Thursday, May 16th, 2013
Max Petroleum Plc, an oil and gas exploration and production company focused on Kazakhstan, is pleased to announce that it has received final regulatory approval of a two-year extension of the exploration period of the Company’s Blocks A&E Licence by the Ministry of Oil & Gas of the Republic of Kazakhstan (the “Appraisal Extension”).
The Company is placing the four wells in the Asanketken Field onto trial production and returning the BCHW-1 well in the Baichonas Field to test production, effective immediately. As a result, the Company expects its current production of approximately 2,200 barrels of oil per day (“bopd”) from the Zhana Makat Field to increase by a minimum of 2,000 bopd.
Monday, May 13th, 2013
Fitch Ratings has affirmed Russia’s Joint Stock Oil Company Bashneft (Bashneft) Long-term foreign and local currency Issuer Default Ratings (IDR) at ’BB’. The Outlooks have been revised to Positive from Stable. A complete list of rating actions is at the end of this release
The Positive Outlook reflects our expectation that over the medium term the company will maintain stable brownfield production levels and strong credit metrics for a ’BB’ rated company, ie, funds from operations (FFO) gross leverage below 2x and FFO interest coverage of above 8x. It also reflects that its Trebs and Titov (T&T) greenfield project is on track to produce its first oil later this year. Bashneft is a second-tier Russian integrated oil company with 2012 upstream production of 308 thousand barrels of oil equivalent per day (mbbl/d) and refinery throughput of 415mbbl/d.
Key rating drivers
Stable Brownfields Production
In 2012, Bashneft’s crude production was up 2% yoy to 308 mbbl/d, which contrasts well with that of some other Russian oil companies such as OAO LUKOIL (BBB-/Stable) that reported a 1% decline in hydrocarbon production in that year. We recognise Bashneft’s efforts in increasing its brownfield production but believe that the company has limited headroom to further increase oil output in Bashkiria, its historical stronghold.
T&T Improves Upstream Profile
Bringing the T&T oilfields on-stream, in a joint venture (JV) with LUKOIL, which has a 25% stake, is important for improving Bashneft’s upstream profile and bringing it up to match its historically more sizable downstream operations. The company expects the JV to produce its first oil in H213 and to achieve peak production of as much as 95mbbl/d by 2018–2019. However, the free cash flow generated by the JV may not be fully available to service Bashneft’s debt as Bashneft will have to coordinate the JV’s dividend and capex policy with LUKOIL.
Competitive Reserves and Costs
Bashneft’s proved oil reserves of 2,007 million barrels of oil at end-2012 imply an 18-year reserve life, in line with that of Russian peers. In 2012, its production costs were manageable at USD6.6/bbl, below that of most international peers but above that of the Russian majors, due to smaller, more mature oilfields compared with those of OJSC OC Rosneft (BBB/RWN) or LUKOIL. Fitch expects that Bashneft’s operational metrics will remain sound in the medium term.
Strong Downstream and Retail
Bashneft is the fourth-largest refiner in Russia; its three refineries have 480mbbl/d total primary capacity and Nelson index of 8.55. In 2012, refining and marketing contributed around 30% to the company’s EBITDA (based on IFRS accounts). The company’s EBITDA to barrel of oil produced of USD28/bbl in 2012 is one of the highest among Russian peers, partially due to downstream being significantly higher than upstream in size — by 34% by volume in 2012, unlike most other Russian majors. Planned further upgrades of its refineries should improve Bashneft’s refining complexity, increase light product yield and help it maintain solid refining margins.
Conservative Leverage to Remain
At end-2012 Bashneft’s FFO net adjusted leverage was 1.3x, up from 1.0x in 2011, and its FFO coverage improved to 8.4x in 2012 from 6.4x in 2011. Based on the agency’s Brent price deck of USD100/bbl in 2013, USD92/bbl in 2014 and USD85/bbl in 2015, we expect that Bashneft’s gross leverage will remain below 2x in 2013–2016 and its coverage be above 8.0x.
