This looks a very good bet? Mentioned in the share magazine.

Perhaps not as big as Dragon Oil but with a hefty income from oil production...4000 barrels plus, I reckon the sp could touch the pound level by the end of the year...plus exploration upside...great little oil company to tuck away....

rf today's RNS suggests production will exceed 4000 bopd with plenty more to come.

Halifax, more the next IEC who's fields were in the same area,next block i believe?
cyril

If it's anything like IEC....then we are looking at several pounds.....but if I remember correctly : they had quite a few blocks, that's more than PTR have at the present moment but it's a nice comparison....

RF your right in concerning the extra blocks,i was thinking more of region and
success rate. Looks to be a very productive area and inferstructures in place.
cyril

Although a couple of weeks old well worthreminding ourselves of what we have,check the last statement.
cyril

PetroNeft Resources expecting first oil production in late August


29 July 2010



With the sixth of nine production wells drilled, and construction of production facilities almost complete, PetroNeft Resources expects to achieve first oil production from its Linenoye field in Russia, before the end of August.

Production will be transported in a newly constructed 60km pipeline which links up with facilities at Imperial Energy's Kiev-Eganskoye field for onward transmission to the main Transneft pipeline system.

With year round production, PetroNeft Resources is targeting 4,000 barrels per day by the end of 2010, 8,000 bopd in 2011 rising to 12,000 bopd in 2012 from the current development of the Linenoye and nearby West Linenoye fields. In 2012, a second development phase will see the addition of production from the Tungolskoye and Kondrashevskoye fields with production anticipated to reach 20,000 bopd from all four fields.

The four fields, plus 26 other prospects, are located in Licence 61, Tomsk Oblast, in the southeastern West Siberian plain of Russia. As at 1 January this year, booked 2P reserves from the four fields total 70 million barrels and 3P reserves are estimated at 531.3 million barrels. At the time of writing, Petroneft Resources' market capitalisation is around 150 million.

PetroNeft Resources which was established in 2005 to develop oil and gas assets in Russia now has two Licence Areas in the Tomsk Oblast: Licence 61 (100%), and the Ledovy Licence 67, which was won at auction in December 2009 and will be appraised and developed 50:50 with Arawak Energy.

Initial efforts on the recently acquired Licence 67 will involve reprocessing of data from 22 1970's vintage wells and 4,300 km of 2D seismic data acquired in the 1980's and 1990's.

In addition to bringing the Linenoye and West Linenoye fields into production, PetroNeft Resources is planning to spud an exploration well in October on the the Arbuzovskaya prospect, a 30 million barrel prospect about 10 kilometres from the Linenoye field. Further likely wells are an exploration well at the Sibkrayevskaya prospect where potential by-passed pay has been identified and a delineation well at the Kondrashevskoye oil field targeting upside above the 8 million barrels of 2P reserves currently identified.

The management of PetroNeft Resources will be no doubt be delighted when production starts up next month, however their plans to explore Licence 61 further and take a close look at Licence 67 suggest that they want to take the PetroNeft Resources story much further. The company's 2009 Annual Report is also one of the best reports I have come across in the oil and gas sector.

Looks like PTR are on the move,not so supprising considering 1st oil by end of month,ideal time for T traders?
cyril

News update expected next week .

Looking good.....excellent little Irish-Russian company this....

Super graph......another gem.....

Yes and with news expected this week,had to close one of my T positions,alas.
cyril

Excellent news as good as one could expect imo?
cyril

PetroNeft Resources plc

("PetroNeft" or the "Company")



Production Commences in Licence 61



PetroNeft Resources plc (AIM: PTR) owner and operator of Licences 61 and 67, Tomsk Oblast, Russian Federation, is pleased to provide an update on its operations at Licence 61.



Highlights:



Year-round production commenced on Licence 61 in Tomsk Oblast



Production of 4,000 bopd expected by end 2010



Seventh production well encounters thickest net oil pay to date





First Oil

Construction of production facilities has been completed and production has gradually been commenced from four wells. Field production has been 1,100 bbls of oil in the first two days of production and flow rates are expected to increase as drilling fluids are cleared out and the electric submersible pumps are optimised. Three additional wells will be brought on production over the coming week.



Eleven wells are scheduled to be on production at the end of the year and we anticipate meeting our year-end production target of 4,000 bopd. In January 2011, when a crew can be mobilised on winter roads, a programme of hydraulic fracture stimulation will commence in order to achieve the maximum production levels and enhance oil recovery.



