Tag: PTR

PetroNeft Resources plc (LON:PTR) an oil & gas exploration and production company, operating in the Tomsk Oblast, Russian Federation, 90% owner and operator of Licence 67 and 50% owner and operator of Licence 61, has announced the following board changes:

Key Points

·    Alastair D. McBain has resigned as Non-Executive Chairman of the board with immediate effect.

·    Pavel Tetyakov has been appointed as Chief Executive officer and David C Sturt has taken up the role of Executive Chairman.

Alastair was appointed to the PetroNeft board initially as Non-Executive Director on 31^st January 2021 and then assumed the role of Chairman on 21^st February 2021.

Through these challenging times the board has decided to provide continuity to the management of the Company. Pavel Tetyakov who has been an Executive Director and Senior Vice President of New Business will assume the role of Chief Executive Officer and David Sturt, formerly Chief Executive Officer will assume the role of Executive Chairman with immediate effect.

David Sturt, Chairman of PetroNeft Resources plc, commented:

“I want to thank Alastair for his leadership, vision & guidance which was greatly appreciated. I wish him well in his future endeavours.I together with the other members of the board, look forward to working with Pavel in leading the management of the Company through these most difficult times.”

PetroNeft Resources plc (LON:PTR) an oil & gas exploration and production company, operating in the Tomsk Oblast, Russian Federation, and 90% owner and operator of Licence 67 and 50% owner and operator of Licence 61 has provided the following share purchase update.

PetroNeft announces that non executive director Eskil Jersing, has purchased common shares in PetroNeft.

Details of the respective purchase are included in the table below.

Name	Number of Common Shares purchased	Total number of Common Shares held after Purchase	Percentage of issued share capital held after the purchase
Eskil Jersing	768,807	768,807	0.00071%

PetroNeft Resources is a public company registered in Ireland.

The Company was established to develop oil assets in the Tomsk Oblast in Western Siberia and was admitted to the London AIM and Dublin ESM Markets on 27th September 2006.

The company owns and operates 90% of licence 67 and 50% of license 61, both located within the Tomsk region of Russia which has a long tradition in oil and gas production.

Tomsk itself is located within the major West Siberian Basin which is the largest petroleum basin in the world, covering an area of 2.2 million km². Discovered petroleum volumes are estimated to be over 350 billion barrels oil equivalent (BBOE).

PetroNeft Resources plc (LON:PTR) an oil & gas exploration and production company, operating in the Tomsk Oblast, Russian Federation, and 90% owner and operator of Licence 67 and 50% owner and operator of Licence 61 has provided the following financing update.

Petrogrand Loan facility 

On 15^th December 2021 PetroNeft announced that it had met all contractual obligations, including the payment of $574,430 (representing 20% of the principal sum outstanding), and the payment of the  associated interest for fiscal 2021.  The reduced principal amount of $2.3 million, has enabled the Company to extend the facility by a further 12 months to 15^th December 2022. 

At the same time PetroNeft Resources has been looking at all options to see if it would be in shareholders’ best interest to re finance the loan. After detailed negotiations with various parties we have decided that it is in the best interests of shareholders to continue with the facility as is. We will continue to explore financing alternatives, with a view to securing terms and conditions, which are in PetroNeft’s Shareholders best interests.

PetroNeft Resources plc (LON:PTR) an oil & gas exploration and production company, operating in the Tomsk Oblast, Russian Federation; and 90% owner and operator of Licences 67 and 50% owner and operator of Licence 61, has provided the following update.

Highlights

·    Reservoir Stimulation program on the Lineynoye and Arbuzovskoye fields (Licence 61) expanded from five to seven wells.

·    Drilling tender for Cheremshanskoye field drilling (Licence 67) of up to five new wells awarded to OJSC SSK.

·    Oil sales and forward finance contract for Cheremshanskoye production extended for an additional year.

Licence 61

On the 12^th of November 2021, the Company announced it had signed a contract with NewTech Well Services LLC for a five well reservoir stimulation program to be carried out during Q1 2022.

After further technical analysis and discussions with NewTech, we are pleased to announce that the program has been expanded from five to seven wells, of which six will be on the Lineynoye field and one on the Arbuzovskoye field. The two additional wells added to the program are the two best producing wells at the Lineynoye field.

The expected increase in overall production from the seven well program is between 350 and 650 bopd. The successful reservoir stimulation  of L-115 well (Lineynoye field) last year, and outstanding results from the S-373 well (Sibkrayevskoye field), provided crucial technical information which has enabled us to expand the program with confidence.  

Licence 67

PetroNeft Resources has completed a tender for the provision of drilling services at the Cheremshanskoye field. The tender is now closed and awarded to SSK. The program covered by the tender is for the drilling of up to five wells which will be a combination of vertical and horizontal development wells from the northern pad on the Cheremshanskoye field, adjacent to the currently producing C-4 well.

SSK have considerable experience of drilling operations in the Tomsk region including the successful drilling of the C-4 well in 2018. As well as providing the most commercially attractive bid, they were also selected for their technical and operational excellence. Now that the tender process is complete, we are negotiating and finalising the drilling contract.

In December 2020, an Offtake Contract was signed with the Alexandrovskoye Refinery (‘AOR’) for the purchase of oil produced from the Cheremshanskoye field (C-4 well).  This was a very positive development for PetroNeft, providing competitive pricing at the wellhead, thereby maximising returns on production. The contract was for an initial 12 month period which has now been extended for a further year.

