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Oil India buys into PetroNeft’s Western Siberia field

04th July 2014

PetroNeft has announced the completion of the Licence 61 farmout to Oil India Limited

Oil India buys into PetroNeft’s Western Siberia field
Under the terms of the Licence 61 farmout, Oil India has acquired a 50 per cent interest in Licence 61 in return for a total Investment of up to USD 85m

“I’m delighted that we have now completed the Licence 61 Farmout fully clearing all of our debt and leaving us with surplus cash and access to significant further funds to invest in growing the company,” said Dennis Francis, Petroneft CEO. “We look forward to working closely with our new partners Oil India and to realising the full potential of this asset and to developing further opportunities together.

“We have a planned multi-well drilling programme and will re-commence drilling at Licence 61 shortly. I look forward to updating shareholders with the results of this exciting programme over the coming months.”

Following the granting of Russian regulatory approval on 30 June 2014 the transaction with Oil India Limited was completed on 3 July 2014. All debt due to Macquarie and Arawak has been repaid from the initial proceeds of USD 35m and the Petroneft is now debt-free.

Under the terms of the Licence 61 farmout, Oil India has acquired a 50 per cent interest in Licence 61 in return for a total Investment of up to USD 85m.

PetroNeft will remain as operator of Licence 61, but Oil India will have the right to second certain technical experts into PetroNeft’s Tomsk team.

PetroNeft expects to commence drilling at Tungolskoye later this month. The T-5 well will be the first horizontal well drilled by the company and is expected to take approximately 60 days to drill. Assuming a successful result at T-5 PetroNeft plans to bring the Tungolskoye into year-round production in 2015.

Following the T-5 well, up to five additional production wells will be drilled at Arbuzovskoye Pad 1 where drilling was suspended in February 2013. There are also plans in place to acquire 1,000 km of 2D seismic across the large Sibkrayevskoye oil field and Emtorskaya prospect commencing later in 2014. Current production has slowly declined to 2,100 bopd from existing wells.

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