"Success of the S-375 well would provide assurance that there are at least two pads to be developed at Sibkrayevskoye, in which case it is expected that the development of the Sibkrayevskoye oil field will commence in 2018.
The proposed first pad at Sibkrayevskoye has already been delineated by the S-370, S-372 and S-373 wells.
The S-375 well is being drilled within the proposed pad 2 area which is about 2km from the existing wells that found oil and is within the same structural closure.
The S-374 well was more than 10km south in a different structural lobe.
The S-373 well at the proposed pad 1 area has produced oil during the last two winters at consistent rates giving further comfort to the Company of the prospects of the area."
IT IS bizarre that two Irish quoted companies, Petroneft and Petroceltic, should have similar names, operate in the same oil and gas industry, have Tom Hickey as a common director, encounter trading and fi nancial diffi culties, and have a very hostile minority shareholder build up a threatening 29% shareholding. Matters are set to come to a head again later this month, when the hostile party seeks to remove the Petroneft board. For the hapless shareholders the whole story has been a sorry one, with the share price plummeting to 3c. However, there just might be an offer nearer 10c in the pipeline, which would be very good news for recent arrivals on the share register. The most signifi cant strategic difference between Petroceltic and Petroneft is that the former still has to spend huge money to try to develop its big Algerian gas fi eld. In Petroneft, however, chief executive Dennis Francis has almost completely offl oaded the commercial and fi nancial risk associated with developing its Russian Tomsk oilfi elds (which are admittedly on a much smaller scale than Petroceltics Algerian gas prospects), by doing an $85m farm-out deal two years ago with the giant Oil India group. This left Petroneft still in charge of developing the oilfi eld, with an effective 50% carried basis. In Petronefts case, when the fi rst big battle broke out two years ago, it was with a Russian, Maxim Korobov, a member of Vladimir Putins United Russian Party in the Kremlin. In order to stop the farmout deal with Oil India (OI), Korobovs holding company, Natlata, which then held a 5% stake, tried to buy out the $8m Macquarie loan, which was then due, and covert it into equity. He offered to underwrite a $10m share issue at 3p a share, half the then share price, seeking to end up with a 43% holding. The Petroneft board turned down this offer on two grounds: with Natlata having a controlling shareholdingthe outside shareholders would be vulnerable to being marginalised; and there was a belief that the OI deal was far superior. Korobov responded by offering to up the underwrite price to 5.5p, 0.5p higher than the share placing the Petroneft board had previously carried out, but to no avail. Korobov responded by calling an EGM for May 9, 2014 to effectively dismiss the whole board of directors and appoint a new board, but just as in the Petroceltic case, the shareholders supported the incumbent board against the intruder. Petroneft then went ahead in June 2014 with its $85m deal with OI, wherein OI paid $35m up front to clear the whole of Petronefts balance sheet and get rid of the Macquarie bank loan. It offered a $45m injection into the new joint operating company to fund exploration and development, with a further $5m dependent on performance outcome. Clearly, this did not put off Natlata, which instead proceeded to build up its shareholding to a current 29.4% position, despite the continuing underperformance of Petronefts operations, in which the company now has only a 50% interest. For example, production in the fi rst six months of last year actually fell 19% to 1,700 barrels of oil a day, although some new wells that have come on stream since then, as a result of the new funding and drilling programme, helped to increase production in the second half to 2,700 barrels of oil a day. Compared to the original plans Dennis Francis had presented 10 years ago when the company fl oated off on the Dublin Stock Exchange, these latest fi gures are, nevertheless shocking. At a gross level, they are well over 90% behind the 30,000 barrels of oil a day Francis estimated that Petroneft would be producing in 2016. When you consider that Petroneft now only has a 50% stake in this much smaller oil fi eld, with only 1,350 attributable barrels of oil a day, as against the original 30,000 barrels originally projected, the shortfall is over 95%, a dramatic underperformance and one that clearly justifi es Korobovs total dissatisfaction. The diffi culty with the sands
one should worry if natlata and General invest are the same entity. If so if they get on the board they could end up setting the conditions so that they could buy this company for a song. Not happy with current management but its all about the devil you know and if oil price would turn around any bit this company could be worth quite a bit
I am trying to see where the negatives are here, but all looks good with a production increase expected, reserve update from 50m at end of year now strongly hinted at and a company that seems to be doing what they said they would.....