The original contract included a forward financing provision for up to $1M to cover the costs of constructing the 6.2 km all-season road, linking the C-4 well in the west to the all-season road running close to the eastern margin of the field. This financing option was not used due to the strong performance from the C-4 well, enabling the road to be paid for out of free cash flow. Whilst the road is now complete, the forward financing option has been retained within the contract extension, further enhancing our financial flexibility as we plan for expanded operations in the year ahead.

David Sturt, CEO PetroNeft Resources commented:

“We are very pleased to continue to report operational progress across our producing portfolio. At Licence 61 thanks to the excellent technical work by our team in Tomsk, combined with the strong performance from the two wells stimulated in 2021, we have been able to expand our reservoir stimulation program to seven wells – a significant increase on last year’s two-well program. If successful, this has the potential to result in a significant increase in production and therefore to deliver meaningful returns to the business.

At the Cheremshanskoye field, we are delighted to be working with an experienced drilling contractor with successful experience of both working in Tomsk and with PTR. The tender process has also demonstrated the benefit of having all season access to the field enabling us to optimize the timing for operational activities without the normal seasonal constraints so common within this region which has led to more competitive pricing

We look forward to keeping shareholders informed as our operational program ramps up through the year”

PetroNeft Resources plc (LON:PTR) an oil and gas exploration and production company, operating in the Tomsk Oblast, Russian Federation and 90% owner and operator of Licence 67 and 50% owner and operator of Licence 61, has today provided a financing update. 

Convertible Loan facility

In June 2019, PetroNeft agreed a convertible loan facility of US$1.3 million with a group of five lenders with a revised Convertible loan maturity date of 31^st December 2021. Throughout 2021, the group of five lenders at various times elected to convert 65% of their loan advance into Ordinary Equities of PetroNeft Resources plc. The Company is now pleased to announce that it has reached agreement with the five lenders to extend the term of the remaining loan balance of $0.455 million under the following terms:

·      Extension to the Maturity date from 31^st December 2021 to 31^st December 2022.

·      Interest rate to remain at 8% above LIBOR. 

·      The remaining loan balance may be converted fully at Stg0.06p per Ordinary Equity Share in PetroNeft, at any time up to the revised maturity date at the option of the loan holders.

The loan was provided by a group of five investors. Four of the investors are related parties (as defined in the AIM Rules and Euronext Growth Market Rules). Details of the loan amounts which remain outstanding to these related parties are outlined in the table below. The directors of the Company, other than Alastair McBain, Daria Shaftelskaya, and David Sturt, having consulted with the Company’s Nominated Advisor and Euronext Growth Market adviser, consider the terms for the extension of the loan facility to be fair and reasonable insofar as the Company’s shareholders are concerned. 

Lender	Amount provided(US$)	Relationship
Natlata Partners LLP.	196,000	Substantial shareholder
ADM Consulting FZE	140,000	Beneficial owner substantial shareholder and Chairman of PetroNeft.
Daria Shaftelskaya	84,000	PetroNeft Director and substantial shareholder of PetroNeft.
David Sturt	17,500	PetroNeft CEO & Director

PetroNeft Resources Chief Executive Officer, David Sturt, welcomed the extension:

“PetroNeft is a tight team, and we continue to benefit from the experience and expertise of our senior Management team to devise and deliver a fiscally robust capital structure to drive the business forward.  I believe the agreed loan extension is a welcome development, combined with the added opportunity for the investors to convert at Stg0.06p per Ordinary Equity Share, which represents a significant 52.6 % premium above the average closing for the last 5 trading days and is a further vote of confidence in the growth momentum PetroNeft can achieve in the coming year.”

PetroNeft Resources plc (LON:PTR) an oil and gas exploration and production company, operating in the Tomsk Oblast, Russian Federation and 90% owner and operator of Licence 67 and 50% owner and operator of Licence 61, has provided the results of the reserves and resource audit, the first undertaken since 2016 for Licence 61, and 2011 for Licence 67.

Highlights

·    Miller & Lents, an independent oil and gas consulting firm, have completed the 2021 Reserves & Resource audit for both Licences 61 and 67, link available at: http://petroneft.com/investor-relations/reserve-reports/ This is the first review of reserves and resources in five years on Licence 61 and a decade for Licence 67.

·    Updated 2P reserves of 48.655 Mbbls and a 2P NPV₁₀ valuation across Licences 61 and 67 of $522.2M net to PTR

All figures in Mbbls	Gross	Gross	Gross	Net Attributable	Net Attributable	Net Attributable
Asset Name	Proved	Proved & Probable	Proved Probable & Possible	Proved	Proved & Probable	Proved Probable & Possible
Licence 67	4.78	27.214	79.646	79.646	4.302	24.493
Licence 61	24.345	48.325	70.95	70.95	12.173	24.163
Total =	29.125	75.539	150.596	16.475	48.655	107.156

NPV10 $(US)M	Gross	Gross	Net Attributable	Net Attributable
Asset Name	Proved	Proved & Probable	Proved	Proved & Probable
Licence 67	50.186	281.895	45.167	253.706
Licence 61	266.302	536.998	133.151	268.499
Total =	316.488	818.893	178.318	522.205

