PETRONEFT disappointed investors after the latest well it drilled in Siberia hit oil but it flowed at a lower rate than had been hoped.
In a statement yesterday, the company said the third of 10 production wells it was drilling at the Arbuzovskoye oil field flowed at about 109 barrels of oil per day (BOPD).
While the well was producing and there was no water diluting the oil, the flow rate was well below the 300 or so that had been expected.
The well faced problems with the oil being frozen as it came to the surface but it has since been stabilised.
Even with the poor performance so far of the third well, the drilling programme is still running ahead of expectations, Petroneft said.
Company chief executive Dennis Francis described the well's production so far as "very economic".
"We do expect the rate will improve somewhat as we optimise the well. Importantly, the well is producing 100pc oil with no water so we are continuing to confirm our understanding of the size of the field.
"While some operational challenges and variation in results should always be expected, we look forward to completing further wells in Arbuzovskoye over the coming months as we continue to focus on materially increasing our production profile and cash flows," he added.
Goodbody's Gerry Hennigan was particularly downbeat on Petroneft's progress.
"Relative to prior flow rates of 310 barrels of oil per day (BOPD) and 540 BOPD, the rate from the latest well ranks as a disappointment, even if commentary in the statement indicates that the initial flow rate was constrained by flow line problems and that there was no water production.
"Overall field production is currently given as 2,500 BOPD. That is down from the 2,700 BOPD outlined a month ago," he added.
Meanwhile, Davy Stockbrokers has increased its long-term price assumption for oil to $95 from $85. The broker made the move to "reflect what we think is a higher marginal cost profile and strong long-term demand". By late afternoon, Petroneft shares were down 4pc in London at 5.4 pence.