(Sharecast News) - Russia-focussed oil and gas exploration and production company PetroNeft announced the successful re-entry of the C-4 well on the Cheremshanskoye field in licence 67 on Monday, and the start of oil sales for all oil produced from the licence.
The AIM-traded firm is the 50% owner and operator of licences 61 and 67.
It said it had successfully re-entered the C-4 well, which was flowing naturally at up to 476 barrels of oil per day of good quality 100% oil, from the Upper Jurassic J1-1 and J1-3 reservoirs.
The company said it had negotiated an "attractive" long-term oil sales contract for all oil produced from licence 67.
Around 1,200 barrels of oil had already been sold, and transferred to the refinery, marking the first commercial sales from licence 67.
PetroNeft said the high value barrels were attracting a lower minerals extraction tax (MET) rate.
It said the workover rig was now moving from C-4 to the C-3 well on the southern margin of the Cheremshanskoye field, to test the deeper Jurassic J-14 reservoir.
"We are extremely pleased with the C-4 well re-entry results," said chief executive officer David Sturt.
"The ability for the well to produce good quality oil from the Upper Jurassic reservoirs at such rates without the need for a downhole pump is very encouraging and demonstrates the considerable potential of this field.
"In addition to the successful re-entry, the ability to be able to sign an attractive oil offtake contract at competitive prices and discounted mineral extraction tax rate applicable to this field further enhances the value of oil produced from this Licence."
Sturt said the success of the C-4 well re-entry had demonstrated that carefully chosen, relatively low level investment could add value to the company's portfolio.
"We believe licence 67 contains significant immediate and long term upside potential and look forward to working with partners to continue to unlock this value.
"We are now looking forward to the testing of the C-3 well."
At 0823 GMT, shares in PetroNeft Resources were down 3.45% at 0.7p.
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