Volga Gas PLC Operational Update (8861I)
14 December 2015 - 6:00PM
UK Regulatory
TIDMVGAS
RNS Number : 8861I
Volga Gas PLC
14 December 2015
14 December 2015
Volga Gas plc
("Volga Gas", the "Company" or the "Group")
OPERATIONAL UPDATE
Volga Gas plc, the oil and gas exploration and production group
operating in the Volga Region of Russia, is pleased to provide the
following update on its operations.
Vostochny Makarovskoye ("VM") field
As of 11 December 2015, the VM#4 well, in which the Group
drilled a successful sidetrack earlier in 2015, has been hooked up
and is ready to be put on production. With the inclusion of this
well to the existing stock of producing wells on the VM and
Dobrinskoye fields, there is sufficient capacity for full
utilization of the current planned operational capacity of 750,000
m(3) per day of gas processing at the Dobrinskoye Gas Plant. This
production rate, with the associated condensate equates to
production of over 5,700 barrels of oil equivalent per day
("boepd"). Combined with the Company's currently modest oil output,
total Group production is estimated to be approximately 6,000
boepd.
Yuzhno Mironovskaya exploration well
The exploratory well on the Yuzhno Mironovskaya prospect, as
announced on 7 December 2015, was drilled to a total vertical depth
of 940 metres within a time of 21 days, a record drilling rate for
the Group. After running logs, the principal and secondary target
zones in the Cretaceous post salt Albian and Aptian formations were
found to be water bearing and the well is being plugged and
abandoned. With the efficient well drilling, the total cost of this
well was limited to approximately US$800,000.
Sobolevskaya-11 and Uzen-8 sidetracks
As stated in the 2015 Interim Report, sidetracks were being
drilled on both of these currently non-producing oil wells with the
aim of recovering production. Unfortunately significant mechanical
difficulties were encountered in both of these wells and the
operations on both have been temporarily suspended.
At Sobolevskaya-11, there is an ongoing contractual dispute with
the drilling contractor. Subject to satisfactory resolution of
this, the Group plans to complete the drilling of this well which
requires a further 250 metres to reach the potential target
reservoir at a total vertical depth of approximately 2,600 metres,
expected to be in Q1 2016.
At Uzen-8, which at 1,000 metres has a shallower reservoir, it
is believed that a re-drill would be required. For the time being
this operation is to be deferred.
Export channels for condensate sales
During November and December 2015, the Group exported its first
two cargoes of 500 tonnes each of condensate from its gas plant.
The cargoes were delivered to a rail loading terminal and shipped
on to customers in Lithuania. While this is still a trial
operation, export channels are being developed to offset the risk
of disruption to the regional domestic market which impacted
production and sales of gas and condensate earlier in 2015.
Andrey Zozulya, Chief Executive of Volga Gas, commented:
"It is pleasing to achieve the important production target with
the new well on the VM field. With the completion of the VM#3 well,
which is already drilled but awaiting tie-back, the Group is well
placed to reach an eventual plateau of 1 million cubic metres of
daily gas production from the VM and Dobrinskoye fields.
"The results from the exploration well and delays to the
sidetracks are disappointing. However, recent changes in the
management of drilling contractors are expected to improve
efficiency, as we have seen at Yuzhno Mironovskaya, and we will
update the market once we have clarity on the timing for completion
of these wells."
For further information, please contact:
Volga Gas plc
+7 903 385
Andrey Zozulya, Chief Executive 9889
Officer +44 (0)20 8622
Tony Alves, Chief Financial Officer 4451
Stifel Nicolaus Europe Limited (Nominated +44 (0)20 7710
Adviser and Broker) 7600
Michael Shaw, Ashton Clanfield
+44 (0)20 3727
FTI Consulting 1000
Edward Westropp, Alex Beagley
Editors' notes:
Volga Gas is an independent oil and gas exploration and
production company operating in the Volga region of Russia. The
company has 100% interests in its four licence areas.
The information contained in this announcement has been reviewed
and verified by Mr. Andrey Zozulya, Director and Chief Executive
Officer of Volga Gas plc, for the purposes of the Guidance Note for
Mining, Oil and Gas companies issued by the London Stock Exchange
in June 2009. Mr. Andrey Zozulya holds a degree in Geophysics and
Engineering from the Groznensky Oil & Gas Institute and is a
member of the Society of Petroleum Engineers.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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