Current oil production is being used to complete the commissioning of the oil processing facilities and is filling the oil storage tanks at the facilities site and will commence filling the 60 km pipeline to the Kiev-Eganskoye transfer point shortly.



Development Drilling

Drilling of the seventh of the planned nine production wells at the Lineynoye oil field has now been completed ahead of schedule. Preliminary log and survey data indicate that the well encountered the thickest net pay to date in the development programme.



Well No.
Top of reservoir vertical depth subsea metres
Gross hydrocarbon interval

metres
Net oil pay

metres
Comments



116


2,400


22.7


17.9
Interval is completely saturated with oil.




The well was drilled in 14 days which is the fewest days yet in the current development drilling programme.



Production casing has been run in the well and cemented. The drilling rig has been moved along its rails and drilling of the eighth well has commenced.



Dennis Francis, Chief Executive Officer of PetroNeft Resources plc, commented:



"We are delighted to announce that the Lineynoye Phase 1 project has achieved first year-round oil production. This has been a monumental accomplishment achieved in less than one year of the funding for the project. We owe special thanks to our Tomsk staff for their hard work, professionalism and planning to make this project a reality. The commencement of production is a transformational milestone for PetroNeft and provides a tremendous platform from which the Company can position itself for future growth."

Good result and a hefty income now for this smallish oil company.

Steady grower, dont think it will rocket , unless they get a big find or a large reserves upgrade.

The sp will take off as soon as an exploration target is spudded.....these people have a tendancy to get things right...not infallible but a very good percentage of successes.

Looks very promising !

Copied from another board,very positive.
cyril

attended Oilbarrel today, presentation was by Dennis Francis, standing in for Paul Dowling not sure what the significance of that was. This is the second time Ive seen Dennis present at Oilbarrel and he was very impressive.

I thought I knew Petroneft well, but you pick up so much more from a session like this compared to reading websites and RNSs. Most of this we know, but worth reminding.

- Potential to triple reserves over next year
- 2011 17 production wells
- 2012 at least 17 production wells
- There will be 2 production rigs for 6 years in Lineynoye fields.

Wells were taking 30 days to drill, as theyve learnt, down to 15 days each. Cost per well is $1.3m. Fraccing costs around another $200k.
This is using old Russian drilling rigs, theyre cheap and designed for Siberian conditions.

ARBUZOVSKAYA
Drilling now, results early November. 8 metres of pay roughly equates to 16m barrels of reserves. (Remember this and bring it out when the RNS hits).

SIBKRAYEVKAYA
Drilled in 70s by Russians. 8m oil bypassed. At todays prices, very commercial. Infact, Arbyzovskaya is the only pure exploration well over the next year, every other expl drill has logs indicating bypassed oil pays.

TAX CHANGES
They are confident that there will be a tax change in January for smaller oilfields (first time Ive seen anyone so confident about this legislation change. It will apply to any field with less than 5m tonnes of oil, this equates to 35m barrel fields most of Petronefts. This will apply a 30-40% discount on NPV tax. This has such a material difference, it will affect how they prioritise future wells.

Looking back over my previous research, typically you make $20 dollar profit in Russia on oil after tax, transport etc and makes little difference whether export or domestic. I cannot find the breakdown of all of the tax elements can someone help so we can work up what difference this makes to Petronefts profitability.

LICENSE 67
They are excited about this license, it has better reservoir rocks than license 61. A drill in the 70s flow tested at equivalent to 1,000bopd.

Should be able to book reserves in 2010 as part of the license commitment was to reprocess all of the Soviet paper logs, which have all been digitised and reprocessed.

Dennis reckons that Cheremshanskaya will be the companies best field when they look back in 5 years time. Probably dont need to frac, he mentioned thats important when your drilling hundreds of wells as at $200k a pop it adds up love the fact that he mentioned wells in the hundreds on a couple of occasions.

They evaluate hundreds of opportunities each year and expect a reserve addition through this route as well when they find the right opportunity.

I knew the Petroneft team were all ex-Marathon. Dennis and his team developed Sakahlin for Marathon and sold onto Shell, this team have brilliant Soviet experience and know how to do business there.

In Q&A, made point that all licenses to date have been bought from government auction so no legacy issues as many other companies have had, if they ever did an acquisition that was not from government, would spend a lot of time on due diligence for this reason.

