PTR.L Regulatory News (PTR)

29 May 2007 07:02

Petroneft Resources PLC29 May 2007 PetroNeft Resources plc Operational Update PetroNeft Resources plc ('PetroNeft' or 'the Company'), 100% owner of Stimul-Twhich is the sole owner and operator of Licence 61, Tomsk Oblast, RussianFederation is pleased to provide this update on the progress on its 2006/07three well drilling programme. Lineynoye No. 6 Well The Lineynoye No. 6 well on Licence 61 was spudded on 4 March 2007 and reachedTotal Depth on 14 April. Initial petrophysical analysis, released on 24 April,confirmed the presence of hydrocarbons in the Upper Jurassic J1 sandstone in twostratigraphic units (J11 and J12). Flow testing of the well was conducted overa 13 metre gross perforated interval (-2,410 to -2,413 metres and -2,419 to-2,429 metres subsea). During initial testing the well flowed oil to the surfaceat a stabilised rate of 100 barrels per day on a 3 mm (1/8th inch) choke with aflowing tubing pressure of 118 pounds per square inch. The oil is high qualitywith a density of 0.805 g/cm3 (44 degrees API). The well flowed oil to surface without stimulation or any artificial lift andwill now be suspended as a future production well. The reservoir was damagednear the wellbore, as the drilling contractor experienced mechanical problemswhile cementing the production casing adjacent to the oil bearing reservoir.When put on production the well will be stimulated and matched with anelectrical submersible pump and will produce at a significantly highercommercial rate. As previously reported, the well confirmed the structural interpretation priorto drilling but also lowered the field wide oil water contact to -2,430.5 metres(subsea) or below. This is at least 10 metres below the previous conditionaloil water contact for the field and when integrated with new seismic dataacquired this winter, provides the potential for a modest reserve upgrade inrespect of the Lineynoye Field. Lineynoye and Tungolskoye Drilling Programme The current appraisal drilling programme which comprises two wells, LineynoyeNo. 6 and Tungolskoye No. 4) is designed to confirm prior reservoir data in theLineynoye and Tungolskoye fields and will provide further input into a FinalDevelopment Feasibility Study. The programme also includes a high impactexploration well, Lineynoye No. 7, on the West Lineynoye Prospect. Theseresults will also be incorporated into the Final Development Feasibility Studyexpected to be completed in late 2007. Tungolskoye No. 4 Well The Tungolskoye No. 4 well was spudded on 16 May 2007. The principal targethorizons for this well are Upper Jurassic sandstone reservoirs starting at adepth of -2,490 metres. The total planned depth for the well is approximately-3,100 metres. The well is currently drilling at a depth of -1,920 metres. Itis anticipated that the well will be drilled, logged and tested withinapproximately 70 days of commencement. Lineynoye West Prospect. Lineynoye No. 7 Well West Lineynoye, a high impact prospect, is estimated by Ryder Scott to containPossible Reserves of approximately 67 million barrels of oil. A third rig whichwas mobilised to the site for this well is currently being assembled and shouldcommence drilling in June. The principal target horizons for this well are againthe Upper Jurassic sandstone reservoirs starting at a depth of -2,375 metres.The total planned depth for the well is approximately -2,750 metres and it isanticipated that the well will also be drilled, logged and tested withinapproximately 70 days of commencement. Dennis Francis, Chief Executive Officer of PetroNeft Resources plc commented: 'We are pleased to announce positive results for the Lineynoye No. 6 flowtesting. We have established natural flow of high quality oil to the surfacewithout stimulation or artificial lift and this provides positive support forour ongoing Feasibility work. Once the well is effectively stimulated andequipped with an electrical submersible pump it will be capable at producing ata significantly higher rate. The well has also established a lower oil watercontact for the field which should lead to a modest increase in the fieldreserves once all of the new seismic data has been integrated.' For further information, contact: Dennis Francis, CEO, PetroNeft Resources plc+1 713 988 2500 Desmond Burke, Director Investor Relations, PetroNeft Resources plc+353 52 53226 John Frain/Brian Garrahy, Davy+353 1 679 6363 Nick Elwes/Paddy Blewer, College Hill+44 207 457 2020 The information contained in this announcement has been reviewed and verified byMr. Dennis Francis, Director and Chief Executive Officer of PetroNeft, for thepurposes of the Guidance Note for Mining, Oil and Gas Companies issued by theLondon Stock Exchange in March 2006. Mr. Francis holds a B.S. Degree inGeophysical Engineering and a M.S. Degree in Geology from the Colorado School ofMines. He has also graduated from the Harvard University Program for ManagementDevelopment. He is a member of the American Association of Petroleum Geologistsand the Society of Exploration Geophysicists. He has over 34 years experiencein oil and gas exploration and development. Glossary of Key Technical Terms J11 and J12 Sandstones - Stratigraphic units in the top part of the VasyuganFormation of Upper Jurassic age in the West Siberian Basin. The VasuganFormation underlies the Bazhenov Formation and the J11 and J12 sandstones arenormally of reservoir quality in the region with sufficient porosity andpermeability to store and transmit hydrocarbons. Oil Water Contact - A bounding surface in a reservoir above which predominatelyoil occurs and below which predominately water occurs. Stimulation - A treatment performed to restore or enhance the productivity of awell. Stimulation treatments fall into two main groups, hydraulic fracturingtreatments and matrix treatments. Fracturing treatments are performed above thefracture pressure of the reservoir formation and create a highly conductive flowpath between the reservoir and the wellbore. Matrix treatments are performedbelow the reservoir fracture pressure and generally are designed to restore thenatural permeability of the reservoir following damage to the near-wellborearea. Artificial Lift - Any system that adds energy to the fluid column in a wellborewith the objective of initiating and improving production from the well.Artificial-lift systems use a range of operating principles, including rodpumping, gas lift and electrical submersible pumps. Forward Looking Statements This announcement contains forward-looking statements. These statements relateto the Company's future prospects, developments and business strategies.Forward-looking statements are identified by their use of terms and phrases suchas "believe", "could", "envisage", "potential" "estimate", "expect", "may", "will" or the negative of those, variations or comparable expressions, includingreferences to assumptions. The forward-looking statements in this announcement are based on currentexpectations and are subject to risks and uncertainties that could cause actualresults to differ materially from those expressed or implied by thosestatements. These forward-looking statements speak only as at the date of thisannouncement. This information is provided by RNS The company news service from the London Stock Exchange