PTR.L Share News (PTR)

(Sharecast News) - Russia-focussed oil and gas exploration and production company PetroNeft Resources announced the start of year-round production from the Sibkrayevskoye field in licence 61 on Wednesday, following the connection of the field to the central processing facility.
The AIM-traded firm said it had completed the construction of a 26 kilometre line from the Sibkrayevskoye field to the facility, which was now operational.

It said the line would enable the field to produce throughout the year, without the need for expensive trucking.

Production from the Sibkrayevskoye field had historically only occurred during the winter season, when oil could be trucked along ice roads to the central processing facility at Lineynoye.

During that time, production from the two producing wells, being S-373 and S-375s, averaged between 250 and 300 barrels of oil per day.

PetroNeft said that, in addition to increased production and cash flow, the ability to produce throughout the year would provide "valuable" long term reservoir performance data.

That information would be used to de-risk the forward investment strategy for the field.

It explained that its technical review last year revealed that the reservoir at Sibkrayevskoye was a complex channelised system, with thick channels in the J1-2 sands that were producing in wells S-373 and S-375s.

Those types of channels could be visualised on 3D seismic data in other fields in the region, so future development of the field would involve acquisition of such seismic data, which would enable the company to better target the channel systems.

That, the board said, would reduce the risks of encountering poor reservoir quality zones in future development wells.

PetroNeft said it would be evaluating whether to acquire 3D seismic data once it had sufficient longer term production data from the two wells currently producing.

The directors said that, while they were "very pleased" with the completion of the project on schedule and "significantly" under budget, it was monitoring the ongoing turbulence in the energy sector caused by recent declines in the price of oil, the devaluation of the Russian ruble, and the worldwide effects of the Covid-19 coronavirus pandemic.

It said it was continually evaluating all possible ways to cut costs, manage or defer capital projects, while maintaining a "safe and secure" environment for its employees in its offices and field operations.

"This is a significant achievement for the company, not only did we manage to build the pipeline during very challenging operational conditions, but we also achieved it well within budget," said chief executive officer David Sturt.

"The performance data from these two wells is going to provide vital reservoir data which will help to de-risk further capital allocation to this asset, especially now that we have an improved understanding of the geology of the field.

"This investment, combined with the recent successful re-entry of the c-4 well, demonstrates the company's ability to implement low cost but highly operationally effective solutions to the development and optimisation of its resource base, despite wider industry challenges."

At 1500 BST, shares in PetroNeft Resources were down 4.76% at 0.5p.