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

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."

One of the most underestimated oil stocks on the market.....should be 100p....

Not a gusher like xcite , but a steady riser for sure.

Looks like its going to make a new high.

Steady as she goes.

We did hit 67p which is a new high, hope we dont fall back on news, which is what tends to happen.

Interesting read.
cyril

Bloomberg

Petroneft Boosts Reserves, Value Drilling Abandoned Soviet Finds
By Stephen Bierman - Dec 23, 2010 2:34 PM GMT

Petroneft Plc, the biggest gainer among Russian oil producers this year, aims to triple output and reserves, drilling deposits abandoned during the Soviet era.

A lot of time when you talk about Russia you need to talk full-cycle costs, Chief Executive Officer Dennis Francis, a former executive with Marathon Oil Corp. in Russia, said in an interview. You can pick up reserves cheaply. While you make less money, you also spend less money finding the barrel.

Drilling results at a prospect by Petronefts Soviet-era Lineynoye deposit in the Tomsk region of Siberia has lowered the risk of exploring in the area, he said. The company aims to boost proved and probable reserves to more than 200 million barrels by the end of next year from 70.8 million now, Francis said. Petronefts market value in London more than tripled this year to about 275 million pounds ($424 million).

Oil taxes and the financial crisis have hindered Russian oil explorers listed on Londons AIM small cap market, while Sibir Energy Plc and Imperial Energy Plc were bought by larger companies. Urals Energy Plc ceded assets to OAO Sberbank after failing to meet loan payments. Volga Gas Plc has lost 62 percent in the past year, the most among Russian oil producers this year, after drilling a dry well.

OAO Rosneft, Russias largest oil producer, has declined 13 percent in Moscow in the past year. OAO Lukoil, the second biggest, has risen 5.4 percent, while TNK-BP gas gained 57 percent on the RTS bourse as it agreed to buy BP Plc assets and was admitted to trading on Russias biggest exchange, Micex.

Reserve Additions

Petroneft shares arent that expensive considering that reserve additions are likely early next year after drilling a successful well and further exploration in the region, Ildar Davletshin, an oil and gas analyst at Renaissance Capital, said by phone. Theres also the potential for a buyer to be a catalyst.

Low flow rates due to non-porous subsoil may pose a risk to production increases, Davletshin said. Petroneft plans to use high-cost fracturing to pulverize bedrock and improve flows, he said.

Petroneft may double commercial output to 4,000 barrels a day this year, after starting in October, and aims to triple that to 12,000 barrels a day by the end of 2012, Francis said. A second phase of development may push output to more 20,000 barrels a day in 2014, according to the company.

Thousands of Prospects

The company may also seek to acquire licenses, Francis said.

Russia has thousands of Soviet-era prospects in the 10 million or 15 million barrel range, passed over at the time for larger deposits closer to pipelines, Francis said. An expanded pipeline network and higher oil prices have made some of these deposits potentially viable, he said.

Its a small niche, Francis said. We have an advantage working there over some of the larger companies who are more focused on developing bigger resources.

Petroneft gained access to a link to OAO Transnefts trunk pipeline from fields to the east of the Ob River for 25 years under an agreement signed in 2009. The link was built by Imperial Energy, which Indias Oil & Natural Gas Corp. acquired for about 1.4 billion pounds ($2.2 billion) last year.

The Energy Ministry estimates that only half of the countrys undeveloped oil fields could make a profit at $60 a barrel oil prices, given current taxes and costs.

Tax Discounts

Russia may encourage development of smaller deposits as the government aims to hold output at a post-Soviet high of 10 million barrels a day for more than a decade. The Finance Ministry has proposed discounts to the mineral extraction tax for deposits containing less than 35 million barrels of oil to help revive Russian oil production, which clearly helps, Francis said.

The company was formed in 2005 with rights to Block 61 in Tomsk, a region on the fringe of the West Siberian basin where most of Russias oil is produced. Through drilling, Petroneft raised the blocks proved, probable and possible reserves to 531 million barrels at the start of 2009, according to an audit by Ryder Scott.

In 2009, Petroneft and Arawak Energy Ltd. bought the rights to Block 67 and plan to begin drilling next year. The block holds 55 million barrels of reserves under the Russian C3 classification.

Small explorers have preferred Tomsk where blocks put up for auctions tend to contain several prospects as opposed to other west Siberian regions, such as Khanty-Mansiysk, where structures tend to be auctioned individually, said Francis.

Petroneft agreed loan facility of as much as $30 million dollar with Macquarie Group Ltd. in May and raised $43 million selling shares to fund drilling and move reserves from the possible category to the more valuable proved and probable category.

We are oil and gas people and we develop oil and gas and eventually if you do that well and get above the radar people get interested, he said. We arent going to stick polish and lipstick on it and sell.

To contact the reporter on this story: Stephen Bierman in Moscow sbierman1@bloomberg.net.

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net.
.

