PetroNeft updates market on plans for licence 67

The AIM-traded firm said it was exploring options to workover and re-test two wells in the Ledovoye field, also in licence 67, during 2020.

As it had previously told shareholders, the firm had been examining development options for the licence, before deciding to re-enter the C4 and C3 wells on the Cheremshanskoye field during the first quarter of 2020, with the combined aim of bringing the field into production and provide crucial reservoir performance data.

That, the board said, would enable the company to optimise forward development of the field, which it said benefitted from a “favourable” infrastructure location, allowing low cost operations. There is a road running along the eastern edge of the field, as well as powerlines running close to the western margin of the field, which PetroNeft said should allow it to reduce operational expenditure over the longer term.

In addition, the firm said it was also working on plans to re-enter two wells on the Ledovoye field, also in licence 67, during 2020.

Should that be successful, the company said it would be looking to both book additional reserves and promptly start production from the Ledovoye field.

Like the Cheremshanskoye field, Ledovoye was said to be “ideally located” close to existing infrastructure, being 60 metres away from a “major” all-weather road.

“This is an exciting development for the company as we work towards commencing production from the Cheremshanskoye field in licence 67,” said chief executive officer David Sturt.

“Re-entering the two previously drilled wells enables us to initiate production without the need for significant capital.

“In addition, following the approval of the Cheremshanskoye field reserves from the state reserves committee (GKZ) earlier this year, the field qualifies for a 20% lower production tax which significantly increases the value of each barrel of oil by approximately $4 per barrel in today's oil price environment.”

Sturt noted that the company had outlined a twin track strategy to develop shareholder value.

“These wells have the potential to both increase production and revenues while also booking further reserves and increasing the value of licence 67.”

As at 1032 GMT, shares in PetroNeft were down 5.16% at 0.74p.