PetroNeft Fully Funded to Reach Year-Round Production in 3Q 2010
PetroNeft, the owner and operator of License 61, Tomsk Oblast, Russian Federation, has agreed the terms of a conditional placing of 120,640,209 new Ordinary Shares at Stg£0.14 (€0.155) per Ordinary Share (the "Placing Shares"), raising gross proceeds of approximately US $27.5 million ("the Placing").
The net proceeds of the Placing will be applied to pipeline and related infrastructural expenditure, field facilities, drilling of production wells and general corporate overhead. The Company's field development programme is targeting commercial oil production commencing in Q3 2010. The first phase of the development program will focus on the Lineynoye oil fields, with 9 new production wells planned for 2010 to complement the two existing wells, construction of a 70 km pipeline and associated field infrastructure development. The Company has already acquired over 90% of the pipe required and this has been in storage at a river port to the north of License 61. This pipe will now be available for the construction of the new export pipeline to the Imperial Energy facilities at the Kiev-Eganskoye field during the 2009/10 winter season.
Mobilization of a production drilling rig and field facilities is expected to commence early in 2010 and development drilling is scheduled to commence in April 2010. Oil production is currently forecasted to commence during the third quarter and reach approximately 4,000 barrels of oil per day ("bopd") by the end of 2010. Peak production from the first phase of the development program is forecast to reach 12,000 bopd in 2012. Additional phases will consist of existing and new fields discovered to the south, including the Kondrashevskoye and Tungolskoye oil fields, which will be developed incrementally in order to optimize the overall economics of License 61.
The Placing is being executed in two tranches and has been arranged by Joint Bookrunners Davy, Canaccord Adams and Renaissance Capital. The first tranche of the Placing consists of a conditional placing of 22,922,303 Ordinary Shares (the "'First Tranche Placing Shares") which is conditional, inter alia, on admission of such Ordinary Shares to trading on the AIM Market of the London Stock Exchange ("AIM") and the IEX Market of the Irish Stock Exchange ("IEX"). The second tranche of the Placing consists of a conditional placing of 97,717,906 Ordinary Shares which is conditional, inter alia, on admission of such Ordinary Shares to trading on AIM and IEX and upon receiving shareholder approval to complete the Second Tranche Placing at an extraordinary general meeting of the Company to be held on October 15, 2009 ("EGM"). A circular to convene such an EGM will be sent to shareholders shortly.
Application will be made to the London Stock Exchange and the Irish Stock Exchange for the First Tranche Placing Shares to be admitted to trading on AIM and IEX, with Admission of the First Tranche Placing Shares expected to occur on September 24, 2009. Application will also be made for the Admission of the Second Tranche Placing Shares to trading on AIM and IEX, with admission of the Second Tranche Placing Shares expected on October 16, 2009, subject to the approval of the Second Tranche by the Company's shareholders at the EGM. The Placing Shares will, when issued, rank pari passu in all respects with the Existing Ordinary Shares including the right to receive dividends and other distributions declared following Admission.
Dennis Francis, Chief Executive Officer of PetroNeft Resources plc commented, "We are delighted with the outcome of the Placing and the high level of support received from new and existing shareholders demonstrating the market's confidence in the Company and its strategy. The commencement of year-round production will represent a major milestone for PetroNeft and is an excellent base from which we can take advantage of the opportunities available to us in the region and further develop and expand our exciting portfolio of assets."
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