Petroneft shares take a 40% tumble

Shares in Irish exploration company Petroneft fell nearly 40% yesterday on the back of the firm reporting a significantly lower than expected production rate.

The Dublin-headquartered company — whose licences are based in the Russian state of Tomsk — said that total production had increased to around 3,000 barrels of oil per day (bopd) by the end of December; but has declined to 2,300 bopd in recent weeks, mainly due to “a number of issues” connected to numerous “Pad 2” wells.

These issues include higher-than-expected well decline rates and the clean- up of water associated with the Pad 2 fracture programme being less than expected.

The company is converting one of the wells to a new water injection well, with the aim of restoring some of the reservoir pressure — before doing likewise with the other wells. However, these restorative programmes could take at least six months to complete, thus postponing development.

More encouraging has been the discovery of three oil pools at Petroneft’s Cheremshanskaya number three exploration well, and the likelihood of its Arbuzovskoye development hitting production ahead of schedule in the second quarter of this year.

“We’re disappointed with the results of the Pad 2 fracture stimulation programme, especially when compared to the improving Pad 1 results. We’re now studying the results to see what can be done to manage the wells. Development focus will now turn to building the production profile at Arbuzovskoye and assessing other near-term development opportunities,” said Petroneft chief executive, Dennis Francis.

Petroneft’s share price fell by over 6c to just over 11c, yesterday.

In other Irish-related exploration news, John Teeling’s Botswana Diamonds has announced the conditional raising of £1.5m (€1.8m) through a share placing; the majority of said funds going towards the company’s African exploration projects in Botswana, Zimbabwe and Cameroon.

“The strong support we’ve received for the placing is a further vote of confidence in Botswana Diamonds’ strategy,” Mr Teeling said.

He said the company is hopeful of finding large diamond anomalies in the “hard-to-explore” north- east of Botswana, by the third quarter of this year.