PetroNeft (AIM: PTR) an oil & gas exploration and production company, operating in the Tomsk Oblast, Russian Federation, and 50% owner and operator of Licences 61 and 67 is pleased to announce improved production.
· Licence 61
o Production up year on year by 7.8%, to 1,589 bbls/day July 2020, currently averaging 17% above July 2019 levels.
o Strong performance from the Lineynoye field with production over 20% ahead of July 2019 levels.
o Sibkrayevskoye field continues to perform well with production currently averaging 246 bbls/day.
o Improvement in local market conditions.
Production has increased year on year at Licence 61 due to a combination of optimising the waterflood program at the Lineynoye field and placing the Sibkrayevskoye field into year-round production.
In 2019 the company allocated capital and resources to a low-cost data gathering program across our fields. The first data acquired was on the Lineynoye field. This data has improved our understanding of the field, which has enabled us to implement improvements in the water flood program at Pad 1, during Q1 2020. We believe we are now seeing the positive results of these adjustments. An additional well was converted into an injector during Q2 2020. We will continue to closely monitor the field performance and are looking at the potential to carry out further well interventions.
The Sibkrayevskoye field continues to produce at approximately 246 bbls/day without any material decline. The robust performance of the two wells is providing increased confidence in the forward potential development of the field. We are currently looking at ways to increase production further during the next winter season (2020/21) through either hydraulic fracturing or further well re-entries. We hope to be able to update shareholders on these plans as the year progresses and once our detailed review is complete.
Following our success at Lineynoye, we have now begun to focus on the Arbuzovskoye field where over the last two years we have observed a significant decline in the production rate at PAD 2, particularly the A-214 HZ well. Following evaluation of the reservoir data gathered through last year, we have taken the decision to convert one vertical well to an injector and another to a water source well during the first quarter of this year. We are currently monitoring performance at this location and will provide an update within the next few weeks.
The global oil price drop in March 2020, which further weakened in April, had an immediate effect on the Russian domestic market where Petroneft sells its produced oil. Starting from May we have seen domestic oil prices starting to recover and by June they had returned to near pre-crisis levels.
David Sturt, CEO PetroNeft commented:
"It is extremely encouraging to be able to begin seeing the benefits of the field optimisation programs which started last year with extensive but low-cost data gathering across our well portfolio. This data led approach allows to achieve greater returns from our investments. Being able to stabilze and even increase production without deploying significant capital to expensive drilling is particularly good news and demonstrates the future potential of these fields.
Looking forward, we are planning to continue improvements which in addition to optimising our water floods may involve techniques such as re-fracking and well re-entries. We believe that these low cost initiatives can deliver real production benefits".