Petroneft struggling with strategic review and hunt for auditor

Russia-focussed Petroneft Resources updated the market on its operations and ongoing strategic asset review on Thursday.

The AIM-traded company recently announced the voluntary filing for bankruptcy administration of Stimul-T, meaning it faced additional challenges during the sales process for both licences L61 and L67.

In terms of operations, Petroneft reported that the C-4 well at the Cheremshanskoye field in licence 67 was continuing to produce oil steadily, without any significant decline.

The well had yielded around 270 barrels of oil per day, totalling nearly 220,000 barrels since its start of production.

As part of its strategic asset review, Petroneft said it was actively engaging in discussions with all stakeholders, including potential acquirers.

The discussions encompassed both licences L61 and L67, but the recent bankruptcy filing of Stimul-T - the owner and operator of licence 61 - added further complexity to the ongoing process.

Petroneft said the development necessitated “careful navigation and adaptation” as it proceeded with the sales process.

The firm added that it was currently negotiating with Petrogrand and the holders of the 2019 convertible loans.

However, Petroneft’s board said it could not accurately predict the outcome of the negotiations as yet.

“To date, the company has been unable to source an auditor in respect of the company's financial statements for the financial year ended 31 December 2022,” the board added in its statement.

“Whilst the company will continue to source an auditor, it is becoming clear that the company will not be able to submit audited accounts for 2022 by the required deadline of 30 June 2023 under the rules of AIM and Euronext Growth.”

Petroneft described it as a “rather unfortunate consequence” of owning and managing assets within the Russian Federation in the current environment, given Russia’s ongoing invasion of Ukraine and the resulting sanctions on Russian economic activity.

“The likely consequence of not publishing audited accounts by 30 June is that the company's ordinary shares will be suspended from trading until such time as the situation can be resolved.”

At 1127 BST, shares in Petroneft Resources were down 10% at 0.2p.

Reporting by Josh White for Sharecast.com.