PetroNeft Resources plc share price, company news, analysis and interviews

PetroNeft Resources plc (LON:PTR) Chief Executive Officer David Sturt caught up with DirectorsTalk for an exclusive interview to discuss final results, improvements in the business environment and what to look forward to for the rest of the year.

Q1: PetroNeft Resources announced 2020 results this week, obviously a challenging period. What the key highlights and how did the company manage to navigate through this period?

A1: It’s correct, 2020 was a terrible year for most people with the ravages of COVID and it’s the tragic loss of life we’ve been seeing around the world. I think if look at the oil industry in particular, it’s been hit by the massive demand destruction and price reductions. We first saw that this manifests itself in two basically themes that played out.

Firstly, January last year, we saw the split up of what’s called the OPEC plus agreements, which led to the initial reductions in the oil price and then, March, it started to fall very sharply as the demand was taken off the table, as people stopped traveling. So, that translates to a massive decline in oil price and actually, as we know, in April, there’s actually reports of negative pricing in the Texas plays.

Looking at our numbers, it has been a challenging year, but the highlight really is that we kept our productions relatively stable through the year, we had slight 3% decline. That was on the back of we’d actually decided in April, when the prices went so low, that it wasn’t economically viable to produce in that month so we shut in a lot of our wells and we also had some shut-ins in September through unplanned pipeline maintenance.

So, when you look at it, actually, we lost about 35,000 barrels of oil a day through the voluntary shut-ins and the pipeline so if we hadn’t had had that scenarios, we’d have actually been about 3% up year on year. Obviously, we’re not about just producing a little bit about producing oil economically so production was actually performed pretty well through this period.

The other part is production costs so obviously we’ve had a laser focus on this throughout the last couple of years, and we’ve managed to further reduce the cost of associated producing oil. It went down from $13.80 a barrel to $12.8, which is a further 10% reduction, which was a nice achievement.

The pricing environment, talking about it again, we look at what we got per barrel in 2019, we got just under $42 a barrel, and the average realised price for 2020 was just over $28 a barrel so there’s a massive 33% decline in our price we got per barrel as international market went through the ravages of the pandemic effects.

The great news is that despite all these challenges, because of our earlier focus on costs, and keeping production stable, we were actually able to reduce our losses by quite a bit, it reduced from just over $6 million to $4.5 million so we reduced our losses by 25% in a period when we had this drop in the oil price.

I think the other thing is that it was a challenging year from the COVID effects but we were able to operate throughout our year without a single lost time accident, which was again, great news and just demonstrates how we look after our staff.

So yes, a challenging year, but our cost reduction we had in place before 2020 and leading through 2020 had had an effect in reducing using our losses, despite the lower prices.

Q2: In the release, you mentioned the improvement in the business environment so far this year. How is this affecting the company?

A2: Quite dramatically actually, and perhaps not surprisingly, as we come out, we basically positioned the company through 2019/2020 to optimise the production. We improved the understanding of our fields, reduced operational costs, and then we’re entering this period where if we look at the macro environment, clearly the prices have been escalating and there’s an incredibly newfound confidence within the industry. Today, we’re looking at Brent of plus or minus $75 a barrel, it’s unprecedented.

How do that affect us as a company? Well, clearly it has dramatic effects on our cashflow at operational level, we’re generating good cash flow at the moment. If you look at even last month, we’re getting well over $60 about barrel last month, our operational costs of $12.3 a barrel with the mineral extraction tax in Russia being approximately 50%, you can see that the net amount we receive per barrel has gone positive in quite a dramatic way.

This is actually one of the good things about the Russian tax regime for the oil industry so it’s called the Mineral Extraction Tax, and it’s based on a percentage of the oil price so as it goes down and you pay less, as it goes up, you pay more, but you still get that percentage of the upside. In quite a lot of fiscal regimes around the world, as the price goes up, you tend to get taxed quite punitively, you don’t in Russia.

So, we’re benefiting from the increased oil price, and that’s generating more cash in our professional units, as reported recently, we constructed the road on License 67, the Cheremshanskoye field. We had a $1 million facility to do that, yet we’ve not used it yet, we managed to finance it so far out of cashflow so it gives an indication of how much cash is going through the system.

We’ve obviously been benefiting from the transaction, where we increased our equity in License 67, from 50% to 90% and the C-4 well on the Cheremshanskoye field in License 67 continues to perform extremely well with zero decline.

