Petroneft shares soar over 20% after oil found in Russia

DUBLIN AND London-listed explorer Petroneft’s shares surged by more than 20 per cent yesterday after the company announced that it has found “a significant” new oil field in one of its two Russian licence areas.

The company said yesterday a well drilled in the Sibkrayevskaya section of one of its licence areas in the Tomsk Oblast region of Siberia struck a reservoir of oil.

Initial drilling produced 170 barrels of oil a day and Petroneft said that the reservoir could hold significantly more than the 44 million barrels that it originally expected to encounter.

The news sparked a plunge for its stock. Petroneft’s share price added 21.4 per cent to close at 44.5 cent on the Dublin Stock Exchange yesterday.

Petroneft’s broker, Dublin firm Davy, upgraded its assessment of the company and increased its estimate of its net asset value by 10p sterling to 80p a share.

Analysts Job Langbroek and Caren Crowley based their assessment on a long-term oil price of $85 a barrel. They also suggest that the company could be a takeover target for local exploration groups seeking to build up their own reserve inventories.

Petroneft targeted the Sibkrayevskaya area because it believed that exploration carried out there in the early 1970s may have missed the field.

The company based its belief on a reassessment of data from wells drilled there at that time.

This is the sixth and largest field it has discovered in licence 61 in Tomsk Oblast. It also owns the nearby licence 67.

Both blocks were explored during the Soviet era, and the information gathered then indicates that they hold commercially viable reserves.

It said yesterday that it is continuing with its development of licence 61 and with an exploration programme outlined for licence 67.

Investors hammered Petroneft’s shares last month when it cut guidance for production for this year to between 4,000 and 5,000 barrels a day from an original estimate of 7,000 to 8,000.

The company produces about 2,500 barrels a day from seven wells.

When it made the announcement the shares dipped 23 per cent to 33 cent.