·    Additional 3C Net contingent resource – 23.74 Mbbls

All figures in Mbbls Asset Name	Gross 1C	Gross 2C	Gross 3C	Net Attributable 1C	Net Attributable 2C	Net Attributable 3C
Licence 67	0.566	3.387	24.512	0.509	3.048	22.061
Licence 61	0.499	1.471	3.369	0.250	0.736	1.685
Total =	1.065	4.858	27.881	0.759	3.784	23.745

·    Significant low risk prospective resource estimate for Licence 61 – Emtorskaya prospect, Gross Pmean 96.19 Mbbls with a geological Chance of Success of 49.7%, and Gross P10 upside of 253.35 Mbbls

·    The M&L report underlines the importance and value of License 67 for the Company’s future, with the 2P and 3P gross reserves largely driven by the newly producing Cheremshanskoye field and further upside now recognised, supporting the Company’s new strategy, and added forward focus on License 67

M&L has completed its assessment of the Group’s petroleum reserves and resources with an effective date of 30^th July 2021, in accordance with the standards of the Petroleum Resources Management System, prepared by the Oil and Gas Reserves Committee of the Society of Petroleum Engineers (SPE-PRMS). This is the first reserves and resource audit since Ryder Scott completed their assessment in 2016 for Licence 61 and 2011 for Licence 67.

The following is a comparison between the legacy audits carried out by Ryder Scott and the current Miller & Lents report. Such a comparison is partly complicated by updates to the PRMS standards, which have impacted the categorisation of the Emtorskaya prospect in Licence 61.

Table 1: Net reserves comparison between legacy (Ryder Scott) and 2021 (Miller & Lents) audits

All figures in Mbbls Asset Name	Ryder Scott 2011/16 Proved	Ryder Scott 2011/16 Proved & Probable	Ryder Scott 2011/16 Proved Probable & Possible	Miller & Lents 2021 Proved	Miller & Lents 2021 Proved & Probable	Miller & Lents 2021 Proved Probable & Possible
Licence 67	1.500	14.000	17.400	4.302	24.493	71.681
Licence 61	14.170	49.390	86.810	12.173	24.163	35.475
Total =	15.670	63.390	104.210	16.475	48.655	107.156

Miller and Lents have also estimated additional net additional Contingent resource (3C) of 23.74 Mbbls (22.06 Mbbls in Licence 67 and 1.68 Mbbls in Licence 61) and net Pmean prospective resources for the Emtorskaya prospect of 48.09 Mbbls (Gross 96.18 Mbbls with a 49.7% geological chance of success).

In Table 2 below, the 2P NPV10 has increased significantly from $255.716M in 2011/16 to $522.21M as of 30^th June 2021. The increased valuation is mainly a reflection of the materially improved long term oil pricing environment both internationally and domestically within Russia since the last report. The total valuation uplift is further increased by the recent acquisition of an additional 40% interest in Licence 67 in 2021.

Table 2: Discounted cashflow (NPV₁₀) comparison between legacy (Ryder Scott) and 2021 (Miller & Lents) audits

Net NPV10 $(US)M Asset Name	Ryder Scott 2011/16 Proved	Ryder Scott 2011/16 Proved & Probable	Miller & Lents 2021 Proved	Miller & Lents 2021 Proved & Probable
	Probable	Probable
Licence 67	8.590	76.642	45.167	253.706
Licence 61	55.409	179.074	133.151	268.499
Total =	63.999	255.716	178.318	522.205

Note: Ryder Scott L67 at 50%, Miller & Lents L67 at 90%

While full copies of the actual reserve reports, which are by operational unit on a gross and net attributable basis, can be downloaded by clicking on the following link  http://petroneft.com/investor-relations/reserve-reports/ , below is a management summary of the audit results.

David Sturt, CEO PetroNeft Resources commented:

‘We are delighted to be able to finally publish the results from our recent reserves and resource audit.

This has been a painstaking interactive process and we are pleased to have engaged Miller & Lents due to their depth of expertise and considerable experience of working with significant Russian oil operators, some with assets near our licenses and fields that are likely analogous to ours.

We feel the audit results fully supports our on-going strategy, with the Cheremshanskoye field on License 67 providing the most exciting near-term upside for our continued growth, reflected in the strong reserves numbers, which are all new and not reported at all in the last reserves audit.

On License 61, it is satisfying to see the exciting upside and running room potential of our northern hub, particularly at Emtorskaya, beginning to show through numerically. An extensive inventory of reserves remains at our other License 61 fields. Whilst comparison with the 2016 report is not straightforward due to the evolution of assessment methodology which has become more rigorous in the intervening years of production, we are satisfied that the latest audit gives a suitably robust view of our reserve base and wish to thank Miller & Lents for their thoroughness and professionalism. 

The NPV₁₀ valuation of our 2P reserves of over $520M is a clear indicator of our material value proposition, and we will continue to focus on building our production and cashflow to deliver the underlying values of our assets to our shareholders.’

Licence 67

PTR own and operate a 90% interest in the licence. The last reserves audit was carried out by Ryder Scott from existing legacy data in 2011, just after the award of the licence. Since then, the C-3 and C-4 wells on the Cheremshanskoye field and the L-2a well on the Ledovoye field have been drilled. Due to improved oil prices and cost optimisation initiatives, the 2P NPV₁₀ per barrel has increased from approximately $3.50/bbl in 2011 to approximately $10.36/bbl in 2021.

