OilVoice - Petroneft Resources Announces New Licence Acquisition

Petroneft Resources Announces New Licence Acquisition

Friday, December 18, 2009

PetroNeft Resources plc, owner and operator of Licence 61, Tomsk Oblast, Russian Federation, announces that it has won the State Auction for a 100% interest in the Ledovy Licence No. 67 also in the Tomsk Region.

• The Ledovy 'Licence 67' is located in the main oil bearing region of the Tomsk Oblast west of the Ob River, in the prolific Western Siberian Oil & Gas Basin
• The large 2,447 km2 Licence 67 is surrounded by proven and producing oil and gas fields and is located close to existing road, power and pipeline infrastructure - including the Vasyugan-Raskino oil pipeline and electric power lines running through the middle of the Licence 67 area.
• Russian registered C3 (possible) recoverable resources are 55 million barrels in 3 prospects
• There is believed to be significant upside within existing discoveries - two structures have previously tested oil but require further appraisal

The Ledovy Licence area is located west of the Ob River in the main oil bearing part of the Tomsk Oblast. The Licence has an area of 2,447 km2 and is surrounded by proven and producing oil and gas fields. Two producing oil fields, Grushevoye and Lomovoye, containing about 90 million barrels of C1+C2 reserves are located within the Licence area, but are excluded from the Licence. However, two existing drilled structures, Ledovoye and Sklonavaya, included in the Licence area have previously tested oil and may form the basis of a future development project.

The Vasyugan-Raskino oil pipeline and electric power lines run through the middle of the Licence area. There is a paved road and oil pipeline that runs to Strezhevoy through the northwestern tip of the Licence area. Both pipelines have the potential to accommodate production from any incremental discoveries in the Licence.

History
Exploration on the Ledovy Licence began in the 1950s with wells being drilled on large prospects identified by vintage seismic data. Modern 2D seismic data was subsequently acquired from 1980 to 2001. Russian registered C3 (possible) resources are currently 55 million barrels.

A total of 8 wells have been drilled on the Licence. PetroNeft has reviewed the drilled and currently mapped undrilled structures and believes that there is significant upside within existing discoveries, potentially by-passed pay and new exploration prospects within the block. Two of the previously drilled structures, Ledovoye and Sklonavaya, have tested oil but have not to date been assigned reserves. PetroNeft believes that these discoveries have potential to form the basis of a future development project on the Licence, but also intends to pursue an active exploration programme.

Licence and Work Programme
The Licence is an exploration licence for 5 years but can be extended based on an agreed work programme. Discovered fields will convert into production licences once the discovery is registered. The minimum work commitments are to re-analyse the data from old wells and seismic surveys, acquire 750 km of new 2D seismic and drill one well within 3 years. The bid consideration was 42 million Roubles (US$1.39 million).

The planned 2010 work programme will focus on the overall re-evaluation of all the previous data on the Licence area with modern technology. Well and seismic data will be reprocessed and the results of this evaluation used to acquire 750 km of new seismic data, which will help to determine the exploration priorities for the Licence area. It is also possible that some of the old wells could become workover candidates. This analysis will also be part of the 2010 work programme.

Arawak Area of Mutual Interest
The Licence is within Western Siberia and thus falls within the 2008 Area of Mutual Interest agreement between PetroNeft and Arawak Energy Limited (Arawak). Under this agreement Arawak is entitled to participate in up to a 50 percent interest in the Licence and will confirm its intentions by the end of January 2010. PetroNeft will remain as operator of the Licence.

Dennis Francis, Chief Executive Officer of PetroNeft Resources plc commented:
'We are very excited to have acquired the Ledovy Licence. This new acreage materially enhances our footprint in the Tomsk Oblast, is an important step forward in our stated growth strategy and exceeds our strict technical criteria for exploration and development potential. We are confident that we have added two new oil fields and many quality prospects to our portfolio at a very attractive cost. With year-round production from Licence 61 expected in the third quarter of next year, we look forward to further building our business and our asset base in the region in 2010 and beyond.'