Production from Urals' two producing fields, Arcticneft and Petrosakh, is currently 645 barrels of oil per day ('bopd') and 1,420 bopd, respectively.
Workover is currently underway on well 47 at Petrosakh, which is anticipated to increase current production by up to 140 bopd, at a total cost of approximately US $50,000. In addition, another two well rod pumps were acquired and are awaiting installation following the swabbing of well 47. Subject to available financing or internal cash flow generation, a total of ten workover wells are being planned by the Company for 2010 at Petrosakh. These workover wells are being undertaken primarily to mitigate production decline and the Company expects to see a moderate short-term increase in production.
The Company is also expecting to spud the first of three side track wells at Petrosakh in May 2010, with an anticipated initial flow rate of up to 300 bopd.
Following changes in Russian legislation regarding offshore exploration, only State companies with more than three years experience of off-shore development can operate off-shore blocks. Consequently, the Company did not sign the farm-out agreement for the exploration of the off-shore Petrosakh license. All 3P reserves at Petrosakh were impaired in the Company's financial statements in 2008.
Currently, Petrosakh refines and sells 100% of its production on the domestic Russian market. Proceeds from such sales are currently anticipated to be sufficient for Urals' short-term liquidity requirements. However the Company believes that additional financing will be required before the first export delivery from Arcticneftand the Board is currently reviewing options in this regard.
The Company has also started the process of looking at financing options for its 2010 development program. The total requirement for the year ranges from US $10 to US $15 million, depending on the extent of the work program, its success and other factors.
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