TIDMZOL
RNS Number : 4489R
Zoltav Resources Inc
30 June 2020
30 June 2020
Zoltav Resources Inc.
("Zoltav" or the "Company")
Corporate & Operational Update
Zoltav (AIM: ZOL), the Russia-focused oil and gas exploration
and production company, provides a corporate and operational update
about its operations at the Bortovoy Licence, Saratov.
Production - West Bortovoy
Natural production decline from existing well stock on the West
Bortovoy fields continued at steeper rate in 2019 than in preceding
periods. Total gas production in 2019 was approximately 26 percent
lower than in 2018, while total oil and condensate production in
2019 was approximately 18 percent lower than in 2018.
2019 total production summary:
2019 bcf 2018 bcf 2019 mmcm 2018 mmcm Change
YoY
Natural gas 8.9 12.0 252 341 -26%
2019 bbls 2018 bbls 2019 t 2018 t Change
YoY
Oil and condensate 89,618 109,807 11,416 13,988 -18%
Total revenues in 2019 were approximately RUB 1.2 billion (2018:
RUB 1.6 billion).
The Western Gas Plant continued to operate efficiently with no
shutdowns. Operations at the plant have continued throughout the
COVID-19 pandemic without interruption. The Company has introduced
measures to mitigate the risk of infection at its operations
including additional cleaning and personal protective
equipment.
The development drilling programme aimed at reversing the
production decline in the western fields has to date seen a total
of four side-track wells being drilled. Two wells on the
Zhdanovskoye field have been successful and are now contributing to
gas production; while two wells on the Karpenskoye field have been
unsuccessful and will require additional investment in order to
have the potential to be put into production in the future.
Average daily gas production in the first half of 2020,
including the contributions from the two Zhdanovskoye side-track
wells, has been approximately 26.8 mmcf/d (0.76 mmcm/d) (2019: 24.5
mmcf/d or 0.69 mmcm/d). However, the development drilling programme
has not yet generated sufficient additional production to
sustainably reverse the declining production profile across the
full current year.
A standalone vertical well is currently being drilled on the
Zhdanovskoye field which management projects will, when put on
production later this summer, together with a 7.2 km looping pipe,
be sufficient to sustain total production across 2020 at the same
rate as 2019.
Development strategy - East Bortovoy
As previously announced on 30 September 2019, the Company has
been conducting a feasibility study on the East Bortovoy fields.
The Company has expended approximately RUB 550 million towards this
feasibility study, including the well re-entry programme and
pipeline design. This includes substantial budget overrun due
mainly to the technical condition encountered in Nepriyakhinskoye
Well 1 (as announced on 30 September 2019) and the requirement to
undertake further well re-entries on the Pavlovskoye field in order
to gain additional confidence over the project's future production
profile. This has resulted in a significant delay to the
feasibility study and to the independent technical analysis
necessary to procure project financing.
Well operations and technical due diligence are ongoing to
complete this work and therefore allow the technical analysis to be
completed within approximately three months.
Significant progress has been made on other aspects of project
development including pipeline design, procurement strategy, well
design and gas plant capacity extension. Management have held
preliminary discussions with a number of prospective providers of
project finance, including around any future equity contribution to
the project which would be required to secure such project
finance.
The East Bortovoy project is currently being reviewed by
independent technical consultants. A project final investment
decision is subject to technical due diligence results, successful
negotiations of binding terms for project finance from major
Russian banks and the ability to secure a necessary equity
contribution to support the project finance.
Working capital update
A number of factors, including the production decline,
development drilling, feasibility study and the hiring of
additional technical and geological personnel, combined to place
significant pressure on working capital in 2019 and 2020. However,
the Company is in the advanced stages of negotiating a finance
facility with one of its substantial shareholders. Zoltav
anticipates formalising the finance facility in the near future and
will provide further information once it has been completed.
Cash at 30 June 2020 is approximately RUB 30.1 million.
Final Results for 2019
As previously announced on 25 June 2020, the Company and its
auditors require additional time to complete the audit given the
COVID-19 pandemic and the associated travel restrictions and delays
in fulfilling audit requests as a result of the finance function
operating remotely. Accordingly, the Company has received an
extension to its filing deadline for its Final Results from 30 June
2020 to 30 September 2020.
Enquiries:
Zoltav Resources Inc. Tel. +44 (0)20 7390
Lea Verny, Non-executive Chairman 0234
(via Vigo Communications)
SP Angel Corporate Finance LLP (Nomad Tel. +44 (0)20 3470
and Joint Broker) 0470
John Mackay / Jeff Keating / Soltan Tagiev
Vigo Communications Tel. +44 (0)20 7390
Ben Simons / Simon Woods 0234
zoltav@vigocomms.com
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 until the release of this
announcement.
About Zoltav
Zoltav is an oil and gas exploration and production company
focused on Russia.
Zoltav holds the Bortovoy Licence in the Saratov region of South
Western Russia, a 3,215 sq km area along the northern margin of the
Pre-Caspian basin, one of the largest hydrocarbon basins in the
CIS.
The Bortovoy Licence contains a number of productive gas fields
in the west of the Licence, a processing plant and significant
exploration prospectivity. It holds proven plus probable reserves
under the Society of Petroleum Engineers' Petroleum Resources
Management System of 750 bcf of gas and 3.8 mmbbls of oil and
condensate.
In 2018, Zoltav produced 12.0 bcf (341 mmcm) of gas or 2.0 mmboe
(274 mtoe) and 66,558 bbls (7,715 t) of oil and condensate.
The Company is currently evaluating strategies to commercialise
the eastern fields of the Bortovoy Licence.
For further information on Zoltav, or to sign up for our news
alert service, visit: www.zoltav.com.
Glossary
bbls Barrels
bcf Billion cubic feet
mmboe Million barrels of oil equivalent
mmcf Million cubic feet
mmcf/d Million cubic feet per day
mmcm Million cubic metres
mmcm/d Million cubic metres per day
mtoe Thousand tonnes of oil equivalent
t Tonnes
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END
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