Petroneft progress proves slow

Irish explorer Petroneft Resources has said that progress on its refinancing and farm-out plans has proved slower than expected, but that work is continuing on both fronts.

The Dublin-headquartered company’s operational focus lies in Siberia in Russia. It has been in discussions for a number of months over the restructuring of outstanding debt levels and the potential sale of up to 50% of itsLicence 61 asset in the Arbuzovskoye field.

In an update, yesterday, the firm said it continues to move forward on both fronts, but progress has been slower than anticipated. Interest shown by additional parties, within the past month or so, has slowed the refinancing matter, in particular.

“We continue to make encouraging progress on the refinancing and farm-out fronts,” Petroneft chief executive Dennis Francis commented.

The statement added that production drilling activity has recommenced, with a new deferred payment arrangement signed with local company TBNG. Under the terms of the agreement, TBNG will not receive any of the $1.95m cost associated with drilling the Lineynoye No 9 well until Petroneft’s full refinancing arrangements are agreed.

Mr Francis added that the arrangement allows the company to continue its drilling programme in a cost-effective manner.

Goodbody Stockbrokers noted the protracted refinancing arrangements as “an obvious point of concern”, but said that the recommencement of drilling supports the company’s claim that progress is being made.

It also made the point that drilling funds are more likely to emerge from a re-finance of the company’s debt facility with Macquarie Bank quicker than from a successful farm-out.

Yesterday’s update, added that production at Petroneft’s existing wells has declined to 2,300 barrels of oil per day (bopd), from about 2,500 bopd in September, due to wells requiring workovers.