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

oilbarrel conference write up:

The markets may be in the doldrums, beset by the Eurozone crisis and economic contraction, but oilbarrel.coms final conference of 2011 attracted a large crowd of investors, industry executives and financiers. For while many companies are feeling the pinch as share prices continue to flag and lenders run scared, it is fair to say that the current dismal environment presents plenty of opportunities for canny investors.

Indeed, there were those running a slide rule over the first presenter of the day, PetroNeft Resources. This AIM-quoted E&P has two licences in the Tomsk Oblast region of Russia where it boasts production of 2,500 barrels per day and has nearly 100 million barrels of 2P reserves yet the market cap is just 85 million and the shares are currently trading at half the level of a year ago.

As CEO Dennis Francis explained, the company has not yet recovered from the share sell off when it missed production targets in 2010; it dropped further this summer when the company announced a rethink of its Lineynoye oil development in Siberia, again signposting further delays in the ramp-up of the production profile.

Despite this, Francis was willing to hold himself hostage to fortune again, proposing a new production target of 4-5,000 bpd by the end of Q1 2012, with output hitting 7,000-9,000 bpd by the end of Q1 2013. Francis said he was very comfortable with the Q1 2012 guidance.

This near-term production gain will come as the company completes its fraccing programme at Lineynoye on its 100 per cent owned Licence 61. This stimulation programme has been a learning curve for PetroNeft, with the company now applying larger fracs than in Q1 2011 (the company had been seeking to avoid fracturing into possible underlying water sands but this is no longer an issue now that water-handling facilities are in place, with the water re-injected for pressure maintenance) and refraccing some of the wells. Importantly, in rethinking its model of the Lineynoye field, which caused such a panic among investors this summer, the company has now identified additional potential to the north, what it calls the Emtorskaya High prospects, where there could be another 70 million barrels in the J1-1 and J1-2 sands.

PetroNeft has also been enjoying some success on the exploration front in the northern part of Licence 61. The Sibkrayevskaya discovery was a re-look of the 1972 Sibkrayevskaya-370 well and successfully found 12.3 metres of missed oil pay in the Soviet-era well. The well flowed 170 bpd of 37 degree API oil on open flow test. Its early days, with further seismic and more delineation drilling required, but Francis reckons this could be a 50 million barrel field, which is pretty significant.

The North Varyakhskoye discovery is a tight reservoir that will require fraccing but could be a nice, if modest, 2 million barrel addition to the reserves base (offsetting a 2 million barrel reduction at the Kondrashevskoye field after field delineation defined the oil water contact). Then theres the Arbuzovskoye oilfield, which has 2P reserves of 13 million barrels and flowed 176 bpd on test. Its lined up for production start-up in 2012.

On Licence 67, where the company has a 50 per cent interest, exploration is also underway with the company making a new field discovery with the C-3 well on the Cheremshanskaya field (again an old Soviet-era well that had by-passed pay potential). PetroNefts well found oil and oil/gas in the Upper and Lower Jurassic sands a drill stem test is currently underway to learn more. The company this week spudded a well on the Ledovoye oilfield, a 1970s discovery (there are already booked 2P reserves of 14 million barrels in the Upper Jurassic net to PetroNeft) again with bypassed potential.

This is certainly a company with a solid set of assets steady and growing production and an exploration and appraisal programme that is readily moving exploration resources up the value chain. Indeed, the company sees the potential to double its reserve base just on the back of its 2011 drilling campaign. Were currently producing from 20 per cent of our reserve base and if we double our reserves then its just ten per cent, said Francis, demonstrating just how much scope there is to deliver growth from the existing portfolio, whatever the current share price might suggest.

Looks an interesting company

Time this doubled in value in line with production increases.

One of my great hopes for 2012+,news is close.

A good acessment i think?

http://wexboy.wordpress.com/2011/12/30/happy-new-year-a-bakers-dozen-for-2012/#more-221

13. Petroneft Resources (PTR:LN) : Petroneft’s a Dublin based oil and gas exploration and production company, focused on Western Siberia. Production only began this year, and has been beset with problems and disappointment, significantly impacting the share price (down about 75% now in the past year). I don’t consider this a serious problem myself, all it needs is more money, time and brains… I’d be more concerned about their cash burn rate – the real negative for the share price was the fact the company strongly hinted they’d become cashflow positive this year. This hasn’t happened due to the production problems to date, and the company’s down to about 0.9 years of cash burn left (unfortunately funded by drawing down on a debt facility). They’ve really missed their chance on another placing, which would now be terribly dilutive, so offering a farm-in/sale of some of their assets might be a potentially better solution. You have to balance this though with the fact that they have almost 100 mio boe of Proved/Probable Reserves (to be increased at year-end, plus much larger Resources) on hand, and an experienced, straight-shooting management team (led by Dennis Francis) despite the recent issues. This will also be a good stock for stake building, if appropriate, as news/events occur in 2012. I hold a 1.2% portfolio stake.