They are so below the radar and the fields are not strategic reserves that there is no chance of them being taken back (important as Im a shareholder of Timan Oil & Gas, different issue but big power games get played). BPs and Gazproms are all fighting over 500m barrel fields and are divesting the type of fields Petroneft want.

All licenses are both exploration and production licenses, so no issue of going back and having problems converting exploration into production.

He paid a lot of credit to the Russian team that have executed flawlessly, including the local relationships with Tomsk authorities to keep all permits, documents correct.

A thoroughly professional presentation, every question asked was comprehensively answered. I came away even more impressed than before I came.

I hope this is useful to you all. Id appreciate in return, people share how they value Petroneft going forward (reserves / production) as Id really like to validate my thinking and future price expectations, including any tax experts the impact of tax changes.

Tony

and

Hi Brenchers

Thanks for your excellent post. This is my take on the conference today.

Dennis Francis made the presentation on behalf of PetroNeft and the CFO Paul Dowling was also present.

Dennis has good experience of working in Russia having worked with Marathon Oil there before that company was taken over by Shell. The business is without doubt been driven by Dennis. He has a vision of where the company is going over the next five years and is determined to see that vision through. To help him along the way he has an experienced Board of Directors. Dennis spoke highly of the local staff in Western Siberia which suggests to me he is a good man manager.

Having recently started oil production the plan is to produce 4,000 barrels of oil per day by 31.12.10, 8,000 by 31.12.11 and 12,000 by 31.12.12. Dennis gave the impression that these figures are very manageable. In addition he is optimistic about growing the oil reserves significantly. As of now the projection for peak production is over 20,000 barrels by 2014.

Dennis mentioned that he is pretty sure from 01.01.11 that the tax regime PetroNeft operate under will be reduced. This of course would be a big plus for the company. Dennis also said when asked that the licences were clean licences in so for the monies had been paid to the relevant authorities. The risk of doing business in Russia he said was minimal for the company as their production was under the radar

Part of the presentation suggested that there will be significant news flow every 6 to 8 weeks.

Paul Dowling told me that the placing of $43 million dollars worth of new shares today was heavily oversubscribed. At the presentation Dennis hinted that this new money would be used to expand the business. Of course he could not go into details.

To sum up PetroNeft is a small company with very good growth potential including of course shareholder value appreciation I think it is important to point out that this potential will only be realised over a period of five years period anything else would be a heck of a bonus.

More from the oilbarrel,
cyril

October 21, 2010

Conference Report 2: PetroNeft Raises Funds For Exploration, Cove Energy Raises Applause For Latest Mozambique Discovery And Gulfsands Continues To Impress In Syria

By Amy McLellan


Its one year since Dennis Francis of PetroNeft Resources last appeared at an Oilbarrel.com event and the ex-Marathon Oil executive had plenty of positive news to share with delegates. The past 12 months have seen the AIM-quoted E&P bring its first oilfield in Russia successfully onstream, despite the financial constraints of operating in a post credit crunch world and the logistical challenges of working in Western Siberia, where the ground is alternatively a swamp or frozen solid.
The company achieved maiden production in August when its Lineynoye oilfield in Licence 61 (PetroNeft 100 per cent) came onstream. Production is currently running at 2,000 bpd but should hit 4,000 barrels per day by early December as all nine producers are brought online, rising to 8,000 bpd by the end 2011 and 12,000 bpd by the end of 2012 as PetroNeft drills out the field at a rate of 17 wells a year going forward.

We will be drilling here with two rigs for the next six years, said Francis. The main thing is to keep the pace going. This is not unusual for fields in the Western Siberian Oil & Gas Basin and the good news is these wells are cheap, about US$1.5 million including fraccing, and quick to drill, about 15 days. This work programme is funded on an ongoing basis through a US$30 million facility with Macquarie Bank and cash flow from production. Phase 2 of the development programme will get underway from 2012 as nearby discoveries are tied into the Lineynoye facilities, helping to lift production north of 20,000 bpd by 2014.

With production established, the company is now turning its attention to exploration, backed by the proceeds of this weeks US$43 million equity fund raising. The company has already spudded its first exploration well, targeting the 16 million barrel Arbuzovskaya prospect, with results due in early November. This is a look-alike to Lineynoye, which lies just 10 km away, and offers a quick tie-in opportunity should the well come in. The second well will delineate the Kondrashevskoye discovery, a possible 20 million barrel prospect just 5 km from Lineynoye. The third is Sibkrayevskaya, a large structure drilled in the 1970s that could hold more than 44 million barrels.

