Wednesday, June 22, 2011
PetroNeft Resources plc
PetroNeft, owner and operator of Licenses 61 and 67, Tomsk Oblast, Russian Federation, provided an update on its operations.
Highlights
- Production currently averaging about 2,500 bopd, primarily from 7 wells
- Autumn production enhancement program 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 recognizing 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
- 1Q 2012 production target has been revised to between 4,000 to 5,000 bopd and 2Q 2013 to between 7,000 to 9,000 bopd
- Kondrashevskoye No. 2 sidetrack well progressing, result expected shortly
- Exploration wells at Sibkrayevskaya and Cheremshanskaya, the largest prospects in the 2011 program totaling over 100 million barrels to spud in early July and August respectively
2011 License 61 Development program - Lineynoye oil field
Production drilling continues with one additional well successfully drilled from Pad 3. Preliminary log and survey data for well 336 indicate net oil pay of 1.4 meters with an additional possible oil pay of 5.6 meters which we will need to test to confirm.
License 61 Production
Production is currently about 2,500 bopd with the primary contribution coming from 7 of the 9 wells drilled in 2010. As anticipated the wells have been slowly declining since they were fracture stimulated earlier this year. We have begun water injection/pressure maintenance in the field using the Lineynoye No. 6 well as an injection well; this will help maintain production levels.
We are pleased with the post frac performance of the wells particularly those with the larger size fracs. The initial fracture stimulation program incorporated a range of fracture sizes depending on the individual reservoir characteristics at each well. Without exception, the larger volume fracture stimulations have shown better and more sustained results than the small or mid-sized fracs. We consequently plan to re-frac some existing wells to boost production.
We anticipate a significant production contribution from the new Pad 2 wells following fracture stimulation; a contract has been signed to conduct this operation in late September/early October. Our next production update will be made following this work.
The positive results from Pad 2 wells have shown that the northern part of the Lineynoye field has thicker pay and extends further than originally anticipated and this has potentially very positive implications for the ability of structures north of West Lineynoye to be oil bearing. The western portion of the field, particularly in the Pad 3 area, is lower structurally and has thinner pays. As a result we will increase the number of wells drilled from Pad 2 and reduce the number of wells drilled from Pad 3. This will mean fewer wells available for production in 2011, thereby reducing our expected near-term production rate. The overall impact on Lineynoye field reserves is expected to be minimal.
The 1Q 2012 production target for License 61 has been revised to a range between 4,000 to 5,000 bopd and the 1Q 2013 production target to a range between 7,000 to 9,000 bopd. These amendments also incorporate a more conservative initial production estimate for the Arbuzovskoye oil field which we plan to bring on-stream in the second half of 2012.
Exploration / Delineation Program
PetroNeft's high impact 2011 exploration program, which has the potential to more than double our reserves, is targeting over 100 million barrels net to PetroNeft on five prospects in Licenses 61 and 67
License 61 (PetroNeft 100%)
The Kondrashevskoye No. 2 sidetrack well being drilled down dip from the Kondrashevskoye No. 2 well is progressing on schedule and we expect a result in early July.
The second 2011 exploration well will be at Sibkrayevskaya, a prospect of over 40 million barrels. Site preparation and mobilization of the rig and materials and rig-up operations is complete. Drilling should start in July with results expected in August.
The site for the third exploration well, North Varyakhskaya No. 1, has also been prepared and the rig and materials have been moved to the site for a planned spud in August/September 2011 following Sibkrayevskaya.
License 67 (PetroNeft 50%)
The two exploration wells, Cheremshanskaya No. 3 and Ledovoye No. 2a, are located close to existing year-round roads and will be drilled in the second half of the year. We have already mobilized equipment and completed construction of the Cheremshanskaya site and the rig is now being mobilized by barge to a nearby river port. This well is expected to spud in August and is targeting over 60 million barrels net to PetroNeft across three objectives.
Construction of the site for the Ledovoye No 2a well has commenced and we expect to spud in October/November. Ryder Scott have attributed 15 million barrels net to PetroNeft in the Upper Jurassic horizon, however, we will also be testing additional potential in the Lower Cretaceous zone.
Dennis Francis, Chief Executive Officer of PetroNeft Resources plc, 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 program has the potential to double these reserves and hence our long term production capability. Further, the experience gained from the drilling program and hydraulic fracturing to date will be applied in this and future developments to deliver improved production performance. We remain confident in the longer term reserve and production potential of Licenses 61 and 67."
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