Petroneft close to finalising Russia deal

Irish exploration company Petroneft Resources is close to concluding a farm-out of one of its main assets in Russia, with the transaction expected to be finalised before the end of March.

Petroneft close to finalising Russia deal

The Dublin-headquartered company, whose operational focus lies within the Tomsk region of Siberia, has been for a number of months in discussions with lenders over the refinancing of outstanding debt; and with separate parties regarding the potential farm-out of up to 50% of its licence 61 asset in the Arbuzovskoye field in Tomsk.

Regarding the latter prospect, the company said yesterday that “significant progress” has been made inside the past month, with a large international oil and gas company.

It added that commercial negotiations, with said party, are now substantially complete, adding that it is hoped to finalise the transaction “during the first quarter of 2014, following the completion of final confirmatory due diligence, which is currently in progress”.

Petroneft is also continuing to talk to “a number of other parties” regarding both its refinancing and the farm-out question; with it saying that these are ongoing, but “less advanced” than the aforementioned proposal.

“We have made significant progress on the planned farm-out of Licence 61 over the last month and we look forward to updating shareholders in more detail when appropriate,” Petroneft’s chief executive Dennis Francis said.

The company — which will retain operator status of Arbuzovskoye with, at least, a 50% stake — plans to drill additional production wells at the field, as well as at its other assets in the region, where “significant upside potential and near-term developments” are possible.

It said both its Tungolskoye and Sibkrayevskoye oil fields have in excess of 10m of net pay and remain high priorities for the future. Average production remains at around 2,300 barrels of oil per day.

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