Table 3: Licence 67 – Net Reserves and Cash flow value (NPV10), as of 30^th June 2021

All reserve figures in Mbbls Licence 67 Fields	All reserve figures in Mbbls Reservoir	All reserve figures in Mbbls Proved	Gross Proved	Gross Proved Possible & Probable	Net Attributable Proved	Net Attributable Proved & Probable	Net Attributable Proved Probable & Possible
Cheremshanskoye	U. Jurassic	4.556	22.900	34.467	4.100	20.610	31.020
	L. Jurassic	0.067	0.244	17.589	0.060	0.220	15.830
Ledovoye	U. Jurassic	0.156	4.067	27.600	0.140	3.660	24.840
Total Reserve =	4.778	27.211	79.656	4.300	24.490	71.690
Total NPV 10 $M=	50.189	281.900		45.170	253.710
NPV10 $/bbl =	10.50	10.36		10.50	10.36

Cheremshanskoye Field

There were no reserves calculated for this field by Ryder Scott in 2011. Since the last audit the C-3 and C-4 wells have been successfully drilled with the C-4 well currently producing.

The results demonstrate sizeable and well-defined reserves in two reservoirs (J1 ad J14) of the main Upper Jurassic zone, currently producing in the C-4 well. In addition, recognition is also made of the upside potential within the Lower Jurassic Tyumen formation with 15.83 Mbbls 3P net reserves, albeit with very modest 1P and 2P numbers at this early stage. The Tyumen formation is an economically attractive target as any production qualifies for a 20% reduction in the Mineral Extraction Tax.

Ledovoye Field

The field was last audited in 2011 soon after the licence award and before the acquisition of the 3D seismic data with a net 2P reserve of 14.0 Mbbls. Since then, the L2a well was drilled in 2012, which encountered oil but with a higher Oil Water Contact. This created uncertainty about the precise location of the Oil Water Contact, which has led to a significant portion of the 2P reserves now being moved to 3P with the 2P net reserve reduced from 14Mbbls in 2011 to the current 3.66Mbbls

Following the successful re-entry of the L-2a well earlier this year and the recovery of oil to surface on test, we are evaluating forward options for this field.

Licence 61

PTR own a 50% operated interest in the licence which was last audited by Ryder Scott in 2016.  The NPV₁₀ per barrel has increased from approximately $3.50/bbl in 2016 to over $11.00/bbl on a 2P basis.

Table 4: Licence 61 – Net Reserves and Cash flow value (NPV10), as of 30^th June 2021

All reserve figures in Mbbls Licence 61 Fields	All reserve figures in Mbbls Reservoir	Gross Proved	Gross Proved & Probable	Gross Proved Probable & Possible	Net Attributable Proved	Net Attributable Proved & Probable	Proved Probable & Possible
Lineynoye incl. west	U. Jurassic	7.380	16.280	16.920	3.690	8.140	8.460
Arbuzovskoye	U. Jurassic	5.060	6.180	7.800	2.530	3.090	3.900
Sibkrayevskoye	U. Jurassic	11.700	24.160	42.520	5.850	12.080	21.260
Tungolskoye	U. Jurassic	0.180	1.560	3.480	0.090	0.780	1.740
Kondrashevskoye	U. Jurassic	0.020	0.160	0.240	0.010	0.080	0.120
Total Reserve =	24.340	48.340	70.960	12.170	24.170	35.480
Total NPV 10 $M=	266.300	537.000		133.150	268.500
NPV10 $/bbl =	10.94	11.11		10.94	11.11

Lineynoye & West Lineynoye Field

There is a reduction of 2P reserves on a net basis of 4Mbbls, this is due to a more rigorous well log interpretation reducing overall net pay. Recent engineering studies based on historical production (material balance calculations) provided a degree of verification of the new volumes calculated.

This field cluster is a key producing asset of the Company. The production wells at Pad 1 continue to perform well, with three producing over 700,000 bbls and two more over 300,000 bbls cumulative production to date. The recent re-frac of the L-115 well has proven highly successful, with additional wells planned to be fracked this winter (Q1 2022).

Sibkrayevskoye Field

The unsuccessful drilling of two appraisal / development wells (S-374 and S-375) in 2016 and 2017 has resulted in a significant reduction  of 2P reserves at this field compared to the 2016 report, with the southern extension of the field being written off.

Despite this, management remains very confident that this field will continue to provide an engine room for production growth and are particularly enthusiastic regarding last year’s frac of the S-373 well having added more than 500 bopd post frac. While the field still has a substantial reserve base and future upside, management focus will be on the further development of the frac programme, which is expected to provide a continuing and growing revenue stream.  The earlier unsuccessful drilling results have confirmed management’s view of the pitfalls of drilling certain development wells, prior to 3D seismic and therefore no further drilling is anticipated to take place prior to 3D seismic.

Arbuzovskoye Field

There has been a small 0.36 Mbbls net reduction in 2P reserve, but we are pleased to see a 1.6Mbbls net increase in 1P reserves due to the drilling of the horizontal wells at PAD 2 in 2016.

The performance of these two horizontal wells has been excellent, with the A-214 Hz well recovering 750,000 bbls and the A-215 Hz well recovering almost 400,000 bbls.