So our bottom line production numbers are going up just as oil price is going up, last year we were doing 1,562 barrels a day gross, this year we announced the other day that we’re up to just under 2,300 barrels a day. So production is strong, cashflows incredibly strong, we’re benefiting from the cost reduction programmes in the past and it puts us in an incredibly rosy position. At the same time, investors are increasingly looking on this as a good place to invest because the cash is generating.

It’s almost like a tale of two halves, 2020 was a terrible year, we managed to come through it, we reduced our losses, kept focus on costs to maintain production, places very well to the first six months of 2020, quite a lot of cash at the operational level.

I think the key thing is also, this is on the back of our operational programmes, which have been updating our investors on over the last few months, which has been pretty successful. The fracking program in License 61, the stability of the production at C-4, which has actually gone up, and Ledovoye, we had to work over, we didn’t actually put in production but we managed to get oil to surface.

So, we have a good pricing environment, good operational performance and our production has actually increased so a rosy picture now.

Q3: This year seems pretty busy, what can we look forward to for the rest of the year from PetroNeft Resources?

A3: Our field generally, on an operational level, you tend to do a lot of the work in the winter using ice roads but those ice roads are obviously no longer there as we’re now in the summer but that doesn’t mean to say that the company’s not doing anything.

We’ve had an incredibly successful operational season this last year, that is fundamentally important because it keeps improving our understanding of the assets and taking forward. The success of that programme in both licenses, it gives us great confidence that we have significant value to grow organically.

The major drivers we talked about in the past have been the Northern Hub in License 61, we have Sibkrayevskoye, Tungolsky and West Lineynoye and then the second part in License 61 is the enormous potential around the Cheremshanskoye field.

So we’re updating with our models that moment, it all looks very positive, now the key tasks for the company is to look at how we optimise it for taking those assets forward into a development phase. We have a significant reserve potential underground, we just need to find a way to extract that economically which in today’s high price environment is not the challenge it was last year.

So I think there will be quite a lot of news coming through in terms of updates on the assets and we hope to have some of that coming through fairly soon.

We can look forward with increasing confidence for a very active season next winter, just based on the cashflow we have already started to accumulate within the operational units so there’ll be quite a lot of news coming forward.

PetroNeft Resources plc (LON:PTR) Chief Executive Officer David Sturt caught up with DirectorsTalk to discuss the operational success of the Cheremshanskoye road, results from the C-4 well, the importance of the workover of the L-2a well and more news flow to look forward to.

Q1: Now, a number of points in today’s update with the first being the operational success of the road being built ahead of time and within budget. David, can you talk us through the importance of the road, which has just been completed along with the results from the C4 well?

A1: It’s certainly been a busy time in Tomsk and I think it’s a credit to the success we’ve been having in the various press releases, including today’s is a tantamount to the success of our team we put in place in Tomsk.

When we look at license 67, and particularly the Cheremshanskoye field, we’ve just completed an all-season road which is vital, it connects up across the fields to a further all-seasons road that’s already in place.

Now, it achieves two major objectives, firstly, it enables us to have the field in production all-year round, in West Siberia, you have the very cold spell in winter when you build ice roads and that’s the way to transport in and out. These all season roads mean we can access the fields all year round, we are already using that road to transport oil out now because the winter roads have melted away so we’re getting oil out of the field all year round but in addition, this road provides a major archery across the field. That enables us to get personnel equipment, in and out at any time of the day we want so that feeds through to improved operating costs and even capital costs because traditionally in some remote fields in Siberia, people can use helicopters, the helicopter is expensive and obviously there’s weight restrictions so it gives us an important revenue stream from the fields as we export oil all-year round. It also provides a great archery into the field as and when we want to use it.

I think the important thing is that the team delivered this on budget and within schedule so another success.

Now, turning to the C4 well, the C4 well is one well drilled under significant structure, Cheremshanskoye field covers an area of 46 square kilometres, and the C4 well was drilled back at the end of 2018. It was the first well to be drilled on 3D seismic and we did an extended test last year, we basically put the well into production this year.

What we did is we took a very careful approach as it was the first well on production in the field so we wants to be very cautious with it and learn as we go along. We opened it up very slowly from a two-millimetre to four to six and eight, and then from mid-March, we’ve had it on an eight millimetre choke and basically, the well is produced extremely well. It’s produced at a very stable 300 barrels of oil a day without any decline up to now and that’s great news.

The important thing is that the fact we’ve got no decline, we’re looking at other ways we may actually try and achieve a higher production rate from that well, and these may involve things such as putting a pump down the well because at the moment it’s actually just flowing naturally, or it may involve even opening the choke size up a little bit more. We’re going to be doing that sort of evaluation over the next month or so.

