PetroNeft Resources plc (AIM: PTR) owner and operator of Licences 61 and 67, Tomsk Oblast, Russian Federation, announces that it is, from today, hosting a three day visit to the Company’s assets and operations in Tomsk for a group of sell-side oil & gas financial analysts. Prior to the start of this visit, PetroNeft is providing the following operational update on its Licences 67 and 61. No additional new information will be released during the visit.
The visit will include a series of presentations on our activities in Tomsk, Russia. Copies of these presentations will be available on the Company’s website (www.petroneft.com) from today, 20 September 2010.
• Very encouraging initial results from reprocessing/reinterpretation work
• Year End 2P reserves upgrade likely
• Ninth production well successfully drilled encountering some of the thickest net pay to date
• Development programme ahead of schedule
The first phase of work on Licence 67 involves a comprehensive study to re-evaluate the vintage seismic and well data located on the licence and adjacent areas including the reprocessing and reinterpretation of 4,430 km of 2D seismic data and 21 vintage wells. All of the seismic data has now been reprocessed, correlation charts have been prepared and the wells have been tied to the seismic data. An initial depth map at the top of the primary Upper Jurassic J1 reservoir has also been prepared.
The results of the well re-evaluation are very encouraging and indicate several zones of potential oil pay that were either not properly identified or not properly tested in the old wells.
Work to date has focussed on two potential development opportunities at Ledovoye and Cheremshanskaya.
In the Ledovaya No. 2 well, drilled in 1973, there was an open hole flow test of 5.5 m³ of oil in 36 minutes which prorates to over 1,000 bopd. However, after the production casing was run the interval tested water with an oil skim which we believe to be due to a poor cement job. The oil zone in the Ledovaya No. 5 well indicates the oil water contact (“owc”) for the interval is at about 2,553 m TVD subsea which also indicates the likelihood of a common owc with the producing North Ledovoye field located in the licence area immediately to the north. North Ledovoye is being developed by Matyushkinskaya Vertikal a subsidiary of the Hungarian MOL Group.
The Cheremshanskaya No. 1 well was drilled in 1962. Oil shows were evident while drilling, but the well was not properly tested at that time. Due to the poor quality cementing of the production casing, the primary objective Upper Jurassic J1 interval was not tested. The Lower Jurassic interval at Cheremshanskaya has some of the best reservoir properties for this interval anywhere in the region and the newly interpreted total net oil pay of 38.5 m for the well is exceptional.
Reserve Potential and Further Work
The results of the log and seismic analysis are very encouraging. Based on this data we calculate that just the primary objective Upper Jurassic J1 interval reserves for the two fields could be significant – Ledovoye C1+C2 of around 30 million bbls [PetroNeft net 15 million bbls] and at Cheremshanskaya C3 of around 60 million bbls [PetroNeft net 30 million bbls].
Following preliminary discussions with Ryder Scott, we believe we will be able to book some 2P reserves at Ledovoye at this year end, but we will need to flow test the oil intervals in the Cheremshanskaya structure before we can recognise any 2P reserves there.Such a test would be likely to occur in conjunction with a wider drilling programme on the structure and licence.
In addition to these two potential fields, PetroNeft has also identified material further structural and stratigraphic exploration upside potential in Jurassic and Cretaceous prospects elsewhere on Licence 67.
As the re-evaluation programme progresses over the coming months the Company will update shareholders as appropriate and expects to be able to provide details of the planned 2011 Licence 67 work programme by the end of November 2010.
Licence 61 Development Drilling
Drilling of the ninth of the planned nine production wells at the Lineynoye oil field has now been completed ahead of schedule. Preliminary log and survey data indicate that this well has encountered some of the thickest net pay to date in the development programme. The top of the reservoir interval is 6 metres higher than prognosis which will benefit future reservoir stimulation and recovery of reserves.
Production casing has been run in well No. 111 and cemented. The drilling rig has been moved along its rails and drilling of the water source well has commenced. A work-over rig has commenced the process of perforating and installing electrical submersible pumps in wells 111 and 117. This will complete the first year of development drilling on Licence 61 except for the fracture stimulation programme which is planned for the 1st Quarter of 2011.
Production, which began in late August 2010, has reached 1,500 barrels of oil per day (“bopd”) from eight wells. The best well is now producing around 400 bopd where other similar wells have not yet cleaned up significantly. Clean up is expected to occur gradually over the coming weeks and months and may include some basic well stimulation procedures. We expect to have a total of 11 wells producing by the end of October and will provide further updates in early November.
Dennis Francis, Chief Executive Officer of PetroNeft Resources plc, commented:
“We are very pleased with the initial results of the comprehensive re-evaluation of the Licence 67 data. This work confirms our high expectations for the Licence area and indicates that both Ledovoye and Cheremshanskaya have the potential to become significant new oil fields in the region. The combined development and exploration opportunities in Licences 61 and 67 provide a solid base for both the near and long term development of the Company”