Standalone Uncapped Ratings
Fitch rates Bashneft on a standalone basis, and assesses its linkage with Sistema Joint Stock Financial Corp (Sistema; ‘BB-’/Stable), its majority shareholder as moderate. We note that Bashneft remains a key asset for Sistema along with OJSC Mobile TeleSystems (MTS, BB+/Stable). In 2012, Bashneft contributed around 35% to Sistema’s EBITDA, and Sistema’s ability to service its debt may depend on dividends it receives from Bashneft.
Bashneft has material related party transactions, eg during 2012 it made a number of deposits with a total amount of RUB24.8bn of cash (or 7.5% of its net revenue) with the Sistema-owned OJSC MTS Bank (B+/Stable). However, by the end of the year most of these funds had been repaid, and Bashneft’s debit balance with the bank was RUB5.1bn. While Fitch does not currently constrain Bashneft’s ratings (which can be the case if related party transactions intensify and lead to material cash outflow), Bashneft cannot be rated more than two notches higher than Sistema under the agency’s criteria.
Positive: Successful production launch and development at T&T in 2013–2015 coupled with solid operational and credit metrics, eg, stable brownfield production and refining volumes and FFO gross adjusted leverage below 2.5x and FFO interest cover above 8x on a sustained basis, may lead to a positive rating action.
Negative: Bashneft’s failure to maintain crude production or sustained deterioration of its credit metrics, including FFO gross adjusted leverage above 2.5x and FFO interest cover below 8x on a sustained basis owing to higher capex and dividends may lead to a negative rating action.
Liquidity and debt structure
At end-2012, Bashneft had cash of RUB20.1bn and RUB33bn in committed credit facilities, which covered its short-termdebt of RUB32bn. In February 2013, Bashneft issued RUB30bn 10-year bonds (with a half having a put option in 2018 and another half in 2020) and repaid most of the debt falling due in 2013. Fitch believes that Bashneft has good access to the domestic capital markets and would refinance its upcoming maturities if needed.
Balanced Debt Portfolio
At end-2012, Bashneft’s balance sheet debt of RUB110.2bn was made up of bank loans (RUB77.4bn), domestic bonds (RUB25.2bn) and pre-export finance facilities (RUB7.6bn). As most of its borrowings are RUB-denominated, its effective interest rate remained relatively high at 8.4%. This may reduce as Bashneft intends to increase the share of USD-denominated borrowings in its portfolio.
List of rating actions
Long-Term IDR: affirmed at ’BB’, Outlook revised to Positive from Stable
Short-Term IDR: affirmed at ’B’
Local currency Long-Term IDR: affirmed at ’BB’, Outlook revised to Positive from Stable
Local currency Short-Term IDR: affirmed at ’B’
National Long-Term Rating: affirmed at ’AA-(rus)’, Outlook revised to Positive from Stable
Senior unsecured rating: affirmed at ’BB’
Tuesday, April 23rd, 2013
The Company wishes to announce that it expects to release its 2012 results by this Thursday, 26 April 2013. Further to the Interim Management Statement and the Operations Update announced on 19 November 2012 and 21 February 2013 respectively, the Company expects its result to show a significant impairment to asset book value leading to a material loss for 2012. The Company expects to finalise its audit shortly and further detail will be included in the fully audited results.
Friday, April 19th, 2013
Further to the announcement made on 5 April 2013, International Petroleum Limited (International Petroleum or the Company), advises its shareholders that it has not yet received the US$15million loan funds from the unrelated third party pursuant to the loan facility (Loan).
The Company is in discussions with the lender in respect to the provision of the Loan to the Company and anticipates receiving the funds in the next few weeks. Once received, the funds will be applied towards payment of the Company’s Russian creditors and general working capital. The Company requests that trading in its shares remains suspended until the Company receives the funds pursuant to the Loan.
The Company will keep shareholders updated in respect to this matter.
