Petroneft drops on mechanical problems in Russia

PetroNeft's shares plunged 20 per cent Friday after the oil and gas company said it reduced output at two wells in Russia following mechanical production issues.

PetroNeft's shares plunged 20 per cent Friday after the oil and gas company said it reduced output at two wells in Russia following mechanical production issues.

The group has encountered operational problems at its Arbuzovskoye oil field in Tomsk Oblast in recent weeks which has cut back overall production by 300 barrels of oil per day (bopd).

"The reduced output may be due to migration of fine grained materials that are gradually plugging the well bore which can be rectified with a simple workover," the company explained.

"We are also investigating possible pressure depletion in the reservoir, which can be addressed with a planned pressure maintenance programme."

This winter the company has also had to contend with unusually extreme temperatures at Licence 61 - which includes the Arbuzovskoye and Lineynoye oil fields - reaching as low as -49 degrees Celsius, slowing operations significantly.

Nevertheless, the group successfully completed well 112 at Arbuzovskoye with an initial oil flow rate of 140 barrels of oil per day. No water production was associated with the well which is currently shut-in for pressure build-up testing.

Drilling on the Arbuzovskoye well 105, the next in the sequence of the prospect, has commenced.

Arbuzovskoye contains proven reserves in excess of 13m barrels of oil, according to independent reserve auditors Ryder Scott, and is the company's second field in development.

Overall, the average initial production rates from the first five wells in the programme have exceeded targets of 150-200 bopd per well.

"The initial flow rate on well 112 is encouraging and the fact that there is no water production bodes well," Chief Executive Officer, Dennis Francis, said.

"We continue to delineate the field and hope to alleviate the issues with the two Arbuzovskoye wells in the coming weeks. We also look forward to completing further wells in Arbuzovskoye and implementing the planned pressure maintenance programme over the coming months."

RD

Recommended

Too embarrassed to ask: what is short selling?
Too embarrassed to ask

Too embarrassed to ask: what is short selling?

Short sellers are often accused of unfairly driving share prices down to make a quick buck. But short selling is a perfectly legitimate – if risky – t…
26 Jan 2021
Broker safety – your questions answered
Investment strategy

Broker safety – your questions answered

Cris Sholto Heaton answers more of your questions about the safety of stockbroker accounts
25 Mar 2020
How demographics affects stock valuations
Investment strategy

How demographics affects stock valuations

New research suggests that stock and bond valuations are driven by the age of the population – at least in the US.
24 Feb 2020
Do you own shares in Sirius Minerals? Here’s what you need to do now
Stocks and shares

Do you own shares in Sirius Minerals? Here’s what you need to do now

Mining giant Anglo American has proposed a cash takeover of Yorkshire-based minnow Sirius Minerals. Unhappy shareholders must decide whether to accept…
20 Feb 2020

Most Popular

The FTSE 100 is set for a makeover with an influx of new tech stocks
UK stockmarkets

The FTSE 100 is set for a makeover with an influx of new tech stocks

The FTSE 100 – the dullest index in the world – is about to reinvent itself as a host of new firms list on the market. The change is long overdue, say…
24 Jan 2021
Think Tesla is a bubble? This might be the best way to bet on it bursting
Oil

Think Tesla is a bubble? This might be the best way to bet on it bursting

The huge rise in Tesla’s share price means that, by market value, it’s now the sixth-largest company in the US and and the world’s biggest car-maker. …
25 Jan 2021
Why we won’t see a house-price crash in 2021
House prices

Why we won’t see a house-price crash in 2021

Lockdown sent house prices berserk as cooped up home-workers fled for bigger properties in the country. And while they won’t rise quite as much this y…
18 Jan 2021