Volga Gas PLC Operational Update (3098P)
June 05 2015 - 2:00AM
UK Regulatory
TIDMVGAS
RNS Number : 3098P
Volga Gas PLC
05 June 2015
5 June 2015
Volga Gas plc
("Volga Gas", the "Company" or the "Group")
OPERATIONAL UPDATE
Volga Gas plc, the oil and gas exploration and production group
operating in the Volga Region of Russia, is holding its Annual
General Meeting today and is pleased to provide the following
update on its activities and operations:
Production Update
As reported on 19 February 2015, the Group's production was
impacted as the domestic market for oil adjusted to the significant
changes to the export taxes that came into effect on 1 January
2015. For a period of approximately four weeks the local demand
situation led to the temporary suspension of production at the
Company's Vostochny Makarovskoye ("VM") and Dobrinskoye gas fields
and the Group consequently brought forward certain scheduled
maintenance operations.
Since mid-February 2015, the Group resumed production operations
and is pleased to report that during March and April 2015 full
production has been achieved in line with plans. In these months
production averaged 16.7 mmcfd of gas, 817 bpd of condensate and
482 bpd of oil, giving a total of 4,086 boepd. These numbers are in
line with management expectations and compares to an average of
4,244 boepd in 2014. During May maintenance operations on the gas
plant were undertaken which consequently constrained gas and
condensate production during that month, resulting in total
production of 2,004 boepd for May.
Realisations
As detailed in the Volga Gas 2014 Annual Report, domestic oil
and condensate pricing in the early part of 2015 did not fully
adjust to reflect the drop in export taxes and consequently the
realised prices were below full netback parity. More recently,
price realisations have moved closer towards netback parity. The
average sales price, excluding VAT, for oil and condensate during
March, April and May 2015 was approximately $36 per barrel.
Gas sales prices continue to be stable in Ruble terms at
approximately RUR3,300 per thousand cubic metres excluding VAT.
Consequently the devaluation of the Ruble has led to a significant
fall in the US dollar equivalent value. However, the Ruble has
partly recovered from over 63 to the US dollar early in 2015 to
approximately 53 at present. At the current exchange rate the
selling price equates to US$1.76/mcf.
Drilling operations
Drilling operations on the sidetrack to well VM#4 have recently
concluded with cores being taken from the identified reservoir
section. The results seen to date appear encouraging, with a pay
section that appears to be similar to that seen in VM#1, the most
productive well on the VM field. Further updates will be made as
appropriate.
The rig used on VM#4 is shortly to be mobilised to the VM#3
location to complete the drilling of this well. A previous drilling
contractor had been drilling VM#3 during 2014 but encountered
mechanical difficulties. The current contractor, Eurasia Drilling,
is to drill the final 300-350 metres of the well to a target depth
of approximately 2,600 metres.
Both of these wells are expected to contribute to increased
production from the VM field during Q4 2015.
Gas plant development
An outline plan for the redevelopment of the Dobrinskoye Gas
Plant has recently been completed comprising amine-based
desulphurisation and cryogenic separation of LPG. The Board will
shortly be considering the options in relation to this project.
Board and Management Changes
As announced on 16 April 2015, Mikhail Ivanov has stepped down
as Group CEO and on conclusion of today's AGM will become
non-executive Chairman of Volga Gas. Aleksey Kalinin remains on the
Board as a non-executive director. Andrey Zozulya was subsequently
appointed as Group CEO and assumed his position on 7 May 2015.
Andrey Zozulya, Chief Executive of Volga Gas, commented:
"I am pleased and excited to have taken up the position of CEO
of Volga Gas and am glad to report that the assets of the Company
are performing as planned. As has been detailed by my predecessor,
the current economic environment has its challenges and the
significant increases in production taxes since 1 January 2015 have
added materially to these challenges. Nevertheless, Volga Gas has a
competitive business and a robust balance sheet which will provide
a strong base for the current operations and for further growth in
the future.
"Management's priority is to build on this base within the
constraints of the existing environment, to maximise the potential
of the Group's assets and to seek further opportunities to add
shareholder value."
For further information, please contact:
Volga Gas plc
+7 495 721 1233
Andrey Zozulya, Chief Executive Officer +44 (0)20 8622
Tony Alves, Chief Financial Officer 4451
Stifel Nicolaus Europe Limited (Nominated +44 (0)20 7710
Adviser and Broker) 7600
Michael Shaw, Ashton Clanfield
+44 (0)20 3727
FTI Consulting 1000
Edward Westropp, Alex Beagley
Editors' notes:
Volga Gas is an independent oil and gas exploration and
production company operating in the Volga region of Russia. The
company has 100% interests in its four licence areas.
The information contained in this announcement has been reviewed
and verified by Mr. Andrey Zozulya, Director and Chief Executive
Officer of Volga Gas plc, for the purposes of the Guidance Note for
Mining, Oil and Gas companies issued by the London Stock Exchange
in June 2009. Mr. Andrey Zozulya holds a degree in Geophysics and
Engineering from the Groznensky Oil & Gas Institute and is a
member of the Society of Petroleum Engineers.
Glossary
bbl Barrel
bopd Barrels of oil per day
bpd Barrels per day
boepd Barrels of oil equivalent per day, in which 6,000 cubic
feet of natural gas is equated to one barrel of oil
LPG Liquefied petroleum gas
mcf thousand cubic feet
mmcfd Millions of standard cubic feet per day
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCUSSWRVSANRAR
Volga Gas (LSE:VGAS)
Historical Stock Chart
From Mar 2024 to Apr 2024
Volga Gas (LSE:VGAS)
Historical Stock Chart
From Apr 2023 to Apr 2024