A double disappointment from wells on its Russian Licence 61 sees oil firm Petroneft (PTR:AIM) slump 13.4% to 2.1p.

The S-374 well was intended to boost proved and probable (2P) reserves at the Sibkrayevskoye oil field but will be plugged and abandoned after failing to encounter hydrocarbons. Despite this failure, chief executive Dennis Francis still sees the field as 'very significant' with 'robust economics' even at today's oil price.

Elsewhere, the water cut on the A-216 production well on the South Arbuzovskoye has increased significantly leading to a drop off in production from the well. For the uninitiated, the water cut is the ratio of water produced to oil.

aaa Petro

To address this water influx the company plans to alter pump settings and may seek to plug off the water. It notes the other three wells on the field are not encountering water issues.

Nonetheless this operational setback contributes to a fall in Licence 61's gross production from July's record 3,700 barrels of oil per day (bopd) to 3,300 bopd.

The company has been plugging away on Licence 61 for more than a decade - bringing Oil India on board as a partner in 2014. In 2011 the company traded above 60p. In April it was forced into a board shake-up by activist shareholder Natlata Partners.

Issue Date: 31 Aug 2016