Dublin-headquartered oil and gas exploration firm PetroNeft has reached agreement on the financing of a $35 million (€31.1m) work programme with its partner Oil India on its flagship west Siberian project.
The company also urged shareholders to vote against resolutions tabled by Natlata Partners at a forthcoming extraordinary general meeting (egm).
PetroNeft 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 in the Tomsk Region .
PetroNeft said it had met with Natlata recently following its recent request for an egm to be held on April 18th, but said a compromise had yet to be reached between the parties. The company said it remains open to discussions with Natlata, which has a 10 per cent stake in the group.
PetroNeft urged shareholders against voting in favour of the egm resolutions, saying they were not in the best interests of the company.
Responding to PetroNeft’s comments, Natlata 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.
“The board of PetroNeft are continuing to refuse to face the facts and recognise that they are to blame for getting the company into the current poor financial situation. Over the last two years they have spent $45million to end up with half the production accruing to the company and its shareholders. This gross mismanagement has to stop, and it needs to stop right now,” said Maxim Korobov, Natlata’s controlling shareholder.
Financing deal
The agreed financing for the license 61 work programme, which was announced on Monday, 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.
"The agreement of a work programme and budget is a major step forward for the development of License 61. Given the challenges currently being experienced in the market, the ability to secure this funding is a major positive for the company," said PetroNeft chief executive Dennis Francis.
The agreed funds will be used on the South Arbuzovskoye and Sibrayevskpye fields.
PetroNeft said Licence 61 is currently producing about 2,400 barrels of oil per day (bopd)with the Sibkrayevskoye No. 373 consistently achieving a rate of over 200 bopd.
“Our most recent drilling campaign has laid the groundwork for this, potentially transformative 2016 / 2017 drilling schedule. At Sibkrayevskoye, the S-373 well and extensive new seismic data acquired at Sibkrayevskoye in 2015 indicate that the field could ultimately be in the 100 million bbl range which would be one of the largest oil fields discovered in the Tomsk Region in the last 25 years,” said Mr Francis.
In a note to investors, Davy said the news that funding on favourable terms had been secured was positive for the stock and ensures development, even in the current low oil price environment. However, it warned that in light of the upcoming egm, the conditionality attached to the funding relating to unchanged management means there is a risk the funding may not complete.
