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

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 .

Unless unexpected,most stock will retrace as short termers take their profits and move on.It's what makes a market,but also creates entry oppotunities.
Just more news on how things will pan out,for the patient.

Oil Barrel:

Petroneft Resources Misses Its 2010 Output Target From Its Siberia Acreage But Is Sanguine It Can Quickly Make Good The Shortfall

PetroNeft Resources, the AIM listed junior with assets in the Tomsk Oblast, Siberia, Russia has missed its announced output target for 2010 but is not nonplussed (maybe that should be un nonplussed) about the shortfall and on other fronts looks in good shape.

The company is the owner of two oil and gas permits, Licences 61 and 67 in the Tomsk Oblast, where it is revisiting and bringing on old, known discoveries. The company had a couple of difficult years in Siberia where the ground is alternatively swamp or frozen solid, but it finally got going in 2010 with its low risk/low costs wells (about US$1.5 million a pop). The company had expected that it would be producing 4,000 bopd from nine wells by exit 2010, mostly from the Lineynoye, field one of four fields on the Licence 61 permit.

In the event the company has now reported that year- end production reached 2,750 bopd from 9 of 11 wells drilled. PetroNeft has said that 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 has meant that the current capacity of the field is estimated at over 3,000 bopd which is less than the companys year-end target of 4000 bopd. It seems that the issue will be overcome by a planned fracture stimulation programme this winter. The fraccing programme will start imminently.

PetroNeft is not too concerned about the production lag. Apart from anything else 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 the fracture stimulation.

PetroNeft CEO Dennis Francis told Oilbarrel he was, not too worried about the production total. He said I reckon that once the fracture stimulation really gets going we will make up the shortfall in about six weeks or so. The news does not seem to have done any serious damage to the share price, it came off less than 5 per on the announcement of the production total for 2010.

There have been four oilfields on Licence 61 with known discoveries, Lineynoye, Tungolskoye, West Lineynoye and Kondrashevskoye. Lineynoye is very much the focus of attention and PetroNefts activities so far have been a development process. The company has announced the production drilliing 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 start by the end of February. A second production drilling rig is being mobilised to Pad 3 where drilling of the first eight wells will commence in April. This means some 17 new wells in the coming year. The company says that The Board have not changed their view on the overall productivity of the field or the 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.

But there is more to Lineynoye than development. Backed by a US$43 equity fund raising in 2010 the company drilled the Arbuzovskaya Exploration Well to a total depth of 2,903 metres on November 13 2010. The final log data indicates that the base of the Bazhenov Formation is at 2,565m 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.

What the discovery means is that a fifth oil field is added to the northern group of wells and will be included in Phase 2 of the development programme. Moreover, Arubzovskaya is the first of a five well exploration programme designed to double the companys 2P reserve base within the next 12 months.

PetroNeft has estimated its 2P reserves at the moment at some 79 million barrels of oil equivalent (boe). The company itself estimates this new field to be in the 10 to 15 million barrel range. Ryder Scott is currently assessing the proved and probable reserves for the field and it is expected their report will published in March 2011.

At some point the exploration rigs will be moved to the more recently acquired Licence 67, which PetroNeft has a 50 per cent interest (Arawak has the remaining 50 per cent). Two wells are on the books for 2011. This licence is home to two existing discoveries, Ledovoye and Chemshanskaya, with the former thought to hold C1 and C2 reserves of around 30 million barrels (15 million net to PetroNeft).

See below from Ambrian today....

Management Meeting: Petroneft Resources (PTR LN)
Price: 67.5p Rec: NR Mkt Cap: 280.2m

Petroneft is looking to continue in 2011 where it left off in 2010 by increasing reserves and production via drilling of lots of development (17) and exploration (5) wells, and with such a busy drilling schedule there will be very regular newsflow (drilling updates roughly every 6-8 weeks).

Year-end 2010 production came in slightly under expectations at 2,750bbl/d vs. guidance of 4,000bbl/d. This was as a result of two out of the eleven production wells not being hooked up due to a key piece of production equipment not arriving onsite in time (a pump), in addition to several other wells being brought off-line in preparation for fracture stimulation and as a result of some near-wellbore formation damage.

Going forward we expect the formation damage issue will be side stepped once the winter frac job is complete and a much greater surface area of the reservoir is opened up for production. Post fracture stimulation, once all wells are brought back on-line, we expect production to surpass the previously mentioned 4,000bbl/d target. Given the large number of development wells to be drilled in 2011, along with the fact that fracture stimulation of some of the PAD 2 wells will take place ahead of winter 2011-12, we anticipate the guided exit 2011 production rate of 8,000bbl/d will be surpassed.

Interspersed with all the development drilling at PAD 2 and 3, Petroneft will also drill five exploration wells, three on Licence 61 and two on Licence 67. Bearing in mind the relatively predictable nature of the local geology and the fact that a number of the wells will be twinning old discoveries, we feel there is a very good chance that all five will be announced as successful discoveries.

