9 Dec 2009 07:00
PetroNeft Resources plc ("PetroNeft" or the "Company")
Operational update
PetroNeft Resources plc owner and operator of Licence 61, Tomsk Oblast, Russian Federation, is pleased to provide an update on its operations.
Highlights:
Nine well development drilling contract awarded
Pipe and equipment moved to staging area south of Licence 61 and welding ahead of schedule
Design of field facilities well advanced
All activities are currently on schedule and all costs to date are within or below original estimates
Drilling Contract
The Board of PetroNeft has agreed to award a contract for the drilling of nine development wells at the Lineynoye oil field in 2010 to Tomskburgneftegaz ("TBNG"). The contract, which was awarded following a competitive tender process, is a fixed price contract and within budget. TBNG's drilling rig is already stored at a river port near Licence 61 and will be mobilised and erected in the first quarter of 2010. Drilling will commence on schedule in April 2010.
In accordance with AIM Rule 13 and IEX Rule 13, the drilling contract is deemed to be a related party transaction as Vakha Sobraliev, a Non-Executive director of the Company, is principal owner of TBNG.
With the exception of Vakha Sobraliev who is involved in the transaction as a related party, the directors consider, having consulted with Davy, the Company's Nominated Adviser and IEX adviser, that the terms of the drilling contract are fair and reasonable insofar as shareholders are concerned.
Pipeline
The transport of the pipe to a staging point south of Licence 61 was completed in late October 2010. The pipeline construction contractor also completed the move of their equipment to this location in early November. The contractor has set up a welding facility and completed the welding of over two thousand 30-metre lengths of pipe thereby reducing significantly the amount of welding that needs to be undertaken during the pipe laying process in the field. This work was completed 3 weeks ahead of schedule.
The next stage of the pipeline construction is to clear the route and lay the pipeline which will commence as soon as the ground is sufficiently frozen to support heavy equipment, which is expected to be by early January 2010.
Field facilities
The detailed design work for the facilities required at the Lineynoye oil field is well advanced and much of the required equipment has been tendered for. To date, all indications are that costs will be within budget. It is expected that all contracts for the various equipment and construction elements of this project will be awarded by the end of January 2010.
Senior management appointments
In November 2009, Valery Solovyev, was appointed to the Group as Chief Engineer. Valery has over 30 years experience in the development of oil and gas fields having held previous positions in companies such as Imperial Energy and Tomskneft. Further senior appointments in the areas of operations and business development are anticipated over the coming months.
Dennis Francis, Chief Executive Officer of PetroNeft Resources plc commented:
"We continue to make encouraging progress toward year-round production in 2010. All activities are currently on schedule and all costs to date are within or below original estimates. We are particularly pleased to welcome Valery Solovyev to PetroNeft and look forward to building our team further during 2010."
For further information, contact:
| Dennis Francis, CEO, PetroNeft Resources plc | +353 1 443 3720 |
| Paul Dowling, CFO, PetroNeft Resources plc | +353 1 443 3720 |
| John Frain/Brian Garrahy, Davy (NOMAD and Joint Broker)
| +353 1 679 6363 |
| Jeffrey Auld/Elijah Colby, Canaccord Adams Limited (Joint Broker)
| +44 207 050 6500 |
| Nick Elwes/Simon Whitehead, College Hill | +44 207 457 2020 |
| Joe Murray/Ed Micheau, Murray Consultants | +353 1 498 0300 |