StockMarketWire.com - Petroneft Resources said production has declined slightly over the past few months to about 2,300 bopd due to several wells requiring workovers.

Once winter roads became available, supplies would be trucked in and the workovers performed. Petroneft's water injection programme continued to function effectively and overall well performance was in accordance with expectations.

Continued progress was being made on both the re-financing and planned farmout of Licence 61. While progress has been slower than expected, Petroneft continued to move forward on both fronts, particularly as regards the re-financing with additional parties having shown interest since our last announcement.

The company said its board had recently approved a proposal received from Tomskburneftegas ("TBNG"), a drilling contractor owned by Non-Executive Director Vakha Sobraliev, to undertake agreed drilling operations under a deferred payment arrangement.

Drilling operations have now re-commenced with the recent spudding of the Lineynoye No. 9 ("L-9") delineation well. Under these arrangements, TBNG will not receive any payment until after the Company completes its re-financing arrangements to the satisfaction of the Board.

All other elements of the commercial agreement relating to this operation are consistent with prior turnkey drilling contracts between PetroNeft and TBNG. The overall value of the contract is of the order of $1.95 million and the operation is utilising existing equipment and supplies available at the L-9 location.

L-9 is a delineation well on the westernmost lobe of the Lineynoye field and is recommended by the Russian authorities as an important component of the overall development of the Lineynoye field. Should the Lineynoye No. 9 well be successful it will be possible to commence production from it utilising winter roads.

Once the re-financing is completed, plans are in place to drill additional production wells at Arbuzovskoye and delineation wells at Tungolskoye and Sibkrayevskoye, where significant upside potential and near-term developments are possible.




At 8:28am: [LON:PTR] Petroneft Resources PLC share price was -0.12p at 4.63p



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