I think the key thing about this oil and these well, it’s not just about the production, obviously we’re very pleased with the results so far, they’ve exceeded expectations, but it’s also about the value of every barrel we get out of the ground from this field. There’s two things that make this extremely attractive to us and that’s really what pushed us into increasing our equity in this license back at the end of 2020 and into 2021 when we increased our equity from 50% to 90%.

Those two aspects are we have a contract in place to sell the oil at the wellhead at competitive rates, the important thing about it is that the custody transfer is at the wellhead so basically it moves any expensive pipeline tariffs we normally have to pay in some fields. It incrementally becomes more valuable.

On top of that, we have a reduction in the mineral extraction tax that, for April, equates to $4.20 per barrel so we’re doing 300 barrels a day, with a $4.20 incremental uplift in value, it’s $36,000/$38,000 a month more. You can soon see how that multiplies up over a year and then as you look at developing more wells, you can see how the value of incremental becomes more and more important so it’s very valuable oil.

In addition to looking at increasing or looking to increase production from this well, we’re also, on the back of the success we’ve had with this field so far, looking at further development because clearly there’s a significant amount of potential in this field. It’s all about how we go about further development, whether it’s horizontal wells, slant wells, directional, we’re doing a lot of that work at the moment to look at further development options but, so far, it’s going extremely well.

Q2: You’re also about to start with a workover of the L-2a well, how important is that for the company?

A2: The L-2a well is actually located on the northern margin of a license 67 and it’s actually a field, it’s called Ledovoye field, there was a couple of wells drilled on the structure back in the Soviet year, in 1973/74, one tested oil for short time at very high rates, that was the L-2a well and the L-5 well, it had oil shows and interpreted oil well logs .

In 2011, we went in and drill a well that twinned the old, what’s called, the L-2 well and we tested oil in an open hole test, it was a quick open hole test on a small choke size, recovered oil to surface, but the problem was the well was never of a cased. What casing is, you basically put the steel sleeve down the well, then you cement in and perforate into formation and that was never done. The trouble with that is that the regulation system requires you to do a cased hole tests to be able to get the state reserves booked on the state register, once you have that booked, you can then go forward to forward development.

So, we want to do two things with this workover of our 2011 well. Firstly, go into the well, properly put a liner down and cement it, and then reperforate, there’s actually two horizons – the J1-1 and the J1-2 –  perforate and hopefully establish a production to surface. On getting any production surface, it will achieve two things, firstly, we can produce that well for up to three months and while we produce, we can export the oil, and we’re very lucky because this field is right next to a very good quality all-season tarmac road. So, the wells are only 200 metres away from that road so we can easily get the oil out. Secondly, and even more importantly, once we established flow or established production in the event we do, we can then go and seek what’s called a State Reserves Report, which will then enable us to develop the field going forward. That’ll take probably five to six months after getting a flow but clearly it will transform an asset which is regarded as an exploration asset, despite the fact is actually produced oil in the past to surface on test, to an asset for forward development.

The other thing just to mention is that this field where the L-2a well is located, Ledovoye field, there’s actually extension of that into the adjacent license to north, license 55, into a field called North Ledovoye, which was actually developed previously by MOL. So, it’s a workover with significant upside on success, and we’re looking forward to results.

Now, in terms of timing, we’ve got mobilized the workover rig to the well site, we’re busy what you call rigging up the workover rig and we’d expect initial results before the end of Q2 this year.

Q3: Like I mentioned earlier, so far in 2021, we’ve seen quite a lot of news flow from PetroNeft Resources, do you think we’ll have more to look forward to?

A3: Yes, good question. We’ve had a lot of, I think, operational success so far this year and a lot of news flow and things are all going in the right direction and it’s very pleasing to see that our share price is starting to reflect that as well.

I think the answer to the question is that we do anticipate news flow on both licenses going forward, we should not forget the success we’ve had on license 61, particularly with the fracking program, which is still going, the results are still looking very positive. This new flow hasn’t just happened overnight, the turnaround we’re seeing has been built on a solid foundation that basically went back as far as 2019 and that was basically, we developed a kind of an emphasis.

Firstly, the key principles where we wanted to maximize our understanding of the subsurface assets so basically placing an increased emphasis on what we call geology and geophysics so getting a clearer picture of the fields themselves. Then we wanted to obviously have a rigorous approach to cost control at all levels, not just in the field but also at the corporate level and that’s been reflected on numbers previously. Then crucially, building the right team to manage our assets so in Tomsk, we’ve had quite a lot of new faces and a lot of these people, some we know and some are new, they’ve had a lot of experience of working on similar assets in the region and I think it’s not surprising that you to see the benefits coming forward.

