Petroneft starts producing oil at its Siberian prospect
AN Irish oil and gas explorer has begun to produce oil at one of its sites in Russia.
Petroneft said it had commenced production on its Licence 61 in the Tomsk Oblast region of Siberia, central Russia.
The 4,000 barrels of oil a day it expects to be producing by the end of 2010 marks the first production by the company.
Petroneft said construction of facilities was complete and production from four wells had now commenced.
Field production has been 1,100 barrels in the first two days and flow rates are expected to increase as drilling fluids are cleared out and the electric submersible pumps are optimised.
Three additional wells will be brought into production over the coming week.
The company also noted that the seventh and most recent well had hit the thickest net pay to date, describing it as "completely saturated with oil".
"Eleven wells are scheduled to be on production by the end of the year and we anticipate meeting our year-end production target of 4,000 BOPD.
"In January 2011, when a crew can be mobilised on winter roads, a programme of hydraulic fracture stimulation will commence in order to achieve the maximum production levels and enhance oil recovery," the company said.
Current oil production is being used to complete the commissioning of the oil processing facilities and is filling the oil storage tanks at the facilities site.
Dennis Francis, chief executive of Petroneft, said he was delighted that production had finally started and paid tribute to the staff on the ground.
"This has been a monumental accomplishment achieved in less than one year of the funding project. The commencement of production is a transformational milestone for us and provides a tremendous platform for future growth," he said.
James McCullough, an analyst with Davy Stockbrokers, saw the announcement as very positive for the stock.
"Petroneft has achieved the transformational milestone of first oil ahead of schedule, and first indications of reservoir productivity are very positive," he said.
"The development has been marked by consistency of delivery at all stages since raising funds for the project in September last year.
"First production is a huge event for the company, but is only one part of a compelling investment thesis that also includes production growth through further development, exploration upside and portfolio expansion," he added.
By the end of trading in Dublin yesterday, the share price was up by nearly 1pc at 61c.