Petroneft Resources PTR Placing and Corporate Update

  Petroneft Resources (PTR) - Placing and Corporate Update

RNS Number : 5734P
Petroneft Resources PLC
25 October 2012



            PetroNeft Resources plc ("PetroNeft" or the "Company")


                           US$17.25 million Placing


                               Corporate Update


PetroNeft (AIM: PTR),  the owner  and operator of  Licences 61  and 67,  Tomsk 
Oblast, Russian  Federation,  is pleased  to  announce a  conditional  placing 
raising gross  proceeds  of approximately  US$17.25  million together  with  a 
corporate update. 



· Gross proceeds of  US$17.25 million raised at  Stg£0.05 per share in  a 
placing with institutional and other investors

· US$7.5 million  will be used  in part repayment  of the Macquarie  Bank 
Limited ("Macquarie") loan facility with the balance to be used to finance the
continuation of  the  2012-2013 Arbuzovskoye  development  programme,  working 
capital and transaction costs

· Macquarieborrowing base facilityamended

· US$1  million of  remaining facility  to be  converted into  equity  by 
Macquarie to retain its pre-placing shareholding


PetroNeft has agreed  the terms of  a conditional placing  of 216,052,348  new 
Ordinary Shares at Stg£0.05 (€0.06) per Ordinary Share (the "Placing Shares"),
raising gross proceeds of approximately US$17.25million (the "Placing").

The Placing is being executed  in two tranches and  has been arranged by  Davy 
and Canaccord  Genuity.  The  first  tranche of  the  Placing  consists  of  a 
conditional placing of 41,635,643 Ordinary Shares (the ''First Tranche Placing
Shares") which  is conditional,  inter  alia, on  admission of  such  Ordinary 
Shares to trading on the AIM Market  of the London Stock Exchange ("AIM")  and 
the ESM Market of the Irish Stock Exchange ("ESM"). The second tranche of  the 
Placing (the "Second Tranche  Placing") consists of  a conditional placing  of 
174,416,705 Ordinary Shares  (the ''Second Tranche  Placing Shares") which  is 
conditional, inter alia, on  admission of such Ordinary  Shares to trading  on 
AIM and  ESM  and upon  receiving  shareholder approval  at  an  extraordinary 
general meeting of  the Company  to be  held on  19 November  2012 ("EGM").  A 
circular to convene the EGM will be sent to shareholders shortly.

US$7.5 million will be used in  part repayment of the existing Macquarie  loan 
facility with  the balance  to be  used  to finance  the continuation  of  the 
2012-2013 Arbuzovskoye development  programme, working capitaland  transaction 

Directors' and Management participation in the Placing

Certain Directors and management of PetroNeft will subscribe for the following
Placing Shares:

                  Placing Shares  Resulting holding of Ordinary % of Enlarged
                   subscribed for                         Shares Share Capital
Dennis Francis          1,000,000                     23,760,416         3.68%
Paul Dowling              400,000                        731,583         0.11%
Tom Hickey                400,000                      2,226,283         0.35%
Senior management:
Karl Johnson              400,000                        932,349         0.14%

Licence 61 - Arbuzovskoye Development Programme

As announced on  22 October  2012, Arbuzovskoye well  102, the  second of  ten 
planned new production wells on  the Arbuzovskoye oil field, was  successfully 
completed and brought into production at an initial rate of 540 bopd with less
than 2% water cut. This production  rate was well above the Company's  target 
rate  and  further  confirms  the  excellent  continuity  and  good  reservoir 
properties in the eastern portion of the Arbuzovskoye field.

Development will continue with  a further eight  new production wells  planned 
for the current development programme. Arbuzovskoye well 109, the next well in
the drilling sequence, is currently drilling ahead. It is anticipated that the
completion of development  programme will be  funded from operating  cashflows 
and a portion of the proceeds of the Placing.

Arbuzovskoye contains  2P reserves  in excess  of 13  million barrels  of  oil 
according to independent  reserve auditors  Ryder Scott and  is the  Company's 
second production development.