Tungolskoye Field

There has been a reduction of 2Mbbls (net) of 2P reserves due to the poor performance of the wells drilled in 2015 when four horizontal and four vertical wells were drilled. Initial rates on the horizontal wells were very encouraging with rates over 500 bopd but declined rapidly. As reported earlier, the field was suspended in early 2019 due to low flow rates leading to non-commercial production.  There are plans to re-enter the T-501 horizontal well during this coming winter season, and if successful, the program could expand. Upon success, we would expect reserve numbers to increase at the next reserve audit.

Emtorskaya Prospect

The Emtorskaya prospect sits on the northern margin of the licence up dip and between the Lineynoye field to the south and the Sibkrayevskoye field to the east. This prospect provides material risked upside for License 61.

Table 5: Licence 61 – Gross Unrisked Prospective Resources (M&L), as of 30^th June 2021

Prospect	Gross	Net Attributable
P90	P50	Pmean	P10	P90	P50	Pmean	P10
Mbbls	Mbbls	Mbbls	Mbbls	Mbbls	Mbbls	Mbbls	Mbbls
Emtorskaya	10.50	55.52	96.18	253.35	5.25	27.76	48.09	126.68

Geological Chance of Success = 49.7%

The prospect was also evaluated in 2016 by Ryder Scott, but due to changes in assessment methodology associated with reserve audit regulations, direct comparison is not straightforward.  PTR believes the 2016 P3 figure of 46.78 Mbbls as not fully reflecting the more robust upside seen with additional in-house integrated evaluation of legacy wells in the vicinity and newer 2D seismic data.

M&L estimated the (gross) Pmean of 96.18 Mbbls with an estimated geological chance of success of 49.7% which PTR believes is a more accurate reflection of the potential value of the prospect to the Company.

In 2016, PetroNeft Resources also had 11 prospects in the southern part of the licence audited by Ryder Scott as potential prospective resources. This portfolio of dependent prospects presents future significant upside unrisked gross potential of ca.287Mbbls.  However, as very little new information is available on these prospects since the last audit, combined with the operational focus of the value creation being around existing fields and the northern hub, a decision was taken to exclude this resource in the current audit report.

PetroNeft Resources plc( LON:PTR) an international oil and gas exploration and production company focused in Russia, is pleased to announce that all Resolutions were duly passed without amendment at the Company’s AGM held at 11.00 am today, 17 December 2021. 

All resolutions as set out in the Notice of AGM were voted on by way of a poll and the results were as follows:

	In Favour(Including discretionary)	Against	Vote Total as % of Issued Share Capital	Withheld*
Resolution	Votes	%	Votes	%	%	Votes
1	576,748,487	99.99	50,000	0.01	53.8	147,455
2	576,748,487	99.97	195,455	0.03	53.8	2,000
3	565,054,634	99.97	195,455	0.03	53.8	11,695,853
4	576,748,487	99.97	195,455	0.03	53.8	2,000
5	565,054,634	99.97	195,455	0.03	53.8	11,695,853
6	576,748,487	99.97	195,455	0.03	53.8	2,000
7	565,054,634	99.97	195,455	0.03	53.8	11,695,853
8	565,054,634	97.94	11,889,309	2.06	53.8	2,000

*A vote withheld is not a vote in law and is therefore not counted towards the proportion of votes “in favour” or “against” the Resolution.

The full wording of the resolutions can be found by clicking on the following link:

 http://petroneft.com/upload/iblock/21c/21cbf26d4a7455eab7659962d2e5495b.pdf

A full replay of the AGM presentation can be found by clicking on the following link. The replay will be available for your perusal up until 16 December 2022.

https://globalmeet.webcasts.com/starthere.jsp?ei=1517532&tp_key=b11c98442e

PetroNeft Resources plc (LON:PTR) an oil & gas exploration and production company, operating in the Tomsk Oblast, Russian Federation, and 90% owner and operator of Licence 67 and 50% owner and operator of Licence 61 provided today the following financing update.

Highlights

·    Reduction in Petrogrand loan to $2.3 million and all conditions now satisfied to extend maturity for an additional year.

·    Agreement reached to extend the current term by 30 days to 15^th January 2022 due to on-going 3^rd party refinancing negotiations.

Petrogrand Loan facility 

In January 2018 PetroNeft agreed a loan facility for up to US$2 million with Swedish company Petrogrand AB (“Petrogrand”) secured on the assets of PetroNeft. The loan facility was fully drawn down and was used to finance the drilling of the successful C-4 well in 2018 and for general corporate purposes. During 2019, the parties further agreed to an increase in the facility by US$500,000 to US$2.5 million and a revised maturity date of 15th December 2020. Terms included the potential entitlement to bonus payments of US$2.5 million per Licence if either or both Licence 61 or Licence 67 are sold before 31 December 2022. On the 15^th December 2020, the maturity date was further extended to 15^th December 2021 under the following terms:

·    Extension to the Maturity date to 15^th December 2021 at the same interest rate.

·    Ten percent of the loan amount to be repaid in six equal instalments from July through to December 2021.

·    Interest accrued and owing at that time was rolled up into the outstanding principal amount.

·    Further extension possible to 15^th December 2022 on payment of a further 10% of outstanding loan amount by 15^th December 2021.

·    Extension to the bonus payments timing by up to two years to 31^st December 2024.

