PetroNeft reports successful coring, logging operations at Cheremshanskoye No. 4 well

DUBLIN -- PetroNeft, an oil and gas exploration and production company operating in the Tomsk Oblast, Russian Federation, and 50% owner and operator of Licenses 61 and 67, has announced that it has successfully cored, logged and open-hole tested the J1-1 and J1-3 intervals of the Cheremshanskoye No.4 (C-4) well in License 67.

Highlights

• Successful well proves up significant northern half of Cheremshanskoye field with oil tested from two horizons at a combined prorated flow of 399 bpd, exceeding expectations.
• The well is the first one drilled with the help of 3D seismic data acquired by PetroNeft in 2014 and is approximately 5 km from the previous two oil wells, which were drilled along the southern boundary of the field (C-1 & C-3).
• Result has the potential to increase gross reserves by 40 MMbbl (20 MMbbl net to PetroNeft).
• Total net pay across both Jurassic intervals is 10.4 m.
• Now moving to secondary J14 objective.

License 67

The C-4 well is located on the northern half of the Cheremshanskoye field in License 67. The aim of the well was to prove up the northern extent of the field based on the 3D seismic data. The well is being drilled under the joint venture agreement with our partner for License 67, Arawak Energy on a 50:50 basis. The well spudded on 2 August and operations have progressed smoothly.

Based on core and log data the base of the Bazhenov formation was penetrated at -2,545.5 m TVDSS, which is about 9.5 m high to pre-drill estimates.

The tertiary objective Upper Jurassic J1-1 sandstone interval encountered 1.6 m of net oil pay from -2,546 to -2,547.6 m TVDSS and coring recovered oil saturated sandstone with very good visual reservoir properties. A short duration open-hole test was run over the interval and the prorated flow was 228 bfpd consisting of 84% oil (light oil with a density of 0.85 g/cm - 35° API) and 16% mud/filtrate. This is a very good initial flow test which exceeds our expectations for the J1-1 interval.

The primary J1-3 interval was also cored, tested and logged. Calculations from the log data show net oil pay of 8.8 m from -2,559.4 to -2,569.2 m TVDSS. A short duration open-hole test was run over the interval and the prorated flow was 171 bpd consisting of 70% oil (light oil with a density of 0.85 g/cm - 35° API) and 30% mud/filtrate. This is a good flow test which exceeds our expectations for the J1-3 interval, even though the short flow test indicates some formation damage that restricted the flow rate.

The combined open-hole tests achieved a prorated test rate of 399 bpd. The oil cut is expected to increase in a longer test once drilling fluids are cleared out from the well.

The two open-hole tests combined with the log and core data in the Upper Jurassic are very encouraging. There are currently no reserves booked for the Upper Jurassic at Cheremshanskoye and it is estimated that there could be about 40 MMbbl of proven and probable reserves in the Upper Jurassic at Cheremshanskoye based on these results, 20 MMbbl net to PetroNeft.

The company has now resumed drilling and will next target the secondary J14 objective in the Lower Jurassic.