has encountered mechanical production issues at Arbuzovskoye which have impacted on production rates in two wells. The reduced output may be due to migration of fine grained materials that are gradually plugging the well bore which can be rectified with a simple workover. We are also investigating possible pressure depletion in the reservoir, which can be addressed with a planned pressure maintenance programme. The net impact is a reduction of overall production by 300 bopd. The pressure build up test of the 112 well should assist in determining which is the more likely cause of the reduced rates and we will factor the results of this into future workover and water injection plans.

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 field being developed.

Licence 61 – Production

Total oil production, comprising both the Lineynoye and Arbuzovskoye oil fields is currently 2,600 bopd. This rate does not include any production from well 112 which is currently shut-in for long term pressure build-up testing, or the 300 bopd currently lost from the two Arbuzovskoye wells.

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

“The initial flow rate on well 112 is encouraging and the fact that there is no water production bodes well. We continue to delineate the field and hope to alleviate the issues with the two Arbuzovskoye wells in the coming weeks. We also look forward to completing further wells in Arbuzovskoye and implementing the planned pressure maintenance programme over 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

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

+44 207 523 8000

Martin Jackson, CitigateDewe 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