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Russia-focussed oil and gas producer PetroNeft Resources (LSE:PTR) has commenced drilling the first of the ten-well development programme at its Arbuzovskoye oil field and expects to put them into production by next month, September, the company announced today.
The plan has been in place since it was approved last November 2011 and Petroneft has stated back in June 2012 it intended to invest up to US$20 million to develop the said field.
Funding was acquired back in May from Arawak Energy, who agreed to provide US$15 million loan in exchange for four million warrants over shares secured against Petroneft’s 50% stake in Licence 67, where Arawak hold the other half of the interest.
PetroNeft is to focus on the said field, according to Chief Executive Dennis Francis, following the “very encouraging production characteristics” demonstrated by its discovery well, Arbuzovskoye No. 1.
“We will focus on developing Arbuzovskoye and seek to steadily build on our existing production profile and positive cashflows throughout the remainder of the year,” Mr. Francis said in a statement.
Back in April, a 10-kilometre pipeline was completely built to connect the Arbuzovskoye field to the Lineynoye central processing facility, in anticipation of production from the said field.
The discovery well is currently flowing at 300 barrels of oil per day (bopd), with total production from both Arbuzovskoye and Lineynoye at 2,000 bopd. The rate, however, has declined from 350 bopd in the case of the Arbuzovskoye well and 3,000 bopd, respectively, following issues and the company expects improvement “over the coming months”.
Shares of Petroneft moved up and down since the start of trading today, as investors look at the announcement in different angles. At the start of trading, shares rose 3.7% to 7 pence, then dipped to as low as much as what it gained to 6.50 pence minutes later. As of 11:00 AM GMT, share price were 1.5% higher than yesterday’s close to 6.85 pence with a turnover of nearly 1.4 million shares.
Company Spotlight
PetroNeft Resources plc is an Irish-registered oil and gas exploration, development, and production company focussing on Russia. The company is dually listed on the Alternative Investment Market of the London Stock Exchange and the Enterprise Securities Market of the Dublin Stock Exchange.