PetroNeft has met all interest payments in full and in addition has now paid the revised contracted amount of $574,430 (representing 20% of the principal), reducing the principal to $2.3 million, which enables the facility to be extended by a further 12 months to 15^th December 2022. 

PetroNeft is however negotiating the potential whole or partial refinancing of this facility with a third party.  In the event that the refinancing occurs before 15 January 2022, Petrogrands entitlement to bonus payments would remain only until 31^st January 2024.  If Petroneft is successful in renegotiating the loan facility, it could significantly improve its debt position. If agreement is not reached then the maturity date will revert to 15^th December 2022 with other loan terms remaining.

David Sturt, CEO of PetroNeft Resources, commented:

“Since the loan facility was first put in place back in 2018 Petrogrand have been very supportive of the company, providing the financial support on which much of our progress has been based.   We are very pleased that Petrogrand has provided us with an extension to enable the company to try and progress alternative refinancing options. Whilst these discussions are advanced and ongoing, there is no certainty that they will be successful.  Should they not prove successful we are happy to have the continued support in place from Petrogrand for another year, if required.

We are grateful and reassured by the continued confidence and support shown by Petrogrand in our performance and future plans for our assets.”

PetroNeft Resources plc (LON:PTR) an oil & gas exploration and production company, operating in the Tomsk Oblast, Russian Federation, and 90% owner and operator of Licence 67 and 50% owner and operator of Licence 61, has today provided a financing update.

Highlights

·      Total of $37,500 of debt converted to equity under 2021 convertible loan agreement for the issuance of 1,395,255 new ordinary shares.

Loan facility

PetroNeft Resources previously secured a convertible loan agreement, it being:

·      February 16^th, 2021: entered a US$2.9 million loan agreement with a group of 13 lenders. Lenders have the right to convert 75% of the outstanding loan to shares at a conversion price of stg £0.02 in year 1 and stg £0.025 in year 2.

The conversion of this debt to shares will result in the outstanding debt principal under these agreements being reduced from $1.083 million to $1.046 million and will result in an increase in the total number of issued shares in the Company from 1,070,397,358 to 1,071,792,613.  All shares are being issued at a premium to the share price on the date that the terms of the agreements were announced.

An application will be made to the London Stock Exchange and Euronext Dublin for the 1,395,255 PetroNeft ordinary shares to be admitted to trading on AIM and Euronext Growth. It is expected that admission to trading on each exchange will become effective and that dealings in the new ordinary shares will commence on AIM and Euronext Growth at 8.00 a.m. on 14 December 2021.

JP Morgan Global Commodities Research said this week that the impact on oil prices from the release of strategic petroleum reserves by the United States China, India, South Korea, Japan and Britain may not last for long.

The release of millions of barrels of oil from strategic reserves was an attempt to try to cool prices after OPEC+ producers did not respond to calls to pump more crude.

“Any further price impact of an actual release will likely not be sustained, as balances would not change beyond the month of the discharge,” JP Morgan said in its research note.

Goldman Sachs said that the 70 million to 80 million strategic petroleum reserves release was a “drop in the ocean.”

PetroNeft Resources CEO David Sturt told DirectorsTalk Interviews “The dynamics in the oil business are looking incredibly strong and confirm our conviction that a unique opportunity is unfolding. This is an excellent time for PetroNeft to be looking to increase our production through our recently announced fracking campaign for early 22.

It is especially good for PetroNeft being a producer in Russia where the tax regime enables operators to share in the upside with the state.”

PetroNeft Resources plc (LON:PTR) is an oil & gas exploration and production company, operating in the Tomsk Oblast, Russian Federation, Its 90% owner and operator of Licence 67 and 50% owner and operator of Licence 61.

PetroNeft Resources plc (LON:PTR) has confirmem that the Notice of the Company’s 2021 Annual General Meeting (AGM) has been posted to Shareholders today. The 2021 AGM will be held on 17 December 2021 at 11:00am in the Clayton Hotel, Merrion Road, Ballsbridge, Dublin 4, D04 P3C3. The Notice is now available online at the Company’s website http://petroneft.com/investor-relations/investor-notices/

COVID-19

The Company plans to conduct the AGM in accordance with the Irish Government’s COVID-19 related public health measures and public health advice. Shareholders should expect the AGM to take place under constrained circumstances. We strongly encourage Shareholders on this occasion to vote by proxy. The AGM will be as brief as possible, observing physical distancing measures, and the venue will be vacated promptly after the AGM. The Company will ensure that all legal requirements of the meeting, in accordance with its Articles of Association, are satisfied with the minimum necessary quorum of three Shareholders (which will be facilitated by the Company), and physical distancing measures are in place. The Company reserves the right to refuse entry to the meeting where reasonably necessary to comply with COVID-19 related public health measures and advice. 

PetroNeft Resources (LON: PTR) will continue to closely monitor the developing situation around COVID-19, including the latest Government guidance, and how this may affect the arrangements for the AGM. Consequently, the AGM is subject to change, possibly at short notice. If it becomes necessary or appropriate to revise the current arrangements for the AGM, further information will be made available as quickly as possible by RNS and on our website at: http://petroneft.com/investor-relations/investor-notices/

PetroNeft Resources plc (LON:PTR) an oil & gas exploration and production company, operating in the Tomsk Oblast, Russian Federation, and 90% owner and operator of Licence 67 and 50% owner and operator of Licence 61 has today announced the following operational news.