Looking forward to the 11 well programme starting April
If they can achieve 500 bopd from the 5 horizontal wells simular yo the T5 drill then the other 6 can come in at 150-250 bopd giving then roughly 5500-6000 bopd going in to the new year should sp around 10p-12p which is 300% from today's sp give or take a few %
Dennis gave a presentation to retail investors today. Apart from being glad he did the farm out to India oil ( impossible today !) putting him in funds it also provides top Indian geophysicists and a program has been agreed . The central processing facility at 61 can cope with c15,000bopd and production from 61 is agreed with IO and increasing - but not to be seen until next year when there should also be news on 67- My hope is 2,500bo for current year but I think that this is optimistic
The net P2 is 72mmbo with a potential uplift to above 300mmbo POST farmout which at present market price means 60c a barrel in the ground or 10 shares per barrel !!!!!!
It really does look as if - at long last - production should get going
Surprised there has been no news release in November of the completion of Arbuzovskoye 106 which was due end of October. Do we have black stuff in the hole or not?
Also, we must be getting near the 2490 metre depth on Tungolskoye No. 5 by now and should expect an RNS confirming casing completion and takeover by Baker Hughes for the horizontal drilling any day soon.
It 's unclear what challenges the trading sanctions, fall in rouble, onset of winter, will have on Petroneft.
With the near 4.5% sp drop today, we are close to the bottom of the current trading range.
No Bomcom, it's a comparatively shallow, hole full of black, sticky, smelly OIL. Not as much as I would like but nevertheless, OIL it is.
I share your anxiety, having bought this stock at a seemingly unrecoverable price, though I live in hope of recovering maybe 50% of my outlay within the next decade!
Petroneff is delivering a succession of positive RNS's. May they continue to come, though the trade restrictions on Russia, the fall in oil prices and the onset of winter in Tungolskoye don't make for compelling reasons for me to keep holding this stock but hold I do.
Different for investors holding at lower prices than todays. You guys have probably picked a winner.
From the 14 Oct RNS -
T-5 has confirmed the structural interpretation of the field encountering 8.2 metres of net oil with an open hole test producing a pro-rated inflow, without stimulation, of 100bopd.
Petronef are now drilling down again at a different angle, another 2,490 metres which, as I read it and taking the first hole drill time as an example, (around 27 August to around 14 October) will take around 5-6 weeks to complete.
We might get an RNS on completion, which would be good PR.
We might not, which would be a missed PR opportunity.
Then comes the drilling of a horizontal section which will take 3 to 4 weeks (possible a further RNS) followed by testing and certainly an RNS on results. Probably the back end of December, if their teams get really motivated and finish the work before Christmas,
2000 metres drilled, balance to go for completion end of October. RNS for sure.
So, if management are sharp they will ensure a steady news flow to Christmas which should encourage the sp to more closely reflect the positive, seismic shift in the changing fortunes of this company, which it would appear the market has not yet come to terms with.
Oil india is now on board with ONGC operating right next door. I am expecting this to settle around 10p soon and potential to reach 100p. ONGC paid over 2 billion $ for imperial next door. Gooluck to all.
I sold all 1m shares a couple of weeks ago at a big loss when I saw continued reduction of production again plus the sentiment of Russia in general. Even if the latest drill is successful it's going to a long time before they get production up again to profitable levels. The management are lucky to still have jobs with their constant underperformance
can the share price break through that 6.5 barrier?
well I note Macquarie no longer hold 42.86 mln shares, and now Ceres Environmental of Boston USA hold 23.98 mln shares - so the balance which may have overhung the market may have found a new home and thus the share price has started to move up - subject to sensative international events this could be the very long awaited upward trend - next week will be interesting, will the share price finally break out or not!!
At least drilling activity is ready to commence. Kev on LSE board spoke to the company yesterday they some difficulty finding drilling staff but its all sorted. Hoping for some good results before winter sets in siberia.
SALES effect the market so now MACQUARIE may have cleared their book, is it that NATLATA are now taking a balanced book investment?
PRICE is depressed due to rejigging of investment books even though a drilling program is in progress!
PATIENCE has to be the order of the day at this stage as anything could now happen.
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