Operations Update

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-end production reaches 2,750 bopd from 9 of 11 wells

-- Fracture stimulation programme to start mid-January 2011 will significantly increase output

-- Retaining 2011 and 2012 production targets

-- Lineynoye development programme on schedule; drilling from Pad 2 to start in February

-- Very good test results for Arbuzovskaya No. 1 well

-- Third Exploration well added to 2011 drilling schedule

-- Drilling Contracts awarded for 20 well Exploration and Development drilling programme

Production

Year-end production reached 2,750 bopd from 9 of 11 wells drilled. While the performance of the wells is good, production growth is being constrained by greater than expected formation damage resulting from the drilling and completion process. This issue will be overcome by the planned fracture stimulation programme.

Production from the Lineynoye No. 1 well, which is one of the best wells in the field, is not included in the year end production total as the well is currently shut-in awaiting installation of a special screw pump. Also, well 117 was taken offline pre year-end in preparation for fracture stimulation. The current production capacity of the field is estimated at over 3,000 bopd which is less than our year-end target of 4 000 bopd.

The winter fracture stimulation programme will commence in mid-January and the Board are confident that this will significantly increase the well rates by fracing through the near well bore damage and creating additional permeability conduits in the reservoir.

The Board have not changed their view on the overall productivity of the field or long term production targets as our plans have always been to fracture stimulate the wells. Consequently the Board remain confident of achieving the production targets of 8,000 bopd by end 2011 and 12,000 bopd by end 2012.

2011 Licence 61 Development programme - Lineynoye oil field

The production drilling rig that drilled the Pad 1 wells will be mobilised to Pad 2 in the coming weeks and drilling of the first of nine wells at Pad 2 should commence by the end of February. A second production drilling rig is being mobilised to Pad 3 where drilling of the first of eight wells will commence in April.

Works to tie-in Pads 2 and 3 to the existing central processing facility have already commenced and it is expected these will be completed by June 2011 thereby allowing new wells to be brought swiftly into production. We are also planning to undertake an early fracture stimulation programme in June 2011 on up to 6 wells from Pads 2 and 3.

Arbuzovskaya Exploration Well

The well was drilled to a total depth of 2,903 m on 13 November 2010. The final log data indicates that the base of the Bazhenov Formation is at 2,565 m and is underlain by 5.1 m of good quality oil saturated reservoir in the J1-1 interval. An open hole test of this interval produced at a prorated inflow of 289 bopd. The oil is very high quality with an API gravity of 47.5 degrees. There were no other zones with hydrocarbon indications in the well.

Production casing was run in the well and a step rate DST was performed. Stabilised flow on an 8 mm choke was 176 bopd and the calculated productivity index indicates the well should produce around 400 bopd on pump without fracture stimulation. These are very good results and plans are underway to register the reserves and obtain a pilot production licence which will allow us to tie-in this new field to the Lineynoye central processing facility in 2012.

Ryder Scott is currently assessing the proved and probable reserves for the field. PetroNeft estimates the 2P reserves to be in the 10 to 15 million barrel range. It is expected that the Ryder Scott report will be published in early March 2011.

North Varyakhskaya Prospect

Based on the highly encouraging results of the Arbuzovskaya No. 1 well tests, which de-risks the surrounding area, the Board has approved the addition of the nearby North Varyakhskaya No. 1 exploration well to the 2011 drilling programme. If successful, this prospect, which is located 6 km north of Arbuzovskoye oil field, can easily be tied-in to the future Lineynoye to Arbuzovskoye pipeline and could be on production in 2012.

Drilling Tender Results - 2011 Development and Exploration drilling

PetroNeft plans to drill a total of 20 wells in Licence 61 during 2011. The programme will consist of two production rigs which will drill 17 development wells from two new pads at Lineynoye and three exploration rigs which will drill the Kondrashevskaya No. 2, North Varyakhskaya No. 1 and Sibkravevskaya No. 372 wells.

Based on drilling tender results the Board has approved the award of the 2011 Drilling Contracts to LLC "Tomskburneftegaz" (TBNG). TBNG is one of the largest drilling contractors in the Tomsk region. In accordance with AIM Rule 13 and ESM Rule 13, the drilling contracts are deemed to be a related party transaction as Vakha Sobraliev, a Non-Executive director of the Company, is principal owner of TBNG.

The Board of Directors, with the exception of Vakha Sobraliev who is involved in the transaction as a related party, having consulted with Davy, the Company's Nominated Adviser and ESM adviser, have determined that the terms of the drilling contracts are fair and reasonable insofar as shareholders are concerned.

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

"While our well performance is good, it has been limited due to formation damage arising from the drilling and completion process. However, this will be resolved by the hydraulic fracturing programme and has not in any way changed our view of the reservoir quality or overall productivity of the field. We remain confident of achieving our long term production targets.

We are delighted with the results of the Arbuzovskaya No. 1 testing and have planned a very active 2011 development and exploration drilling programme in Licence 61. In particular, the addition of North Varyakhskaya prospect adds another quality prospect with near term production pot

Falls back on news, nothing new .