PTR.L Regulatory News (PTR)

14 Aug 2007 07:01

Petroneft Resources PLC14 August 2007 PetroNeft Resources plc Operational Update PetroNeft Resources plc ('PetroNeft' or 'the Company'), 100% owner of Stimul-T,which is the sole owner and operator of Licence 61, Tomsk Oblast, RussianFederation, is pleased to report an oil discovery with its Lineynoye No. 7exploration well on the West Lineynoye Prospect, based on the results of coredata and initial log interpretation. This is the third well drilled in what hasbeen a successful drilling campaign this year in Licence 61. • Two metres of net oil pay was confirmed in a sandstone reservoir in the Upper Jurassic J1 interval from -2,395.5 to -2,397.5 metres subsea . This confirms the oil test in the same interval in the Lineynoye No. 5 well drilled in the 1974. • The data indicates a 22 metre gross oil column in the J1 interval at this location and indicates that the structure is filled with oil to the spill point. • The J1 interval will now be flow tested and the results will be reported as soon as they are available. Lineynoye No. 7 is the last well to be drilled in this year's drillingprogramme. All three wells have encountered hydrocarbons and confirmed theCompany's structural interpretation of the Licence area: • The Lineynoye No. 6 appraisal well has 11.2 metres of net oil pay and has been successfully tested at a stabilised flow of 100 bopd on a 1/8th inch choke. This well will be put on pilot production/long term flow test this winter with the oil being sold to a local Tomsk refinery. The well also lowered the oil water contact (owc) for the Lineynoye Field at least 10 metres which is likely to lead to a modest reserve upgrade for the field. • The Tungolskoye No. 4 appraisal well has 15 metres of net oil pay based on the core data and independent log interpretations. This represents the best reservoir interval encountered of the 17 wells drilled in the block to date. However, the Company has not to date achieved a representative flow test of this interval due to mechanical problems. The well will now be sidetracked to re-access and fully test the relevant reservoir interval. This process should take about 60 days including mobilisation of necessary equipment and materials. Based on the wire line log and core data from this well, and the historic data from the Tungolskoye No. 1 well which tested 332 bopd from the same interval in 1973, we are confident of a positive result. 2007/08 Exploration and Appraisal Programmes The results of this year's drilling programme, along with the seismic programmesundertaken over the last two years have already been taken into account inplanning next year's three well drilling programme. This three well programme,which is expected to commence in February/March 2008, will seek to furtherdelineate the newly discovered West Lineynoye Oil Field and to drill two lowrisk exploration prospects in the Tungolskoye-Lineynoye oil productive fairway.These two prospects, Korchegskaya and West Korchegskaya, are estimated tocontain about 50 million barrels of possible reserves. These wells will bedrilled under a turnkey contract utilising the three drilling rigs currentlyactive or located in Licence 61. The necessary materials for these wells arecurrently being moved to the Negotka staging area by river barge and will bemoved to the well locations when winter roads are in place later this year. Development Planning Once all of the well data has been analysed, both internally and by outsideconsultants SNIIGMS and Ryder Scott, it will be used to update the currentfeasibility study for field development which will then serve as a basis forfinancing the field development. The export pipeline survey from the Lineynoye and Tungolskoye fields to theTransneft pipeline at the Raskino pumping station is currently underway. Dennis Francis, Chief Executive Officer of PetroNeft Resources plc commented: "We are delighted with the results of this year's three well drilling programme. Not only have we further delineated the Lineynoye and Tungolskoye Oil Fields,but we have made an exciting new oil field discovery at West Lineynoye. Whilewe will need to sidetrack the Tungolskoye No. 4 well in order to get arepresentative flow test, we are confident in the oil interval and anticipate apositive result in due course. Each of these results represents a significantstep forward in the commercialisation of Licence 61 and are an importantcomponent of PetroNeft's long term strategy The drilling results have further enhanced our understanding of the reservoirdistribution in Licence 61 and have already been factored into next year'sthree well drilling programme in order to reduce risk." For further information, contact: Dennis Francis, CEO, PetroNeft Resources plc+7 3822 515772 Desmond Burke, Director Investor Relations, PetroNeft Resources plc+353 52 53226 John Frain / Brian Garrahy, Davy+353 1 679 6363 Damien Mauvais, Natixis+44 207 220 5184 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 Bazhenov Formation - Organic rich shale of Upper Jurassic age that is both amajor source rock for oil and cap rock in the West Siberian Oil and Gas Basin.The base of the formation is a continuous and reliable seismic marker throughoutthe basin. Gross Oil Column - the total thickness of reservoir and non-reservoir rock abovea common oil water contact. J1 Reservoir Interval - Stratigraphic unit in the top part of the VasyuganFormation of Upper Jurassic age in the West Siberian Basin. The VasuganFormation underlies the Bazhenov Formation and the J1 interval is commonly madeup of the J11 and J12 sandstones which are normally of reservoir quality in theregion with sufficient porosity and permeability to store and transmithydrocarbons. Net Pay - the aggregate thickness of only those parts of the reservoir whichcontain and produce hydrocarbons. Oil Water Contact - A bounding surface in a reservoir above which predominatelyoil occurs and below which predominately water occurs. Spill Point - The structurally lowest point in a hydrocarbon trap that canretain hydrocarbons. Once a trap has been filled to its spill point, furtherstorage or retention of hydrocarbons will not occur for lack of reservoir spacewithin that trap. The hydrocarbons spill or leak out, and they continue tomigrate until they are trapped elsewhere. 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. End This information is provided by RNS The company news service from the London Stock Exchange