Operations update

March 21, 2013

21 March 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 105 successfully completed
    • Initial oil flow rate of 160 bopd, with no water production
  • Successful workover restores production at Arbuzovskoye well 102 to 380 bopd
  • Recent pressure testing of two Arbuzovskoye wells shows normal pressure decline
  • Arbuzovskoye water source well completed, planned pressure maintenance to commence shortly
  • Timing and location of future Arbuzovskoye wells to be determined by response to pressure maintenance programme
  • Total production increased to 2,800 bopd

Licence 61 - Arbuzovskoye Pilot Development Programme

Arbuzovskoye well 105, the sixth well in the current programme, has been successfully tested at an initial rate of 160 bopd with no visible water cut.

Further to last month’s update, pressure testing of two wells at Arbuzovskoye was carried out which indicated that reservoir pressures are in line with expectations based on volumes produced to date. This confirmed that the rapid decline in production experienced in the Arbuzovskoye 102 well in January and February was due to a near-wellbore problem resulting from likely migration of fine grained materials that had plugged the perforations and was not due to problems with reservoir pressure. As a result an underbalanced re-perforation of the Arbuzovskoye 102 well was performed, which successfully removed the flow restrictions in the well and restored production to 380 bopd.

Following the success of this remediation procedure, other Arbuzovskoye wells are currently being examined with a view to re-perforating additional wells in the near term.

A water source well has now been drilled to supply injection water for the planned pressure maintenance programme at Arbuzovskoye. Locations and timing of further production wells will be selected based on the response to the pressure maintenance programme. The objective is to optimise recovery from the field and allow the pressure maintenance system time to get established. It is likely that at least three additional wells will ultimately be drilled from Arbuzovskoye Pad 1 to fully exploit the area.

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 has increased up to 2,800 bopd after successful completion of well 105 and re-perforation of well 102 at Arbuzovskoye.

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

“Development work at Arbuzovskoye has been positive this past month. Not only has the pressure testing of two wells confirmed normal pressure decline for the field in line with production, but the workover of well 102 was successful. We will now implement the planned pressure maintenance programme on the field which will slow production decline and improve recoveries. A similar programme was implemented at Lineynoye field where we had positive results.”

For further information, contact:

Dennis Francis, CEO, PetroNeft Resources plc

+353 1 443 3720

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