PetroNeft Resources plc provide operations update

Friday, Nov 23, 2012

PetroNeft Resources plc (AIM: PTR) owner and operator of Licences 61 and 67, Tomsk Oblast, Russian Federation, is pleased to provide an update on its operations at Licence 61.

Highlights:

Arbuzovskoye well 109 successfully completed and put into production

The well is just beginning to stabilise after experiencing flow line problems caused by the very cold weather. We expect the initial flow rate of 100 bopd to increase somewhat
There is no water production associated with the well
Arbuzovskoye well 111 drilling ahead
Group production is currently 2,500 bopd; however, 4 production wells are currently off line for remedial work on pumps
The 4 off line wells plus well 111 are expected to be all on line by year end.

Licence 61 - Arbuzovskoye Pilot Development Programme

Arbuzovskoye well 109, the third of ten planned new production wells on the Arbuzovskoye oil field, has been successfully completed and brought into production at an initial rate of 100 bopd with no visible water cut.

Due to very cold weather in the field we experienced some early flow line problems with the well when it was cleaning up caused by freezing of the completion water. Well stabilisation is now underway and we expect the well rate to improve somewhat in the coming period. The average production level from the first three wells at Arbuzovskoye is running ahead of initial targets.

Arbuzovskoye well 111 (previously known as location #12), the next well in the drilling sequence, is currently drilling ahead.

Arbuzovskoye contains 2P reserves in excess of 13 million barrels of oil according to independent reserve auditors Ryder Scott and is the Company's second production development.

Licence 61 - Production

Total oil production, comprising both the Lineynoye and Arbuzovskoye oil fields is currently 2,500 bopd. The rate is reduced due to 4 wells at the Lineynoye oil field being currently off-line while remedial work is carried out on the down-hole pumps. All these wells, along with the Arbuzovskoye 111 well, are expected to be on line before the end of the year.

Dennis Francis, Chief Executive Officer of PetroNeft Resources plc, commented:

"While well 109 is very economic at this initial flow rate we do expect the rate will improve somewhat as we optimise the well. Importantly, the well is producing 100% oil with no water so we are continuing to confirm our understanding of the size of the field. While some operational challenges and variation in results should always be expected, we look forward to completing further wells in Arbuzovskoye over the coming months as we continue to focus on materially increasing our production profile and cash flows."

Source: PetroNeft Resources

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