Petroneft Resources. Recovery Play?

Members Only Post. Not for general release.

I’ve mentioned Petroneft quite a few times in the oil & gas forum urging Members to take an in-depth look. So by now we should all have a pretty good idea of the company.

The company began life as PetroNeft LLC, a Texas-based company, established in 2003 as an oil and gas investment and consultancy company focused principally on the Russian market. In May 2005, PetroNeft LLC acquired the entire participatory interest in a Russian company, Stimul-T, which owned a 100% interest in Licence 61 via the auction process in the November 2004 Tomsk Licence Auction.

PetroNeft Resources came in to being on 15 September 2005 and, as part of a corporate reorganization, acquired the principal assets and liabilities of PetroNeft LLC in November 2005. PetroNeft Resources then listed in London AIM and Dublin ESM Markets, in September 2006.

The Group’s strategy is to develop an oil exploration, development and production business in Russia, using the combined skills, experience and resources of the Group’s Directors and employees. In the short-term this is to be achieved through the growth of production at Licence 61 and a rigorous appraisal and exploration programme on Licences 61 and 67, by seeking to bring the existing discoveries into production as rapidly as possible and by exploiting the additional opportunities already identified and summarised in the Ryder Scott Report.

In addition to operations on Licences 61 and 67, the company continues to evaluate new projects for acquisition, The objective is to acquire new «Core Exploration and Production Areas», that satisfy the company’s strict technical and legal evaluation criteria. While the main focus for new acquisitions will be the Western Siberian Basin, the company will also consider projects in other areas within the Russian Federation.

Todays news bodes well for the company not least because they’ve had a terrible year with bopd targets failing to reach what the company told the Market/Investors. This is the cause of the drop. In late 2010 they hit 70p and where trading at about 60pish until May/June 2011 when news began to leak out all through 2011 that the bopd figures touted by the company wouldn’t be reached this has had a detrimental effect on the sp.

JP Morgan recently sold off their stake which has had an anchoring effect on the SP. That anchor is now off. They bottomed out at 8p and are now looking like a decent recovery-play. There’s several Brokers rating them as a strong buy, but I see them as a potential recovery-play.

The Market-cap is approx’ £40 million while shares in issue are 416 million. The last 12 months saw them trade at 64p pre the bopd dropping. Peel Hunt came out with a 54p target while they were 23p in November 2011. They are currently trading at about 9.5p coming off a low of 8pish. Take a good look at them. The whisper here is that there’s a lot of work being done behind the scenes/on-site by the Board to get the bopd up this year to 4,000. Not least because Macquarie Bank have warrants.

There’s a big work programme currently on-going. Pipeline production expected to commence in Q2 2012. Plans for 10 new production wells in 2012 which are progressing ahead of schedule The Ledovaya 2a exploration well oil encountered in primary Upper Jurassic interval oil discovered in secondary Lower Cretaceous interval. Cheremshanskaya No. 3 exploration well tested successfully; three separate oil pools discovered primary Upper Jurassic J1-3 interval tests good quality oil + water secondary Upper Jurassic J1-1 + Bazhenov interval tests high quality oil

Present bopd is steady at 2300. While their 2P reserves have increased 36% to 131.7 mmbbls; with Sibkrayevskoye 49.83 mmbbls (P1) increase of 50% to 20.03 mmbbls.

They are targeting about 200 million barrels of oil.

They should or could get to over 20p as long as they continue their work-programme in 2012 with-out any mis-haps. Get researching them there’s an awful lot out there on them not in this article.


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  1. edgedemon says:

    Ahh – never enough money for all the opportunities
    Added to research/watch list should my RRL profit ever materialise :-0

  2. Jacillium says:


    You heard anything on RRL puntland?

  3. nmnicklin says:

    “Macquarie Bank have warrants” that could potentially keep a lid on the share price, depending on how many are issued and at what price, MXP was held back for a long time while warrants were continually excercised.

  4. nmnicklin says:

    Thanks Dan, talking about MXP, have you covered them, potentially company changing drill hitting TD in the next six weeks? One for the blog with limited downside and massive upside.