The key differentiator really, when you look at the past and where we are now, is all this improved subsurface understanding, the better team, more vigorous cost control, it gives you much better clarity of thought process on your capital allocation model. We believe we have a much better understanding the risk, we don’t take unnecessary risks, we take a cautious measured approach and clearly trying to continue to improve our success.

So far this winter’s operational programme has delivered, we believe, great success, and we continue to look forward to further news, just at the time when we actually increased the equity of our licence as well. So, in a nutshell, we do anticipate further news flow going forward through the year.

PetroNeft Resources plc (LON:PTR) Chief Executive Officer David Sturt caught up with DirectorsTalk for an exclusive interview to discuss how the production increase was achieved, what they are hoping to achieve with the two well fracking programme, the timing of production on License 67 and the progress of the additional 40% interest in that licence.

Q1: Good news on the production increase PetroNeft Resources announced earlier, can you explain to us though how this was achieved?

A1: We’re quite proud of what the team have achieved here, when you look at a normal oil fields, they tend to decline at varying rates, unless you have a drilling program or intervention work ongoing. Now what we’ve said is that clearly improving the understanding of our assets is crucial to us, we’ve had an ongoing improvement of the data we’ve acquired over our fields, and that’s allowed us to get a greater depth of understanding of the fields. Also, crucially, we put in place, I believe we said before, a good team in Tomsk and that basically means getting people who have experience of operating in this environment, operating on this type of geology setting.

What they’ve done is they’ve turned around what was a perennial decline and if you look at us historically, we were declining at 20/25% per year back in 2018, going into 2019 so to actually turn around this to an improvement in production without any deploying any real capital investment is a significant achievement.

The other thing is that by gathering more data, by getting smarter people improves your understanding of the risk going forward, which, again, improves your capital allocation model or your ability to predict things in a much more robust manner.

So, it all ties round with a great team in Tomsk and continued to improve the asset understanding which feeds through to the better investment decision longer term as well.

Q2:  No, you mentioned in your release a two well fracking program, what are you hoping to achieve with the programme?

A2: Fracking is a technique that most companies look at using and with the right geology and the right conditions, it can be very successful, and the aim of fracking is basically to increase the production near term, which then increases revenue and cash flow and that is the main target.

With us, it’s kind of a two-pronged approach, clearly, we want to increase production, we want to increase revenue, we want to increase cashflow, but we also want to continue improving the understanding of our assets.

If you look at the two wells we’re fracking, we got Lineynoye-115, now Lineynoye-115 sits on the Lineynoye field in an area where we’ve carried out fracking program back in, I believe, 2010. In that particular program, it was pretty successful, it was from what we call the Pad 1. Lineynoye-115 was not that good, it had an improvement, but the problem was the well was fracked using what we call the helicopter approach, so everything was helicoptered in, which was expensive, and so rather than do a large frack, a small frack was carried out and it did have some positive results, but nowhere near as positive as the other wells.

So, what we’re doing is we’re looking at this, we’re seeing what the improvement will be after the frack, we anticipate an increase in production, the scale of the increases be quite important for us because it’s not just about this well, it’s about how we manage forward the continued development of Lineynoye. On success, we have a three or four well program for fracking of the other wells going into next winter.

On Sibkrayevskoye, the other well, that’s a slightly different story. On the S-373 well, on the Sibkrayevskoye field, that is a well that’s been in production all year round, since we connected the field up to the central processing facility at the start of 2020. Since that time, the well has been performing very well, it’s stable production, virtually no decline and so it’s encouraging for the forward development of this field, which has a great upside potential.

So, the fracking is aimed at increasing, again, the production of revenue, but it’s also about improving our understanding of the asset. The geology in this well and this field is very similar to geology of Lineynoye Pad 1, good thick sands well above the oil water contact so we can go in there with some great confidence that fracking should work.

Now, on success, if we go from a 200-250 barrels a day pre-fracked to say 300 barrels a day post-fracked, that again improves your understanding of how to develop the asset going forward, improves your economic analysis, particularly on the risk component, and again, it basically makes you build a much better capital allocation model going forward.

So clearly, it’s about improving production, improving revenue, and again, improving our understanding of the underlying asset and how to improve the performance going forward to improve the way we allocate our capital.