Further to the announcement made on 5 April 2013, International Petroleum Limited (NSX: IOP) (International Petroleum or the Company), advises its shareholders that it has not yet received the US$15million loan funds from the unrelated third party pursuant to the loan facility (Loan).The Company is in discussions with the lender in respect to the provision of the Loan to the Company and anticipates receiving the funds in the next few weeks. Once received, the funds will be applied towards payment of the Company’s Russian creditors and general working capital. The Company requests that trading in its shares remains suspended until the Company receives the funds pursuant to the Loan.The Company will keep shareholders updated in respect to this matter.
Thursday, April 18th, 2013
A scientific and practical conference “History and prospects of Tatarstan oil fields development” dedicated to the 70th anniversary of the oil fields development in Tatarstan was held at JSC TATNEFT.
The event was attended by geologists and senior experts in geology, geophysics and development of oil and gas fields of TATNEFT Group of Companies, “TNG-Group”, small oil companies of the Republic, as well as scientists from TatNIPIneft, IGiRTI, Kazan Federal University, Kazan State Institute of Chemical Engineering and other scientific institutions of Tatarstan and Russia.
The conference participants discussed a wide range of issues concerning the history of studying the characteristics of geology and development of the oil fields in the Republic, and in the first place, Romashkinskoye oil field, analyzed the current situation and shared plans for the future.
About 52 thousand wells have been drilled in Tatarstan for the past 70 years with 45 thousand of this number drilled in the fields of TATNEFT. 3 billion 180 million tons of crude oil have been produced since the start of development with the share of the Joint Stock Company accounting for 3 billion 7 million tons.
At present, TATNEFT Company is actively working to increase crude oil recovery both from new and earlier drilled wells. Extra-viscous oil production is underway at Ashalchinskoye field: more than 200,000 tons of oil have been produced there to date with the daily oil production reaching 325 tons. According to the experts this is one of the main prospective areas of TATNEFT’s activities in terms of the reserves increment and increasing production in the Republic of Tatarstan.
The scientists and geologists actively work on incrementing hydrocarbon reserves. The growth of categories C1 and C2 stock in JSC TATNEFT amounted to 488 million tons during the last 15 years, while the production volume amounted to 378 million tons.
More than 20 spotlight presentations were offered at the conference. Modern technical and technological solutions in the oil exploration and production were considered in the framework of the geological scientific and technical forum. The geologists believe that drilling of horizontal and multilateral wells is one of the key areas for further development of the oil fields in Tatarstan, which will allow improving profitability and increasing the bulk of oil production in the near future. In the future – the development and implementation of new technologies to enhance oil recovery in carbonate reservoirs, technologies for enhanced oil recovery, including microbiology, thermal methods, etc.
Monday, April 15th, 2013
The Gazprom headquarters hosted today a working meeting between Alexey Miller, Chairman of the Company’s Management Committee and Dennis Nally, Chairman of the PricewaterhouseCoopers International Network.
The meeting participants pointed out the high efficiency of the joint efforts. The companies had been cooperating for 18 years in financial statements audit and on a wide range of consulting services.
Special attention was paid to the current activities within the consolidated group of taxpayers set up in Gazprom as well as on the risk management enhancement.
In addition, the parties discussed the ongoing cooperation aimed at working out the asset swap agreements between Gazprom and Wintershall as part of the project for developing the Achimov deposits in the Urengoy field.
Wednesday, February 27th, 2013
The Board of Jupiter Energy Limited, the Kazakhstan-focused oil exploration and production company, is pleased to provide shareholders with a general operations update, including progress with the Company’s drilling campaign in the southern section of Block 31 where three wells (J-55, J-58 and J-59) have been drilled in recent months.
- Early testing results from the J-58 well have been encouraging and stabilized flow rates are expected to be available in March.
- J-59 well has reached TVD of 3,191m and results of wireline logs will be announced as soon as independent analysis of the results is complete, which is expected to be within the next week. A decision has been made to case and complete the well.
- The workover/completion of both the J-53 and J-55 wells continues and it is now expected that stabilized flow rates will be established for both wells during March 2013.
