PetroNeft Sees No Sign of Oil Price Improvement, Vows to Grow Production

PetroNeft’s Chairman, David Golder, stated Tuesday in the company’s half year financial results for 2015 that “there is little sign of improvement in oil prices in the near term” and revealed that PetroNeft is focused on growing production and managing costs in order to take advantage of any oil price increases in the future.

The Russia-focused energy firm stated that gross production at Western Siberia’s License 61 has grown by 46 percent in the year to date and is currently approximately 2,700 barrels of oil per day. Most of the output growth was a result of the T-503 and T-502 wells at Tungolskoye coming online in July and September 2015, respectively. Three additional wells are due to be drilled at Tungolskoye by the end of the year. Elsewhere in License 61, “two to three” wells are expected to be drilled at Arbuzovskoye in 2016.

PetroNeft posted an operating loss of $540,949 in the six month period ended 30 June 2015, which marked an improvement on the operating loss of $1.03 million recorded during the same period last year. Revenue decreased to $1.22 million in the first half of 2015 from $17.52 million in 1H 2014, and the company’s cash and cash equivalents stood at $2.55 million as at June 30, 2015, compared to $3.39 million as at December 31, 2014.

David Golder, PetroNeft chairman, commented in the company’s half year results:

“Whilst we have had an exceptionally busy year so far, with good success in growing production and our understanding of the license, market conditions are very challenging and there is little sign of improvement in oil prices in the near term. We still expect further growth in production this year from the remaining wells to be drilled at Tungolskoye and next year from the addition of new wells at south Arbuzovskoye. Our focus is on growing production, managing costs and positioning the company for any improvement in the market conditions. We look forward to updating shareholders of our results over the coming year.”

PetroNeft, which is the operator of License 61 with a 50 percent interest, announced on June 23, 2015, in its annual results statement for 2014, that it expected a significant boost in production this year. The anticipated production increase followed PetroNeft’s farm-out agreement in License 61, completed in July 2014, to Oil India Limited for a price that could rise up to $85 million. These resources are being used to fund the company’s well drilling campaign.

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