PetroNeft Resources plc 2011 Final Results and Operations Update

PetroNeft Resources plc (“PetroNeft” or the “Group” or the “Company”) (AIM: PTR) owner and operator of Licences 61 and 67, Tomsk Oblast, Russian Federation, is pleased to report its final results for the year ended 31 December 2011 and to provide an operations update. In addition, PetroNeft announces that the Company’s Annual Report and Accounts for the year ended 31 December 2011 and Notice of AGM will be posted to shareholders today (29 June 2012) and is now available online at the Company’s website www.petroneft.com.

Operational Highlights
Average production of 2,049 bopd.
Group 2P reserves increase 36% to 131.7 mmbbls.
Group P1 reserves increase 50% to 20.0 mmbbls.
Sibkrayevskoye discovery in August 2011 was the largest single discovery made by PetroNeft to date. It contains 49.8 mmbbls of 2P reserves.
Expanding the central processing facility capacity at Licence 61 to 14,800 bfpd.

Financial Highlights
First full year of production with 748,079 barrels produced, up from 189,508 in prior year.
Capital expenditure of US$52 million.
Improved Macquarie Debt facility agreed in April 2011.
New US$15 million loan facility with Arawak Energy agreed in May 2012.

June 2012 Operations Update
Arbuzovskoye No.1 well producing at 350 bopd without fracture stimulation.
Current total production steady at 2,200 bopd exclusive of wells temporarily shut-in for pressure transient testing.
The Arbuzovskoye No. 1 discovery well is now in production and has been producing with an electric submersible pump at a rate of about 350 bopd since mid-May 2012. So far it has shown essentially no decline and a water cut of less than 2%. This is comparable to the best wells drilled at Pad 1 at the Lineynoye oil field, prior to fracture stimulation, and is in line with the excellent test results achieved on this well when it was first drilled in November 2010.

It is expected that a drilling crew will arrive on site at Arbuzovskoye in the coming weeks to commence drilling new production wells, the first of which we expect to bring into production in Q3 of this year.

Dennis Francis, Chief Executive Officer of PetroNeft Resources plc, commented:
“Overall, 2011 was a busy year with mixed results. PetroNeft’s first full year of production and its largest ever work programme resulted in great exploration success but disappointing productivity. However, production levels have been stabilised and we are delighted with the rate being achieved from the Arbuzovskoye No. 1 well at present which bodes well for future production at the field and for our future cash flows.

Positioning the Group well financially in the years ahead such that it can fully exploit the many opportunities available to it is of crucial importance.  To this end, we have initiated discussions with a range of strategic investors about possible farm-outs, long term off-take agreements and potential equity or asset investments which in the long term would strengthen the Group’s financial position.”

Source: www.petroneft.com