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

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.....

This is a good'un by the look of things...unfairly underpriced....just has to go higher...much higher...

Can't believe the drop here....with all the wells to be spudded soon and it drops like a stone ......the market has taken a very short term outlook with this one....

With current production of 2500 bopd and market cap of 120 million, looks fairly good value, and there are of course the other potential prospects comming on line. PE<10
Lets have some views.

Whens the next set of results due?

June 22, 2011

Operations Update
Production currently averaging about 2,500 bopd, primarily from 7 wells

Autumn production enhancement programme planned to re-frac, with larger frac sizes, existing wells on Pad 1 and new wells on Pad 2

Planned number of wells required from Pad 3 to be reduced recognising thinner oil pays

Extension of Lineynoye oil field north of Pad 2 with thicker pay zones expected in the longer term to compensate for reserve and production reductions from Pad 3

Q1 2012 production target has been revised to between 4,000 to 5,000 bopd and Q2 2013 to between 7,000 to 9,000 bopd

Update: PetroNeft tumbles amid lower production targets
Wed, 22/06/2011 - 10:12 | Fiona Bond

Russian-focused oil and gas explorer PetroNeft Resources (PTR) saw its shares plummet almost 20% on Wednesday morning after it lowered its production targets.

The company has revised its first-quarter 2012 production target to between 4,000 and 5,000 barrels of oil per day (bopd), down from its previous objective of 7,000 - 8,000 bopd.

Looking further ahead, it has set itself a range between 7,000 and 9,000 bopd in the first quarter of 2013.

Its current production is averaging around 2,500 bopd, primarily coming from seven of the nine wells drilled last year.

The company's more conservative approach to output stems from its decision to reduce the number of wells drilled from Pad 3 on the Lineynoye oil field as a result of thinner oil plays.

In turn, PetroNeft will increase the number of wells drilled from Pad 2, where results have so far proved pleasing to the company, revealing the northern part of the Lineynoye field to have thicker pay and extend further than originally anticipated.

However, this will mean fewer wells available for production in 2011, thereby reducing the company's near-term production rate, PetroNeft said.

Chief executive Dennis Francis commented: "While the results of Pad 2 drilling are encouraging, the Pad 3 drilling results will limit near-term production growth. We are currently producing from less than 10% of our current discovered reserves and this year's exploration programme has the potential to double these reserves and hence our long-term production capability."

PetroNeft's high impact 2011 exploration programme is targeting over 100 million barrels net to the company on five prospects spanning Licences 61 and 67.

The Kondrashevskoye No 2 sidetrack well on Licence 61 is progressing on schedule, with results expected in early July, the company said. A second exploration well will be at Sibkrayevskaya, a prospect of over 40 million barrels. The site for a third exploration well, North Varyakhskaya No. 1, has also been prepared and is set to spud in August/September time.

Meanwhile, two exploration wells, Cheremshanskaya No. 3 and Ledovoye No.2a on Licence 67 will be drilled in the second half of the year.

"We remain confident in the longer-term reserve and production potential of Licences 61 and 67," Francis added.

Oil and gas analysts at Ambrian published a note: "In reaction to this update, Petroneft has been significantly marked down, reflecting disappointment over current hydrocarbon flow rates.

"Despite the clear negative tone of the announcement, we highlight that although near-term production will be reduced, overall field reserves are likely to sustain a much smaller decrease in absolute percentage terms due to the discovery of thicker-than-expected net pay sections to the north of Pad 2. This serves to moderate the overall decrease in total asset value over the life of the field; however, the short-term impact in cashflow terms will clearly be more material to the company's development planning and will serve to push back the profit point.

"Whilst we reiterate our 'buy' recommendation, we move to reduce our target price from 108p to 83p."

Prelimernary results 11-5-11
Interim res 9 -9 - 10

Looks like interim results due sept 2011