Two service rigs are currently operational as Jupiter works towards finalizing the testing of the J-53 and J-55 wells and determining the initial stabilized flow rate from the J-58 well. The Company is also awaiting confirmation of the independent analysis of the wireline logging results from the J-59 well.
Following the initial production testing of the J-53 well during which higher than expected water cuts were recorded, the well underwent a chemical treatment that partially reduced the water production; the well subsequently underwent a cement squeeze to further reduce the water influx.
During the current workover program approximately 250 barrels of fluids have been recovered to surface with a 30% oil cut.
Remedial cementing is currently in progress to repair the poor primary cement bond, thought to be the cause of the water ingress, and then it is planned to re-perforate the lower T2B Triassic. The well will then be brought on to production with an electric submersible pump (ESP) and will be produced under its already approved Trial Production License (TPL).
There is also believed to be productive Z sand present in the J-53 well and this will be also evaluated at a later date.
A further update on J-53 is expected during March 2013.
Following the initial acid-wash stimulation of J-55 in December 2012, approximately 50m3 of oil (300 barrels) was recovered to surface, however stabilized natural flow was not established. A review of the transient bottom hole pressures recorded during the initial testing indicated that the flow characteristics of the lower T2B Triassic horizon may improve following a re-perforation and a further, more aggressive, acid stimulation. This work was carried out in January 2013 and production of up to 200 barrels of oil per day (bopd) was established during the first week of February, using an ESP in the well.
The service rig was then moved from the J-55 well to the J-58 location to carry out the completion of that well and this rig is now currently being moved back to the J-55 well location.
The forward plan is to perforate the upper T2A Triassic and production from this zone will be comingled with the producing lower T2B Triassic. The upper Z sand is also scheduled for evaluation in the next round of well intervention work.
A further update on J-55 is expected during March 2013.
After all the necessary approvals had been granted to commence production testing of the J-58 well, 5.5m of the lower T2B Triassic was perforated and flow tested delivering approximately 400 barrels of oil over an 8 hour period (1,200 bopd equivalent) on a 9mm choke. Based on this initial rate, a decision has been made not to carry out an acid stimulation at this stage.
Pressure Transient Analysis indicates a reservoir pressure of 349 atmospheres which is very encouraging and the J-58 well is currently being brought on to production to determine a stabilized, and sustainable, flow rate.
It is anticipated that a service rig will return to J-58 towards the end of March when the upper T2A Triassic will also be perforated. A final decision on the timing of this work will be made after evaluating the performance of the well during March.
Once the work has been carried out, the forward plan will be to comingle production from the T2B and the T2A for the allowed 90 day period. The upper Z sand is also thought to be productive and the forward plan will be to complete and evaluate this horizon in the next round of well intervention work.
The Company currently anticipates updating shareholders on the initial stabilized production rates from the J-58 well during March.
J-59 Wireline Log Analysis:
The Company spudded the J-59 well on 31 December 2012 and the well reached Total Vertical Depth (TVD) of 3,191m on 20 February 2013.
Hydrocarbon shows while drilling, including a core in the reservoir zone, and subsequent open hole wireline logs all indicated hydrocarbons in the Triassic reservoir. Drilling crews are currently preparing to run production casing and cement the well.
Independent analysis of the wireline logs is currently being carried out and a separate announcement will be made in the next week to confirm the outcome of this analysis. At this stage it is likely that the Triassic pay section will be scheduled for completion, 90 day flow testing will be carried out and all oil produced will be made available for sale into the domestic market.
Friday, November 2nd, 2012
International Petroleum Limited, an oil and gas exploration and production company with assets in Russia and Kazakhstan, announces that it has commenced drilling appraisal well number 38 at its Yuzhno-Sardakovsky field.
During August 2011, the Company entered into an agreement to acquire Vamaro Investments Limited (“Vamaro”), the 100% legal and beneficial owner of two licences for geological study of subsoil, prospecting and extraction of oil and gas in the Yuzhno-Sardakovsky field and in the Zapadno-Novomolodezhny field in the Khanty-Mansiysk Autonomous Region in Western Siberia (respectively, the “Yuzhno-Sardakovsky Project” and the “Zapadno-Novomolodezhny Project”).