Highlights

• Contract signed for the provision of fracking services on the Lineynoye and Arbuzovskoye fields in Licence 61 during the forthcoming winter season.

Following the success of our fracking program in early 2021, PetroNeft is pleased to announce it is extending the campaign for winter 2021/22 with the goal of increasing production and also improving the sustained flow rate of existing wells  over two producing fields in licence 61. 

During Q1 2021, a two well fracking program was successfully completed on wells S-373 (Sibkrayevskoye field) and L-115 (Lineynoye field). Both were highly successful and exceeded expectations with immediate post frack production rates increasing over 200% and have leveled off at an increased rate of between 50%-100% and currently projected to make a full return on investment before the end of the year, well ahead of schedule.

Following this successful initial program, a new contract was signed with NewTech Well Services LLC, an international oilfield services company, for the provision of a larger fracking program covering an additional five wells.  The contract has been secured at the same terms as earlier in the year, ensuring a strong return on additional production.

The program includes the fracking of four wells at the Lineynoye field and one well at the Arbuzovskoye field. Other contingent candidates are still being evaluated and should they meet the technical, operational and economic criteria they may be added to the program. 

At the Lineynoye field the target is to refrac four wells to boost overall production and cash flow. At the Arbuzovskoye field, the A-1 well has been suffering from near well bore reservoir damage. Historically the well has been re-perforated multiple times and although these programs have been successful in reestablishing production, the rates have progressively declined. The planned frack has therefore been designed to remove near well bore damage and reach out into some potential areas of the reservoir that have not been drained adequately.

David Sturt, CEO PetroNeft Resources commented:

“The two well fracking program in early 2021, which was based on extensive technical planning by our team, was a fantastic success.  The program performed beyond our expectations and will have delivered a full return on investment in under a year. Based on this, our team has developed a more ambitious 5-well program for the coming winter. We are delighted to be working again with NewTech, following the successful engagement earlier in the year.

After considerable technical review, we took a careful and measured approach to our two well fracking program earlier this year to ensure that our assumptions were correct. It is now very satisfying to be able to extend the program this year to another five wells and further boost production on our licence 61 asset. We will continue to work closely with all the relevant stakeholders to ensure we operate in a safe and environmentally responsive manner, through full execution of this program

This is the first part of our 2022 operational program to be announced and we look forward to providing further updates over the coming weeks as we look to build on the progress made to date.”

PetroNeft plc (LON:PTR) an oil and gas exploration and production company, operating in the Tomsk Oblast, Russian Federation and 90% owner and operator of Licence 67 and 50% owner and operator of Licence 61 has announced that the Board has elected Eskil Jersing as Independent Non-Executive Director of the Company with immediate effect.

Eskil is an Oil Industry Senior Executive with some 34 years’ plus of Upstream experience in most of the world’s key Petroleum basins and was previously the CEO of Wentworth Resources plc, a Tanzanian Gas producer and CEO of Sterling Energy plc, both AIM listed E&P Companies.

He is currently New Business Advisor to Eburon Resources LLC, a privately backed Exploration startup, on the Advisory panel of Energilink ltd and a Director of Eskoil ltd.

Eskil graduated with a BSc. in Geophysics from Cardiff University, and an MSc. in Petroleum Geology from Imperial College London.

PetroNeft plc Chairman, Alastair McBain, welcomed the appointment:

“PetroNeft is a tight team and we have relied heavily on the experience and expertise of our Board to devise and deliver the transformational strategy we have undertaken in the business. Eskil has considerable depth and breadth of experience within the oil and gas industry and of leading listed E & P companies.  I believe he has a major contribution to make to the next chapter of our growth and I look forward to working with him.”

PetroNeft Resources plc (LON:PTR), an oil & gas exploration and production company, operating in the Tomsk Oblast, Russian Federation, and 90% owner and operator of Licence 67 and 50% owner and operator of Licence 61, has announced its unaudited financial and operating results for the half-year period ended 30^th June 2021.

David Sturt – Chief  Executive Officer commented, 

“Following the considerable challenges faced by the Company in 2020, I am very pleased to report significant progress during the first half of 2021; production has increased, strict cost control has been maintained, operating cash flows have been significantly increased and the capital structure of the Group has been improved.

  It is particularly pleasing to see such an immediate impact from Licence 67 where we  increased our interest during the reporting period. This asset has been operationally profitable during the period, especially during Q2 once the C-4 well had been opened up. We see significant potential for growth in this asset due to the large number of additional drilling locations with very low OPEX costs and reduced tax rate. 

Thanks largely to the technical progress made by our Tomsk team over the last two years, the outlook for the company has been transformed.  A decline in production was first arrested and now reversed.  Our corporate strategy has moved on from asset divestment to asset enhancement. While there is much more to be done, we are now in a position where the Company is moving forward with strength and confidence.  We have also brought Licence 67 on stream and have increased our share in this asset.  It is now realistic to view this as a growing business.  As society opens again, I relish the prospect of more contact with our shareholders and further informing them of our progress.”