The company is also planning to explore its recently acquired Licence 67, in which it has a 50 per cent interest, with two wells on the books for 2011. We got this last year at auction for US$1.4 million and it could be the best deal we ever make in Russia, said Francis, adding that the advantage of securing acreage at auction means the title is clean and not subject to dispute from former owners.

Licence 67 is home to two existing discoveries, Ledovoye and Cheremshanskaya, with the former holding C1 and C2 reserves of around 30 million barrels (15 million net to PetroNeft). Francis has especially high hopes for Cheremshanskaya, which was discovered in 1962 (and this was before 2D seismic) and found oil shows in the Upper and Lower Jurassic but was never tested because of a poor cementing job. The Upper Jurassic alone is reckoned to hold 60 million barrels on a C3 basis (it needs to be tested before reserves can be booked). I reckon this will be the best field in the company if we step forward five years, says Francis, pointing out that reservoir quality looks to be better than in Licence 61, meaning it is unlikely these wells will have to be fracced, thereby improving project economics.

Speaking of economics, Francis also highlighted some pending legislation that could help small producers. There are plans to introduce a tax discount, possibly of 30-40 per cent, for fields less than 35 million barrels, which would certainly impact on the Lineynoye satellites, making those barrels much more valuable than those in the mother field. The proposal could be signed into law in January and would have an impact on how PetroNeft prioritises its future development programme.

http://www.oilbarrel.com/nc/news/display_news/article/conference-report-2-

Result of well early Nov.
cyril

The Arbuzovskaya No. 1 well at the Arbuzovskaya (formerly Varyakhskaya) prospect
located 10 kilometres east of the Lineynoye oil field was spudded on 10 October 2010.
The current well depth is 626 metres where the conductor pipe has been set and cemented.
Drilling will re-commence today and the reservoir objective should be reached and tested in early November.

We don't have very long to wait for a result on this well .


Production
In late August 2010, year-round oil production commenced from the Lineynoye oil field in Licence 61.
The Companys field development programme was completed on time and substantially on budget.
Field production has now reached around 2,000 barrels of oil per day (bopd) from the seven wells currently producing.
The four remaining wells should all be producing by early December when we expect to reach our year-end target of 4,000 bopd.

Fab result,worth waiting for.
cyril



PetroNeft Resources plc ("PetroNeft" or the "Company")



New Oil Field discovery at Arbuzovskaya



PetroNeft Resources plc (AIM: PTR), the owner and operator of Licences 61 and 67, Tomsk Oblast, Russian Federation, is pleased to announce the discovery of a new oil field at Arbuzovskaya in Licence 61.



Highlights:



Arbuzovskaya No. 1 well discovers oil in main Upper Jurassic target



Approximately five metres of net oil pay in J1 interval



Open hole inflow test of 289 bopd (unstimulated)



Drilling continuing with secondary targets of Middle and Lower Jurassic





Arbuzovskaya No. 1 well



The Arbuzovskaya No. 1 well at the Arbuzovskaya (formerly Varyakhskaya) prospect located 10 kilometres east of the Lineynoye oil field in Licence 61 was spudded on 10 October 2010. The Upper Jurassic J1, oil reservoir horizon was intersected at 2,566 metres measured depth. Logs indicate that the J1 interval consists of 19.0 metres of sandstone and shale. Approximately 5.0 metres of the upper most part of this interval is considered to be continuous net pay with good reservoir properties and oil saturation throughout. An open hole test was conducted over this interval and tested at a pro-rated inflow of 289 bopd unstimulated. The oil is high quality with an API gravity of 40 degrees which is consistent with other fields in the Licence area.



The well will now be drilled to basement, at approximately 2,900 metres, targeting higher risk secondary objectives in the Middle and Lower Jurassic intervals. The well should be completed by the end of November at which stage the Company will update shareholders with the final results of the well as part of the operations update due around that time. This discovery well adds a fifth oil field to the northern group of fields and will be included in Phase 2 of the development.



Arbuzovskaya is the first well of a five well exploration programme designed to potentially double the Company's 2P reserve base within the next 12 months.



Dennis Francis, Chief Executive Officer of PetroNeft Resources plc commented:



"We are delighted to commence our new exploration campaign with the discovery of a fifth oil field at Licence 61. This is an especially important discovery, because of the good flow rate it confirms the wider prospectivity of a number of additional structures east of the existing producing Lineynoye oil field which can be easily tied in to the central processing facilities and pipeline at Lineynoye."