During February 2012, the Company completed the acquisition of Vamaro.
Prior to the acquisition of Vamaro by the Company, 14 wells (8 prospecting and 6 exploration) had been drilled in the Zapadno-Novomolodezhny field and 8 wells (3 prospecting and 5 exploration) had been drilled in the Yuzhno-Sardakovsky field.
Since acquiring Vamaro, the Company worked over some of the historical well stock and constructed a short pipeline on the Zapadno-Novomolodezhny block to tie some of these wells into the existing pipeline. Currently, the Company is producing oil from wells at the Zapadno-Novomolodezhny field.
From May to July 2012, the Company drilled well number 34 at the Yuzhno-Sardakovsky field. Well number 34 was an appraisal well with the purposes of increasing proved reserves in known reservoirs, discovering new production reservoirs, obtaining new core data, clarifying well production potential and preparing for production drilling of the field. Currently, the Company is evaluating the results of the well.
Now, the Company has commenced drilling of well number 38 at the Yuzhno-Sardakovsky field. Well number 38 is another appraisal well with the purposes of increasing proved reserves in known reservoirs, discovering new production reservoirs, obtaining new core data, clarifying well production potential and preparing for production drilling of the field. It is is expected to take approximately two months to drill the well to its target true vertical depth of 3,100 metres.
Commenting on the commencement of drilling well number 38 at its Yuzhno-Sardakovsky field, Chris Hopkinson, International Petroleum CEO said, “The Company is focussed on maximising shareholder value by investing cash wisely on drilling wells to produce oil and to increase oil reserves”.
Thursday, October 25th, 2012
Exillon Energy, a London Premium listed independent oil producer with assets in two oil-rich regions of Russia, Timan-Pechora and West Siberia, today published an information memorandum in connection with an application to obtain a secondary listing on the Warsaw Stock Exchange. No shares will be issued or sold in connection with the listing.
The listing is expected to be effective from 29 October 2012. The information memorandum is in the Polish language only; it contains no material information that has not already been disclosed to shareholders. Existing shareholders of London listed shares will be unaffected by this and need take no action.
Mark Martin, CEO of Exillon Energy, said: “Exillon is listing on the WSE to expand our investor base. We already have some Polish pension and mutual funds as shareholders, and we believe that a local listing will facilitate investment by a wider range of investors. This is a secondary listing, and London will remain our primary listing.”
WOOD & Company are acting as Financial Advisor and Listing Agent in connection with the Warsaw listing.
Wednesday, October 17th, 2012
International Petroleum Limited, an oil and gas exploration and production company with assets in Russia and Kazakhstan, is pleased to announce that it has secured an additional US$2 million convertible loan facility from Varesona Participation Corporation, an entity controlled by Frank Timis, a non-executive director, to fund exploration expenditure and working capital. The Loan Facility is additional to the loans entered into by the Company in August and September 2012.
Pursuant to the terms of the Loan Facility, the Company will have access to US$2 million and the amount drawn down under the Loan Facility (“Loan Amount”) will attract interest at the rate of 5% per annum and will be repayable by the Company 12 months from the date of the agreement (unless extended by the parties) (“Repayment Date”).
If the Loan Amount is not repaid by the Repayment Date, the Loan Amount will be converted, subject to the receipt of all necessary shareholder approvals, into shares at a deemed issue price equal to A$0.15 per share. If all necessary shareholder approvals for the conversion of the Loan Amount into shares are not obtained, the Company must satisfy the Loan Amount in cash and not shares.
To allow the Company the future flexibility to determine whether to satisfy the Loan Amount in cash or shares, the Company may seek all necessary shareholder approvals for the conversion of the Loan Amount into shares prior to the Repayment Date.
Funds drawn down from the Loan Facility will be applied towards exploration expenditure and general working capital.