Year to date highlights

Strategic

• Strategic focus on building a financially sustainable company to drive value creation through organic growth.
• Increased the ownership interest in Licence 67 to 90% by completing the acquisition of an additional 40% interest in L icence 67 on 5^th March 2021.
• Established year-round production from Cheremshanskoye field (Licence 67).
• Refreshed and strengthened the board, Alastair McBain, former CEO of Arawak Energy and currently a significant shareholder of the Company, became Non-Executive Chairman 29^th January 2021,
• Successfully raised $4.6M through issuance of convertible loans with $1.7M used for the acquisition of Licence 67.
• Substantial debt retired under three historic loan agreements, with loan principal amounts declining from $5.9M to $3.044M and then further reduced after the reporting period to $2.379M. The conversion pricings, when agreed under the respective agreements, were at a significant premium to the then market share price.
• Significant improvement in operating cash flows at both Licence 67 and Licence 61, covering investment activities including the Licence 61 fracking program and all-season road at the Cheremshanskoye field.
• Independent reserves report commissioned (Miller and Lents), nearing completion.

Operations

• Gross production increased 25.1% rising to 1,967 bopd (H1 2020: 1,573 bopd) and 41.5% quarter over quarter during the first 6 months of 2021, and to Q2 2,091 bopd from (Q2 2020: 1,476 bopd)

Gross Production per L61 and L67	H1 2021	H1 2020	Q2 2021	Q2 2020
Total Production (bopd)	1,967	1,573	2,091	1,476
Net to PetroNeft Resources plc	1,065	790	1,166	739

Licence 61	H1 2021	H1 2020	Q2 2021	Q2 2020
Total gross production	319,511	285,020	162,936	133,496
Gross bopd	1,765	1,566	1,791	1,467
Net to PetroNeft Resources plc 50% share bopd	883	787	896	739

Licence 67	H1 2021	H1 2020	Q2 2021	Q2 2020
Total gross production	36,586	1,200	27,307	0
Gross bopd	202	7	300	0
Net to PetroNeft Resources plc 90% share bopd from Q1 2021 (2020: 50%)	182	3	270	0

• Stable production performance at the new Cheremshanskoye field, in production since February 2021 and currently > 300 bopd natural flow with no appreciable decline.
• Highly successful fracking campaign at Licence 61 (wells’ S-373 & L-115), production at both wells significantly exceeding expectations
• Stable production performance from legacy fields at Licence 61.
• Mini Oil Processing unit operational under test regime producing sufficient diesel to meet all the Group’s internal needs and to supply excess volumes to the local market, thereby reducing costs and providing a valuable additional revenue stream. 

Financial performance of Licences

Licence 61 (100% basis)	Units	H1 2021	H1 2020	Q2 2021	Q2 2020
Revenue	$’000	14,412	8,043	7,954	2,709
Cost of Sales	$’000	(14,356)	(8,987)	(7,384)	(3,598)
Gross Profit	$’000	56	(944)	570	(889)
Administrative Expenses	$’000	(1,623)	(1,533)	(805)	(759)
Operating Profit / (Loss)	$’000	(1,567)	(2,496)	(235)	(1,648)
Average realized price	$/bbl	44.3	27.2	47.3	19.3
Cash operating costs*	$/bbl	15.6	16.0	14.0	13.8

Licence 67 (100% basis)	Units	H1 2021	H1 2020	Q2 2021	Q2 2020
Revenue	$’000	1,629	–	1,305	–
Cost of Sales	$’000	(1,287)	–	(928)	–
Gross Profit	$’000	342	–	342	–
Administrative Expenses	$’000	(171)	(0.2)	(136)	–
Operating Profit / (Loss)	$’000	171	(0.2)	206	–
Average realized price	$/bbl	44.5	35.8	47.7	n/a
Cash operating costs*	$/bbl	8.5	162.2	5.7	n/a

Group Financial Results

• Consolidated revenue $2.5M (H1 2020: $1M), for the first time including Crude oil revenues of $1.6M following the consolidation of Russian BD Holdings B.V. (Licence 67) in March 2021.  These sales show a subsequent month over month increase through to the end of June 2021.
• Consolidated gross profit: $0.647M (H1 2020: $0.192M) and an improved Gross margin driven by a strong performance in Russian BD Holdings BV’s operations.
• Consolidated loss for the period – $2.2M (H1 2020: $2.7M), a significant improvement in bottom line reported results in a very busy corporate activity period for the Company. The reported results include one off accounting adjustments both for the extra 40% acquisition and the convertible debt retirement programs. Excluding these adjustments consolidated earnings for the interim period were $2.0M (H1 2020: $2.7), which demonstrates continued operational improvements across all subsidiaries and the Licence 61 joint venture.
• Consolidated cash balance: $1.1M (31 December 2020: $0.1M). Improvements in cash generation from existing operations and funding through the convertible debt program.
• Gross Debt: $7.76M (31 December 2020: $4.15M). During the Period, the Group raised $4.6M from convertible loans issuances and then reduced the debt by retiring $2.9M of the convertible loans through the issuance of shares.

Outlook

• Evaluating options to develop the significant portfolio of low-risk appraisal/development opportunities including the Cheremshanskoye and Ledovoye fields in Licence 67 and the Northern Hub (Sibkrayevskoye and, West Lineynoye fields and Emtorskaya structure) in Licence 61
• Further production enhancement operations being planned to include: an expanded fracking campaign, further waterflood optimization, and re-working Tungolskoye wells to try to re-establish commercial production.
• Growing confidence in the fundamentals of the industry whilst operating within a supportive regulatory and fiscal regime.