A summary of quite a few oil stocks and how they faired during 2011.

http://www.smallcapnews.co.uk/2012/01/oil-and-gas-round-up-2011/

http://www.macquarie.com/dafiles/Internet/mgl/msg/iConference/documents/Europe/ExplorersAgenda.pdf

6 weeks is up today,so hopefully this coming week we will get the result?

Licence 67 - Ledovaya No. 2a well

The 2a well was spudded on 5 December 2011. The well is targeting oil in both the Lower Cretaceous and Upper Jurassic intervals. It is expected that the well will take approximately four to six weeks to drill to the target depth.

It's at times like this that the market can get frustrating,here is a company undervalued,about to issue several lots of news and yet the SP is struggling.
Down to a stressed seller(Bluegold C.M.)dumping stock,of course this can be a great
buying opportunity(remember AFR,taken down to 13p),just a matter of timing?
aimho

I've just doubled my shareholding.....nuts this sp.....it has to be !....sp should be above 50p at the very least.....

Has to be the most disappointing oil stock around......just can't believe how this has slumped ???...and yet all the indications are of it starting to get a serious cashflow !!!.

As i said,their's a distressed seller and as such the market will take advantage.

5 million trade gone through,reported as a buy?

Tell him to cheer up...he's distressing me with his distress......I'm snapping these up on the drop...

I've increased my holding by 3 this morning.....come on PTR.....

As i thought BLUEGOLD the distressed seller, all 18,600,000 of their remaining stock for 11.6p,Yws 11.6p. Hopefully we can now ptrss on and get true value,so bring on the news.

Some strong trading signals,

24/01/12 10:06 16.95 5,771 O 16.5 17.0 Buy 1,171,788 195,275 390,740
24/01/12 10:00 16.84 100,000 O 16.5 17.0 Buy 1,166,017 195,275 390,740
24/01/12 09:44 16.84 29,691 O 16.5 17.0 Buy 1,066,017 195,275 390,740

Otkritie Brokerage House. Buy. Target 70p. Upside Potential 330.8%.

PetroNeft Resources is at the heart of both geographic and strategic sweet spots of the Russian oil sector. Its prolific assets portfolio(97mnbbls of 2P reserves and 317mnbbls of risked possible reserves and mean risked resources) in Russia’s Tomsk region in West Siberia offers visible production growth in an established hydrocarbon-bearing province with existing infrastructure. As a small-size oil producer, we believe PTR is the major beneficiary of the forthcoming MET breaks on small oil fields;and is also set to benefit from the 60/66 oil tax reform. An experienced management team, in combination with its fully-funded status, in our view make PTR one of the most attractive E&P stocks in the FSU. The recent downgrade of its 2011-2013 production targets and the ensuing 28% drop in its share price has created an attractive buying opportunity.
We initiate coverage of PTR with a BUY rating and target price of
GBp70/share.

Has this become another OTC?!

Hope not,we need a positive update,especially from the fraccing program,in the meantime just came across this.

Petroneft (PTR:LN): I own a 1.0% stake in PTR, and have recently written about it here. Petroneft’s in an enviable situation compared to most other resource stocks, with plenty of proved and probable reserves. This is the underlying basis for my valuation, but the market price illustrates how critical cashflow is with an asset based investment. Any value investor likes to pounce on a stock which trades at a large discount to asset value. This can be sometimes be a big mistake. Why?

Well, if the company involved is suffering from significant cash outflows, and has insufficient cash/debt to reach its expected cashflow positive inflection point, you’re probably going to see that share price hammered. There’s nothing the market hates worse than this kind of funding uncertainty, or the risk of actual company failure. And this is the problem – Petroneft has plenty of asset value, but is running out of cash/debt capacity. Problems with initial production have compounded this – these will be solved with time, brains and money, but the funding issue is unlikely to be solved without dilution for the shareholders.

Purely on an asset basis, I calculate Fair Value of about GBP 75p per share. If I assume a share placing large enough to fund 1 year of cash burn (302.6 mio shares @ say GBP 10.25p, a 35% discount, to bring in $49.1 mio), I come up with a diluted value of GBP 48p per share. Which is correct? Well, I’ve already pointed out the best solution (now that PTR’s missed the boat on a decent share price) – a sale/farm-out of reserves, or preferably resources. In fact, I don’t include resources in my valuation, so any resources sale (and they have 100s of million of boe) would improve my (higher) valuation due to cash received and retention of their reserves. It would also eliminate any near term funding issues, hopefully granting the room for a ramp-up in production. Therefore, I think an average of the two approaches is justified, which is a GBP 61p per share Fair Value, and a Potential Upside of 293%.


And the link for the above

http://wexboy.wordpress.com/2012/02/08/the-great-irish-share-valuation-project-iv/

And an interview with Denis Francis.

http://www.iii.co.uk/articles/21843/interview-petroneft-resources