REG - Petroneft Resources - Company Update

Petroneft ResourcesAnnouncement

10/05/2023 12:00

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RNS Number : 9719Y  Petroneft Resources PLC  10 May 2023

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

 

Company Update

 

PetroNeft (AIM: PTR) provides the following update.

·    Stimul-T LLC, operator of Licence 61, voluntarily files for
bankruptcy administration in Russia

·    PetroNeft issues Demand Notice to WorldAce Investments Ltd for
outstanding Corporate Management Service charges of $0.98M.

PetroNeft together with its joint venture partner Oil India International BV
(a wholly owned subsidiary of OIL India Limited) are the only shareholders in
a Cypriot registered company called WorldAce Investment Limited (WIL), which
in turn owns 100% of the voting equity in Stimul-T LLC (Stimul-T), a Russian
registered legal entity, which owns and operates Licence 61 in the Tomsk
region of the Russian Federation.

The pipeline connecting Licence 61 to the Transneft system is owned and
operated by Nord Imperial (NI), a wholly owned subsidiary of ONGC, the
flagship national oil company (NOC) of India. As disclosed by PetroNeft on the
21(st) of August 2022, following a long running tariff dispute between
Stimul-T and NI, the pipeline was shut down by NI on the 21(st) of August
2022. Despite numerous meetings between Stimul-T, NI and other stakeholders,
and the continuing litigation proceedings, a resolution has not been achieved.

Apart from minor volumes of oil exported during the winter months utilising
ice roads, Stimul-T has had to suspend all operation on the oil fields in
Licence 61 at the beginning of Q4 last year which has resulted in no revenue
to pay its debts as they fall due. These include a RUB 190MM tax debt (US$2.3M
equivalent). The Tomsk Regional Court of Arbitrage ruling going against
Stimul-T, as announced on the 17(th )March 2023, combined with the inability
to be able to transport oil out of Licence 61, has led to the position where
Stimul-T is now legally obligated, under the Bankruptcy laws of the Russian
Federation, to submit an application for bankruptcy administration.

The bankruptcy process in Russia may be protracted. At this time, the
PetroNeft board cannot, with any reasonable certainty, estimate the
recoverability, if any, of the loan advance(s), receivables or underlying
asset value that accrues to the interest of PetroNeft through its 50% equity
holding in WIL and by extension in Stimul-T LLC.

The act of submitting this bankruptcy filing does not affect the on-going
operations at Licence 67 which continue without interruption.

Under the Joint Venture Agreement between OIL and PetroNeft, PetroNeft
provides certain corporate management services to WIL. The outstanding amount
due to PetroNeft as of 31(st) December 2022 was $0.98M and the Company has
issued a Demand Letter for immediate payment of this considerable amount.

PetroNeft will issue a further announcement in due course.

David Sturt, Chairman of PetroNeft Resources plc, commented:

"This is a very sad outcome; we have been trying to find a mutually beneficial
solution which would have enabled us to continue operations at Licence 61.
Although there have been numerous encouraging meetings in Tomsk, nothing has
been forthcoming. We will continue to pursue all legal options including the
submission of an appeal against the legal case but due to the insolvent
position of Stimul-T and no income we have a requirement by law to lodge for
bankruptcy of Stimul-T.

If a resolution is found which would enable production to re commence and
allow exports through the NI pipeline to market, it may be possible to reverse
the bankruptcy process for the benefit of all stakeholders."

This announcement contains inside information within the meaning of the EU
Market Abuse Regulation 596/2014. Upon the publication of this announcement,
this inside information is now considered to be in the public domain.

For further information, contact:

 Pavel Tetyakov, CEO, PetroNeft Resources plc                                +353 1 6470280
 Brian Garrahy/Ciara Mongain, Davy (NOMAD and Corporate Broker)              +353 1 679 6363
 Paul O'Kane, Murray Consultants                                             +353 1 498 0300

 

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