PetroNeft says first tranche of Oil India loan executed

Dublin-headquartered oil and gas exploration firm PetroNeft has said the first tranche of a $35 million (€31.1m) loan to finance the work programme on its flagship Licence 61 in western Siberia, has been executed.

The first $10 million tranche is to be used to drill one vertical and up to three horizontal wells in the South Arbuzovskoye field. A delineation well is also scheduled on the nearby Sibrayevskoye field.

PetroNeft announced on Monday it had reached agreement on the financing of the work programme for the licence with its partner Oil India. The agreed financing is by way of a loan to the joint venture from Oil India with no capital repayments due until 2019. The funding is conditional on the current management team at PetroNeft remaining in place.

A 2017 work programme, which chiefly constitutes the development of the Sibrayevskoye field, is budgeted at $25 million, an amount provided by the second tranche of the loan

"We are pleased to complete the legal documentation for the first tranche of the funding that Oil India have agreed to provide for the 2016/17 work programme and look forward to updating shareholders on the outcomes of the programme later in the year," said Dennis Francis, chief executive, PetroNeft.

“The fact that Oil India has agreed to provide this loan, providing essential development funds for Licence 61 in a very difficult market, is a strong vote of confidence in the current management team and the potential of Licence 61,” he added.

PetroNeft this week urged shareholders to vote against resolutions tabled by Natlata Partners at a forthcoming extraordinary general meeting (egm). The group has been in dispute with Natlata, which is the company's biggest shareholder, for over two years over the financing and farmout of Licence 61.

Natlata has accused the board of mismanagement, saying it had failed to come up with a proper way to address the company’s finances other than to spend more money.