4th Jul 2014 08:13
LONDON (Alliance News) - PetroNeft Resources PLC Friday said it has completed the farm-out of Licence 61 in Russia to Oil India Ltd, and it will shortly re-commence drilling at its Tungolskove site in Licence 61 site as part of its fully funded multi-well drilling programme.
The oil and gas exploration and production company operating in the Tomsk region in western Siberia said that all its debt due to Macquarie and Arawak have been repaid from the initial proceeds of USD35 million, and it is now debt-free.
"We have now completed the Licence 61 Farmout fully, clearing all of our debt and leaving us with surplus cash and access to significant further funds to invest in growing the company," said Chief Executive Dennis Francis in a statement.
Under the terms of the farmout agreement, Oil India acquired a 50% interest in Licence 61 in return for a total investment of up to USD85 million. Beyond the initial cash payment, Oil India has committed to USD45 million in exploration and development expenditure. A further USD5 million performance bonus is contingent upon average production from the Sibkrayevskoye oil field reaching 7,500 barrels of oil per day within the next five years.
PetroNeft said it expects to commence drilling at Tungolskoye later this month, and assuming a successful result at the T-5 well, it plans to bring the Tungolskoye into year-round production in 2015. It said that following the T-5 well, up to five additional production wells will be drilled at Arbuzovskoye Pad 1, where drilling was suspended in February 2013.
The company said there are also plans in place to acquire 1,000 kilometres of 2D seismic data across the Sibkrayevskoye oil field and Emtorskaya prospect commencing later in 2014.
PetroNeft added that current production has slowly declined to 2,100 bopd from existing wells.
Shares in PetroNeft Resources were up 2.5% at 6.46 pence Friday morning.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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