PTR.L Regulatory News (PTR)

20 Dec 2007 07:01

Petroneft Resources PLC20 December 2007 PetroNeft Resources plc Pipeline Sharing Protocol of Intent Signed PetroNeft Resources plc ('PetroNeft' or 'the Company'), is pleased to providethis update on the progress of its operational activities on Licence 61, TomskOblast, Russian Federation. Highlights O Pipeline Sharing Protocol of Intent Signed with Bashneft O Update on Tungolskoye No. 4 Sidetrack Test Bashneft Pipeline Sharing Protocol of Intent Signed PetroNeft is pleased to announce that it's subsidiary, Stimul-T has signed aprotocol of intent which defines the details of an infrastructure sharingagreement with OAO ANK Bashneft, the operator of two Licences with producingfields in the Khanty-Mansiysk Oblast located immediately northwest ofPetroNeft's Licence 61. This agreement will enable PetroNeft to tie-in to the Bashneft pipeline at theLukpaiskaya pumping station under a simplified custody transfer scheme. TheLukpaiskaya pumping station is located only 60 km from the Lineynoye and WestLineynoye Oil Fields. The new route is over flat terrain and no longer requiresa major river crossing. Bashneft will then transport the crude to theAleksandrovskoye (Strezhevoi) custody transfer station where it will enter theTransneft pipeline for export outside of Russia or for domestic sales. Thetariff for this operation will be calculated based on actual costs in proportionto the transferred amount, but will not exceed the Transneft tariff for asimilar pipeline segment. The two companies will now determine the technicalaspects of the tie-in arrangements. This infrastructure sharing agreement is a significant development for theeconomic commercialisation of Licence 61. When compared to the option of theCompany building a 156 km pipeline to the Raskino pumping station to thesouthwest, it will result in significantly reduced pipeline capital expendituresand long term operating expenditures. It is also expected to facilitatecommencing full scale production from Licence 61 in 2009. An important outcome of the Bashneft agreement is that Licence 61 can now bedeveloped in phases from the north. The initial phase will consist of thedevelopment of the Lineynoye and West Lineynoye fields along with a 60 kmpipeline to Bashneft and a simplified custody transfer point. New fieldsdiscovered to the south, including Tungolskoye, will then be developedincrementally in order to optimise the overall economics for the Company. Update on Tungolskoye No. 4 Sidetrack The new access to the Bashneft pipeline system means that emphasis will now beplaced on assessing and developing the northern prospects on Licence 61. Delaysin moving in the materials needed to complete the flow testing of theTungolskoye No. 4 sidetrack well have the potential to inordinately delay the2007/2008 drilling on the West Korchegskaya Prospect. Therefore, the Company hasdecided to commence the disassembly of the Tungolskoye No. 4 drilling rig nowand move it to the West Korchegskaya Prospect, on the planned drilling schedule.The Tungolskoye No. 4 sidetrack test will now be concluded in February, using atruck mounted work-over rig that will be mobilised when winter roads are inplace. Dennis Francis, Chief Executive Officer of PetroNeft commented: "This protocol provides the basis for an excellent long term agreement thatsignificantly benefits both companies. PetroNeft achieves a significant up frontcost savings as well as a favourable long term tariff rate. This agreement, with a much reduced and simplified pipeline route, shouldgreatly assist the Company in meeting its target pipeline production in 2009 asplanned." For further information, contact: Dennis Francis, CEO, PetroNeft Resources plc (Houston)+1 713 988 2500 Paul Dowling, CFO, PetroNeft Resources plc (Dublin)+353 144 33720 Desmond Burke, Director Investor Relations, PetroNeft Resources plc (Ireland)+353 52 53226 John Frain / Brian Garrahy, Davy+353 1 679 6363Damien Mauvais, Natixis Bleichroeder+44 207 220 5184 Nick Elwes/Paddy Blewer/Simon Whitehead, College Hill (UK) +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. 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. Glossary "Bashneft" Joint Stock Petroleum Company - one of the oldest oil and gasproducing companies of Russia - has been in existence since 1932. It is apowerful comprehensive business, providing the whole production cycle from fieldexploration to sales of final products. It currently has over 8,000 employeesand produces about 244,000 bopd with principal operations in Bashkortostan, asemi-autonomous region. The Company is controlled by the government ofBashkortostan. This information is provided by RNS The company news service from the London Stock Exchange