Q3: Now the imminent year-round production from license 67, can you talk a little bit about the timing and why this is so important for the company?

A3: Our target is for getting this on production by the second week of February, which is just around the corner, I think we may have been a few days early but in Siberia at the moment, as people have probably been following, it’s exceptionally cold. We’ve had temperatures below minus 50, and whilst our crew are incredibly tough and can work in these environments, it tends to slow things down a bit. We are still on target for second week of February and we’re almost there with turning the well on so that that’s a pretty hard deadline we don’t believe we’re going to miss.

In terms of why it’s important for us, obviously putting C-4 well on production is going to improve our production again, which feeds through to improve revenue, improved cashflow but it’s not just about how many barrels of oil a day you produce, it’s also about the value of that oil you produce.

Now in the Cheremshanskoye field, we benefit from a good infrastructure, which means that we’re able to sell that oil at wellhead so instead of having to transport the oil to the finery with transportation costs, we’re selling at wellhead. That makes the economics of a barrel of oil from this field very attractive.

In addition, we have a partial, like production tax exemption, it varies between 5-15% depending on other metrics so every barrel of oil we get this field is incredibly valuable.

Going forward, there’s very significant development potential for this field, there is a field very close by, I think about 500 metres away, that’s very similar in geology, already produced 36 million barrels of oil in multiple wells.

So, we see fantastic potential in this field, but also crucially, it’s not just about the amount of oil in the field, it’s also about the value of that or the why it’s so good for us and why it’s important to company.

Q4: Now wonder PetroNeft Resources want to increase the interest there. The last time we spoke, we talked about that additional interest of 40%, can you provide us an update on how that’s progressing?

A4: You make a very good point there, you can see why we want to increase our equity, we don’t wait a year or two when production’s up.

We can’t go out with exactly where we are at the moment because obviously no deal is done until it’s done but all I can say is that when we talked in our last interview, we said it’s going to be Q1, it’s going to be more towards the first half than the second half.

All I will say is we’re definitely on schedule, things are going well, and we’d expect some news on this fairly soon.

PetroNeft Resources plc (LON:PTR) Chief Executive Officer David Sturt caught up with DirectorsTalk for an exclusive interview to discuss the potential acquisition of a further 40% of licence 67, more about the deal, licence 61, the loan extension and news flow going forward.

Q1: David, PetroNeft Resources currently own 50% of licences 61 and 67 operating in the Tomsk Oblast region in the Russian Federation and today you’ve announced a potential acquisition of an additional 40% of licence 67. Firstly, can you just tell us a bit more about the asset?

A1: Licence 67 really does have all the things going for it in three main areas to focus on.

Firstly, it’s in what we call the right postal address and what I mean by that is it’s surrounded by significant oil field production from major companies so they’re adjacent to the licence. Obviously, if you want to be looking for oil, it’s always a good place to look amongst large fields.

Secondly, and I think it’s crucially important in the West Siberian region, is good infrastructure links. We have all-season roads crossing the licence, we have electricity cables going through it as part of the national grid and we have pipeline networks. That’s crucial because of two things, first it means we can get into and out of the licence all year round because commonly in a lot of Siberian areas you can only get in when you have winter roads so we can get in all year road. Secondly, because we have good transportation links into the licence, it means your actual operational costs are lower in a more remote region. So, you can transport in personnel, equipment and we can crucially get our oil transported out at lower costs so it results in lower opex charges over.

Finally, and crucially, the licence is high prospective. We have already two fields which are not currently producing, the Cheremshanskoye field and Ledovoye field, and they’ve had wells drilled on them and have encountered oil in both wells . On the Cheremshanskoye field, we actually did an extended well test of a well we drilled in 2018 and we did that test Q1 last year and we produced oil to surface which flowed naturally at up to 496 barrels of oil a day which is a very good flow rate. Importantly, we managed to sell that oil at market rates which generated very good economic numbers so it ticks all the boxes from an asset perspective.

I think crucially in this deal, it’s at the juncture where you transfer from being an exploration asset which is not revenue-generating to a production asset which is generating cash flow and we anticipate starting the oil production from as early as next month.

Q2: Can you explain more about the deal and why Alastair is selling after just one year?

A2: Just to put some historical perspective on this, Arawak Energy was owned by Vitol which is a massive oil trading house and they have been a good partner in the past to Arawak but they made a strategic decision way back, I believe as early as 2016/2017, to start exiting exploration, particularly in this region. That presented a challenge to PTR because the more work we did on the licence the more we liked it but we had a partner who was not wanting to invest anymore money in it.

