Drilling Update – Results of C-4 Well Upgraded

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

 Drilling Update – Results of C-4 Well Upgraded

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 cased-hole testing of the J1-1 and J1-3 intervals of the Cheremshanskoye No.4 (C-4) well in Licence 67 has confirmed the excellent results from the open-hole testing reported on 28 August.

 

Highlights

·         Excellent results of open-hole testing confirmed and upgraded by extensive cased-hole test of the J1-1 and J1-3 intervals. The well productivity from the cased-hole test indicates that the combined intervals should achieve in excess of 450 bopd when produced on an electric submersible pump.

·         The C-4 well proves up the northern half of the Cheremshanskoye field with oil tested from two horizons.

·         The well is the first one drilled with the help of 3D seismic data acquired by PetroNeft in 2014 and is approximately 5km from two previous oil wells which were drilled along the southern boundary of the field (C-1 & C-3 wells).

·         Result has the potential to increase gross reserves by 40 mmbbls (20 mmbbls net to PetroNeft)

 

Licence 67

The C-4 well is located on the northern half of the Cheremshanskoye field in Licence 67. The aim of the well was to prove up the northern extent of the field based on the 3D seismic data. The well was being drilled under the joint venture agreement with our partner for Licence 67, Arawak Energy on a 50:50 basis. The well spudded on 2 August and results of the open-hole testing were reported on 28 September. An extensive cased-hole testing programme has since been conducted for the J1-1 and J1-3 intervals.

Cased-hole test no. 1 of the J1-3 interval was conducted on the perforated interval from 2,644 – 2,655 m MD. The interval was step tested on different choke sizes and pressure regimes. The final natural oil flow rate on a 3 mm choke was 11.1 m3/day (70 bopd). The productivity index is calculated at 0.22 m3/day/atm which translates to about 277 bopd at 200 atm drawdown (typical drawdown expected for an electrical submersible pump).

We then isolated the J1-3 interval from the J1-1 interval and conducted cased-hole test no. 2. The J1-1 interval was perforated from 2,631 to 2,634 m MD. The interval was step tested at different choke sizes and pressure regimes. The final test on a 5 mm choke had a natural oil flow rate of 17.4 m3/day (109 bopd). The productivity index is calculated at 0.15 m3/day/atm which translates to about 189 bopd at 200 atm drawdown.

Assuming the well is completed with just an electrical submersible pump we would expect the combined flow rate of the two intervals to be in excess of 450 bopd. This compares to the combined open-hole prorated test result of 399 bfpd.

The two cased-hole tests combined with the log and core data in the Upper Jurassic are very encouraging. There are currently no reserves booked for the Upper Jurassic at Cheremshanskoye and is the Company estimate that there could be about 40 million bbls of proven and probable reserves in the Upper Jurassic at Cheremshanskoye based on these results (20 mmbbls net to PetroNeft).

The Company is in the process of getting the reserves approved by the State Reserve Committee (GKZ) and reviewing the options for producing the C-4 well on long term test production this winter when the oil can be trucked on winter roads.

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

“We are very pleased to report that extensive cased-hole testing of the C-4 well has confirmed and upgraded the encouraging initial short-term open-hole test results. The test data confirms Cheremshanskoye as a significant oil discovery within Licence 67 with good reservoir properties and excellent flow rates.

As outlined in the H1-2018 results, in order to enhance shareholder value the Company has engaged financial advisers in Russia to test the market and gauge appetite for a potential sale of Licence 61. While we are only in the early stages of this process for L-61, we have seen a high level of interest from a range of well-financed industry players.

Given the good result of the C-4 well, we would now expect a similar high level of interest in Licence 67. The good result of the C-4 well clearly expands the Company’s options for returning value to shareholders.”  

 

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
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.

 

Glossary

API	The American Petroleum Institute gravity, or API gravity, is a measure of how heavy or light a petroleum liquid is compared to water: if its API gravity is greater than 10°, it is lighter and floats on water; if less than 10°, it is heavier and sinks.
bbls	Barrels
Bfpd	Barrels of fluid per day
bopd	Barrels of oil per day
m	metres
MD	Measured depth from the rig floor
mmbbls	Million barrels
Net oil pay	A reservoir or portion of a reservoir that contains producible hydrocarbons.
Spud	To commence drilling a well

 End