Macquarie Debt Facility

The Company and Macquarie  have agreed to amend  the Company's existing  US$30 
million borrowing base loan facility. The amendments to the facility  include 
the repayment  of  US$7.5  million  from the  proceeds  of  the  Placing,  the 
repayment  of  a  further  US$9.1  million  in  fourteen  monthly  instalments 
($650,000 per month)  beginning on 31  March 2013 and  the conversion of  US$1 
million of debt into equity  in the Company at  the placing price of  Stg£0.05 
per share (the "Macquarie Shares"). In addition, production covenants will be
removed and Macquarie will  waive the right to  seek additional repayments  of 
the outstanding balance at the next three reviews which were due to take place
on 31  December 2012,  30 June  2013  and 31  December 2013.  Macquarie  will 
continue to hold US$4 million in a Debt Service Reserve Account ("DSRA") until
the maturity of  the loan. The  final outstanding balance  of US$12.4  million 
(US$8.4 million net of the DSRA) will be repaid in a lump sum at the  maturity 
of the facility in May 2014. These proposed amendments and the conversion are
subject to,  amongst other  things, the  preparation and  execution of  formal 
documentation, and the completion of  the Placing. The amended facility  will 
be subject  to  certain  financial  covenants and  lender  approvals  for  the 
application of certain funds typical of a facility of this nature.

In May  2012, PetroNeft  entered into  a three  year loan  facility for  US$15 
million with its partner Arawak Energy. This loan facility will be  unaffected 
by the above amendments.

Corporate Development

Positioning the  Company  so  that  it can  fully  exploit  the  opportunities 
available to it is of crucial importance. To this end, the Company  continues 
in active discussions with a number of parties about possible farm-outs which,
in the  long term,  should  strengthen the  Company's financial  position  and 
position the Company  to extract  value from its  reserve base  and to  pursue 

Dennis Francis, Chief Executive Officer of PetroNeft Resources plc commented:

"We are pleased with the outcome of the Placing and the high level of  support 
received  from  both   new  and  existing   institutional  shareholders.   The 
combination of the results of  recent Arbuzovskoye wells and stable  financing 
base will allow management to continue  to focus on materially increasing  our 
production profile and  cash flows,  substantially increase the  value of  our 
reserve base and  focus on  the numerous  corporate development  opportunities 
available to us."

Application will be  made to  the London Stock  Exchange and  the Irish  Stock 
Exchange for the First Tranche Placing Shares to be admitted to trading on AIM
and ESM, with Admission of the First Tranche Placing Shares expected to  occur 
on 30 October 2012. Application  will also be made  for the Admission of  the 
Second Tranche Placing Shares and the  Macquarie Shares to trading on AIM  and 
ESM, with admission  of the Second  Tranche Placing Shares  and the  Macquarie 
Shares expected on  20 November 2012,  subject to the  approval of the  Second 
Tranche Placing by the Company's shareholders  at the EGM. The Placing  Shares 
will, when issued, rank pari passu in all respects with the existing  Ordinary 
Shares including  the  right  to receive  dividends  and  other  distributions 
declared following Admission.

For further information, contact:

Dennis Francis, CEO, PetroNeft Resources plc               +353 1 443 3720
Paul Dowling, CFO, PetroNeft Resources plc              +353 1 443 3720
John Frain/Brian Garrahy, Davy (NOMAD and Joint Broker)       +353 1 679 6363
Henry  Fitzgerald-O'Connor/Tim  Redfern,  Canaccord   Genuity +44 207 523 8000
Limited (Joint Broker)

Martin Jackson, Citigate Dewe Rogerson                        +44 207 638 9571
Joe Murray/Ed Micheau, Murray Consultants                     +353 1 498 0300

The information contained in this announcement has been reviewed and  verified 
by Mr. Dennis Francis, Director and Chief Executive Officer of PetroNeft,  for 
the purposes of the Guidance Note for Mining, Oil and Gas Companies issued  by 
the London Stock Exchange in March 2006.  Mr. Francis holds a B.S. Degree  in 
Geophysical Engineering and a M.S. Degree in Geology from the Colorado  School 
of Mines.  He has  also graduated  from the  Harvard University  Program  for 
Management Development.  He  is  a  member of  the  American  Association  of 
Petroleum Geologists and  the Society  of Exploration  Geophysicists. He  has 
over 35 years experience in oil and gas exploration and development.

Forward Looking Statements

This announcement contains forward-looking statements. These statements relate
to the  Company's  future  prospects, developments  and  business  strategies. 
Forward-looking statements are identified  by their use  of terms and  phrases 
such as  'believe', 'could',  'envisage', 'potential',  'estimate',  'expect', 
'may', 'will' or the negative of those, variations or comparable  expressions, 
including references to assumptions.

The forward-looking  statements  in this  announcement  are based  on  current 
expectations and  are subject  to  risks and  uncertainties that  could  cause 
actual results to differ materially from  those expressed or implied by  those 
statements. These forward-looking statements speak only as at the date of this

                     This information is provided by RNS
           The company news service from the London Stock Exchange


MSCGMMZGKKRGZZM -0- Oct/25/2012 15:10 GMT
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