Inside the company, Alastair, who was actually the CEO of Arawak, which was owned by Vitol, he was also getting increasingly frustrated by the inability to take this asset forward under Vitol so he eventually led essentially what was a management buy-out through his company Saram Energy.

We’ve obviously been talking to Alastair a lot and his company and we see great, what I would say, similar views on the prospectivity of this asset and similar views on how we want to take this forward. So, we’ve structured the deal which is beneficial to both parties but crucially aligns the success of both parties with the success of PTR so it’s not really Alastair selling out or Saram Energy essentially selling out to our company, what it’s doing is aligning the two companies very closely together. Saram Energy and the majority shareholder, Alastair, will essentially becoming a further significant shareholder in PTR, he already has some shareholdings in the company today already.

So, it’s basically getting the two companies aligned to the greatest success of PTR with an equal vision of how to take it forward to generate value.

Q3: When we last spoke, we discussed licence 61 and the success that you’d had there. Where does the focus lie now going forward?

A3: Some people may read this as a refocussing away from licence 61 to licence 67 which is not the case at all. We’re interested in generating value across our portfolio and I think when you look at the results from 61 up to now, that’s borne out.

When the new management team came in, we focussed a lot on data gathering and gaining a much better technical operational understanding of our assets, at the time our production was declining 20%-25% a year and we had some technical uncertainties.

So, what we’ve done over the last year to year and a half is we’ve improved the technical team in Tomsk, we’ve brought in some new people, changed out others but crucially having people now working on the assets who have worked on similar assets in adjacent fields for larger companies. That has resulted in us turning around this perennial production decline and most of our fields are now actually increasing production, not decreasing, without any real capital being deployed. In addition, we had the great success of being able to build the mini oil processing unit so it’s all been about improving our knowledge and improving the team.

The next steps going forward is how we then deliver on where we see the significant upside on 61 which is around the area that we now call the northern hub which is Sibkrayevskoye and West Lineynoye fields development and getting to a level where we’re able to deliver the value there.

That’s the next stage which we’ll look at unfolding at the end of this year so it’s not in a sense refocussing away from 61, it’s basically taking 61 aggressively forward as we are licence 67 and moving them forward together so we don’t just focus on one asset.

Q4: Previous news that was out was the loan extension, how are things progressing there?

A4: We have a convertible loan facility from June 2019 which was matured 31^st December 2020 and we’ve been in discussions with the lenders, there’s five of them and I’m actually one of them although I’m one of the relatively small lenders, and our target was to achieve an extension on basically the same terms.

We put out a press release as a holding pattern because discussions are going very well, we’re encouraged and we believe there’ll be a successful outcome which we’ll be able to announce very shortly to the market. We didn’t want to have this hanging in the air whilst all the documents, in essence, went through the legal process.

Q5: Finally, we’d like to talk about news flow over the coming months. I think you’ve touched on this but what can we expect from PetroNeft Resources and more importantly, what kind of timeline we can expect on the acquisition with it being at a potential stage at the moment?

A5: Obviously, it’s very hard to control any acquisition when it closes and we did not want to go out too early with this, we’ve been working on this acquisition for a while. We discussed this with the seller and we only wanted to get a news release out when we were near certain that it was going to progress.

The acquisition itself is not that complicated, in essence it’s not one party selling to the other, it’s one party selling to the other but also taking a very significant position within the buy-out. So, in that kind of transaction, it’s a lot easier to negotiate terms beneficial to both parties because both parties are going to be in the asset going forward.

So, in terms of timing, we do not think this is going to take long at all, we’ve said Q1, I think it’s going to be earlier Q1 rather than later.

In terms of other news flow, obviously 2020 was a disastrous year for many people, I think particularly in the energy markets, going forward now obviously on a macro-environment we’re seeing significant improvement in sentiment and also prices have improved. This is now enabling us to start looking seriously at how we move forward this year, we’ve already announced that the licence 67 we put in year-round production from as early as next month for the C-4 well. We’re currently looking on that licence that the further news flow being when we can back to working over the Ledovy field to testing the older wells there and seeing if we can then put that into eventual production.

On licence 61, it is about continuing to manage the existing production, we have said that we hope to carry out a fracking production and some fracking this year, I think there’s going to be news on that fairly soon and also, with the other things we see on licence 61 which we want to take forward.

So, in a nutshell, there’s potentially going to be quite a lot of news through this year, particularly in the first six months of the year as we get results from both licence 61 and licence 67.