2017 Work Programme and Financing agreed with Oil India

March 31, 2017

31 March 2017

PetroNeft Resources plc ('PetroNeft' or 'the Company')

2017 Work Programme and Financing agreed with Oil India

PetroNeft (AIM: PTR) an oil and gas exploration and production company operating in the Tomsk Oblast, Russian Federation, and 50% owner and operator of Licences 61 and 67 is pleased to announce that it has reached agreement with Oil India, its partner on License 61, for the 2017 work programme.

Following the disappointing result of the 10km step out S-374 well at Sibkrayevskoye in 2016 it has been agreed with Oil India, to defer the development of that field pending further appraisal.

In order to further de-risk the field before committing to significant full field development expenditure it has been decided to drill an additional delineation well, S-375, before commencing the full development of the field. The S-375 well will be drilled on the northern structural lobe of the field approximately 2km south of existing wells that contained approximately 10m of net pay. This well will be spudded in Q2-2017 and completed this summer. If successful, it is expected to lead to the development of the Sibkrayevskoye oil field commencing in 2018. Work has commenced to construct the pad for the S-375 well and rig mobilisation is almost complete.   In early 2016 the Board of Oil India approved the provision of 100% of the necessary finance for the first phase of this development up to US$25 million and this approval remains in place.

Oil India have agreed to fund 100% of the cost of the S-375 well by way of a shareholder loan.

Winter test production of the S-373 well thus far in 2017 has been as expected, at about 200 bopd with no water or noticeable decline from the 2016 winter test production.

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

“The S-374 delineation well which was drilled in 2016 was a 10 km step-out to define the upside reserve case of over 100 million bbls.  While the results of the well removed some of the upside from the field we do not feel it significantly changes the current 2P reserves of over 50 million bbls which are already defined by 4 wells in the northern part of the field. 

The decision to drill the S-375 well this year will allow one additional well in the Pad 2 area to be drilled before committing to the pipeline and utility line to the Lineynoye Central Processing Facility.   

The amended schedule for developing Sibkrayevskoye is a prudent decision which enables further de-risking of the field following the S-374 well result.  Sibkrayevskoye remains a very significant field with robust economics at today’s oil prices.

In addition to this well and since the addition of Pavel Tetyakov last year as Vice President of Business Development, we have been able to intensify our efforts to identify and evaluate mergers and acquisitions. We hope to be able to demonstrate progress on this objective during 2017.”

For further information, contact:

Dennis Francis, CEO, PetroNeft Resources plc     

+1 713 988 2500

Paul Dowling, CFO, PetroNeft Resources plc        

+353 1 647 0280

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/Shabnam Bashir, Citigate Dewe Rogerson

+44 207 638 9571

Joe Heron / Douglas Keatinge, Murray Consultants

+353 1 498 0300

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 Guidance Note for Mining and Oil & 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 40 years’ experience in oil and gas exploration and development.