PTR.L Regulatory News (PTR)

PetroNeft Resources plc

25th Nov 2022

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

Company Update

PetroNeft (AIM: PTR) an oil & gas exploration and production company, operating in the Tomsk Oblast, Russian Federation, 90% owner and operator of Licence 67 and 50% owner and operator of Licence 61, announces the following update.

Licence 67 Cheremshanskoye Development Drilling

The drilling of up to five development wells at the Cheremshanskoye field (Licence 67) has been delayed for the foreseeable future due to inability to secure financing for the program.

Earlier this year the Company announced the award for the provision of drilling services at the Cheremshanskoye field, Licence 67, to the drilling company SSK. The Company has been working with a Russian domestic bank on the potential financing of a significant portion of the costs for this drilling program. Despite encouraging earlier communications, due to the on-going geopolitical situation, the bank is no longer able to provide a loan facility. The Company will continue to look for alternative financing avenues but at the same time recognising that this is likely to be particularly challenging under the current circumstances.

Company's Auditor

BDO, who have acted as the statutory auditor to the Company since 2019, have notified the Company of their intention to resign as their policy is not to engage in any business involving companies with significant operations or assets in the Russian Federation. PetroNeft is currently working to source an alternative auditor in respect of the Company's financial statements for the current year which are due to be published in H1 2023.

Operational Update

All fields at Licence 61 remain shut in due to the on-going legal dispute with Nord Imperial LLC regarding storage and transfer of oil by pipeline from Licence 61 to the Transneft Entry point at Zavyalovo.

Production at Licence 67 from the C-4 well on the Cheremshanskoye field remains stable at 303 bopd without any signs of decline and no water. The well has, since the start of production produced over 170,000 barrels of oil. 

PetroGrand Loan Facility

As previously announced, the redemption date for the PetroGrand loan facility is 15th Dec 2022 with all principal and interest due and payable on that date. We are in ongoing discussions with PetroGrand to investigate all possible options and will keep shareholders aware of any outcomes.

Strategic Review

In its Annual Report and Accounts for 2021, published on 29 September 2022, the Company highlighted the increasing challenges facing the Company due to the continued Ukrainian-Russian conflict and the consequent international sanctions directed at leading Russian financial institutions and the Oil and Gas sector. The difficulties in financing the drilling of development wells at the Cheremshanskoye field combined with the pending resignation of the Company's auditor is further evidence of these challenges.

Consequently, the directors of the Company believe that this is an appropriate time to conduct a review of the strategic options available to PetroNeft and will consider all viable options within the context of the current geopolitical environment so as to maximise value for shareholders (the "Strategic Review"). The Strategic Review will include engagement with all stakeholders and could lead to the full or partial disposal of the Company's assets.

There is no certainty that any changes will result from the Strategic Review. The Company will make further announcements in due course.

This announcement contains inside information within the meaning of the EU Market Abuse Regulation 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.