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(Alliance News) - PetroNeft Resources PLC on Tuesday said production at licence 61 in Tomsk Oblast, Russia is up as a result of an optimised water flood programme and putting the Sibkrayevskoye field on year-round production.

Shares in PetroNeft jumped 29% to 0.74 pence in London in morning trading.

Licence 61 production in July was up 7.8% at 1,589 barrels of oil per day, an average of 17% higher than levels in July 2019.

Production at the Lineynoye field was up 20% year-on-year in July due to optimisation of the water flood programme at the field. This followed a data gathering programme across its field, improving understanding and allowing for improvements in the Pad 1 water flood programme at Lineynoye during the first quarter of 2020.

Moreover, on year-round production, the Sibkrayevskoye field is currently averaging 246 barrels a day with no material decline. PetroNeft is now looking at ways to improve production even more in the next winder season, ending 2021, either though hydraulic fracturing or self more well re-entries.

After success at Lineynoye, PetroNeft is now focusing on the Arbuzovskoye field since the Pad 2 production rate, especially at the A-214 HZ well, has declined significantly in the past two years.

After evaluating reservoir data, the company opted to convert one vertical well to an injector and another to a water source well in the first quarter of this year.

PetroNeft acknowledged that the oil price drop in March and further weakening in April hurt the Russian domestic market where it sells its produced oil. However, starting in May, domestic oil prices began to recover and were at near pre-crisis levels by June.

Chief Executive David Sturt said: "It is extremely encouraging to be able to begin seeing the benefits of the field optimisation programs which started last year with extensive but low-cost data gathering across our well portfolio. This data led approach allows to achieve greater returns from our investments. Being able to stabilise and even increase production without deploying significant capital to expensive drilling is particularly good news and demonstrates the future potential of these fields.

"Looking forward, we are planning to continue improvements which in addition to optimising our water floods may involve techniques such as re-fracking and well re-entries. We believe that these low cost initiatives can deliver real production benefits."

By Anna Farley; annafarley@alliancenews.com

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