We also expect Petroneft to be nimble with respect to new business development opportunities and, given that the next auction bid round is pencilled in for 1Q, we would not discount there being at least one more licence on the books by year end.

Canaccord sector review published yesterday...PTR with 93p target

Investment summary

PetroNeft almost ticked all of the boxes last year, only slipping up right at the end when it fell short of its production target. However, management seems confident that this is nothing more than a temporary blip and investors, quite rightly given its track record up to that point, seem to have given the company the benefit of the doubt. In 2011, we expect PetroNefts essentially simple story boosting reserves and output on its acreage in Western Siberia -to continue unfolding.

Recommendation and valuation

We estimate the existing oil fields on Licence 61 are worth the equivalent of 91p/share using a Brent crude oil price of US$87.50/barrel and a 15% discount rate. Adding an estimated 2p/share of net cash increases the total to 93p and we have rather conservatively given the exploration upside enjoyed by the company set this as our target price. We maintain our rating at BUY.

Also Ryder Scott resource update expected any day soon?

Well i've topped up,can;t believe the SP? News imminent,probably resource and results of fraccing?

Should be going a lot higher.....this will be 100p by the years end or thereabouts; the production is going to be increased dramatically and the next update will inform the market about it !, plus there will be exploration wells and that is what gets a sp going.....

From tonights FT:


Petroneft, the exploration group focused on Western Siberia, added 3.6 per cent to 58p, after Canaccord Genuity reiterated its"buy" recommendation, citing among other factors a forthcoming report on reserves Traders reckon that update could be published very soon and will show at least a 30 per cent increase in proved plus probable reserves to about 100m barrels .

News out today, ongoing progress, and drilling program commencing in April

100p target for me at least....

Davy Research
Petroneft
(PTR LN)
Releases operational update
10 March 2011
Job Langbroek
Closing Price: $0.95 Rating: Outperform 09/08/10
FACTS: Petroneft has released (March 10th) an operational update. Reserves (2P) have been increased from just over 70m barrels per day to 97m barrels. Seven out of nine fracced wells are producing at 400 barrels each. Two more are still due to come back on-line. The first well in the second development pad has started and the first exploration well this year will commence in April. Macquarie has converted a standard debt facility to a reserve base facility of up to $75m of which $30m is approved. A further update is expected in early April.

ANALYSIS: The statement delivers on most parts of the business plan as guided by the group. Reserve growth to 97m 2P barrels is up 37% from just over 70m barrels with the increase coming roughly half through drilling and half through the addition of licence #67 to its portfolio. The first of this year's 17 development wells is due to complete very shortly and the first of this year's five exploration/appraisal wells will commence on the 12m barrel Kondrashevskoye prospect in April. Production output has suffered from a difficult February in the field. Consequently, only seven of the nine fracced wells are back on stabilised flow, running at 400 barrels per day on average. Petroneft now expects production to be in the 3,500-4,000 barrels per day range by early April. The conversion of the debt facility to reserve base lending is cheaper and points to the evolution of Petroneft as an oil and gas producer. The facility will obviously increase operational flexibility.

DAVY VIEW: The reserve upgrade and ongoing operational development of the Linenoye field is as expected. In all, this year's exploration targets and appraisal is targeting up to another 100m barrels of reserve growth. The production numbers will disappoint but should just be a function of timing. Guidance for exit production of 8,000 barrels per day by the end of 2011 is not challenging in the context of an additional 17 development wells on top of the nine drilled in recent months. Our valuation of 72p per share is built on a production profile which is very achievable and we see significant opportunity for reserve growth and value addition on top of the existing 2P reserve base. Our rating is 'outperform', a position made even more tenable by the recent share price pullback.

http://www.investegate.co.uk/Article.aspx?id=201103100701116879C/

http://www.investegate.co.uk/Article.aspx?id=201103210700092721D

All coming together,not long to wait?


At present, seven of the fractured wells have come back fully online and are averaging over 400 bopd after clean-up and normal initial decline. We currently anticipate that production will be in the 3,500 bopd to 4,000 bopd range by early April when all wells are back on production and we will provide a further update at that time.



Russia new oil tax regime to take effect by July
Fri Mar 25, 2011 2:24pm GMT
Print | Single Page[-] Text [+] MOSCOW, March 25 (Reuters) - Russia's new oil and oil products tax regime will take effect no later than July, deputy Finance Minister Sergei Shatalov told reporters on Friday.
"There are a few small problems with certain companies . . . We hope that a decision will be taken soon," he said, adding that the new tax regime -- that aims to lower duties on crude exports while increasing those on oil products -- will be enacted in July at the very latest.

Russia's Energy Ministry has submitted a new tax regime proposal to the Finance Ministry that would lower the crude oil export duty by around 7 percent.

Nobody seems interested in this one apart from niceonecyril and myself but this has all the hallmarks of a little gem.....