Volga Gas Plc (LON:VGAS) announced this morning operational highlights from 2009. Volga Gas is an independent oil and gas exploration and production company operating in the Volga region of European Russia with 100 interests in its four licence areas. Report highlights included a confirmation of the completion of the supra salt Uzenskaya oil field in the Karpenskiy acreage, where seven successful wells have now been drilled. In addition, production of the entire Karpenskiy prospect averaged 1,267 barrels per day during the period, with the average sale price increasing from $25.23 to $30.05 in the second half of the year.
At the wells, the sub-salt Grafovskaya ("G-1") well, the company intersected a 300 metre oil and condensate column of low estimated permeability at a depth of 4,000-4,300 metres. The well has reached a depth of over 5,200 metres and drilling continues to explore deeper zones, the report said. First phase development drilling has begun on the Vostochny Makarovskoye gas/condensate field completed, where two wells have been reportedly tested and are ready for production. Volga also revealed it had agreed to acquire a 75% interest in gas processing facilities for the VM field development signed in March 2010. The company added that there was is a combined Russian classification C1/C2 of recoverable reserves of 68 million barrels of oil at the Uzenskoye and VM prospects.
Revenues increased from $0.6m in 2008 to $11.6m in 2009, profit before tax was $0.9m whereas in 2008 it was a loss of over $10m. Net cash flow in 2009 was $4m and capital expenditure for the period fell from $48.5 million in 2008 to $23.7 million in 2009. Year end cash and bank deposits increased to $33.6 million following a net proceeds of a share placing of $26.6 million.
Current oil production, since January this year, has been lower than average due to a severe snow conditions - impacting the oil transportation to customers. Production capacity is still at 1.300 bopd, and the company expect levels to increase to 1,500 bopd when a water injection facility is installed. The results from the G-1 well will soon be evaluated and an exploration strategy established and exploration of the Uzenskaya-2 license area in scheduled for H2 2010. Mikhail Ivanov, Chief Executive of Volga Gas…
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