PrimeGen Energy Corp. announces an update to its strategic plan through the period ending December 31, 2010 (the "Strategic Plan") on its Russian oil and gas operations. The Company has assembled a highly prospective portfolio of oil and gas exploration assets in Russia (Timan-Pechora and Rodnikovskogo properties) and has attracted an excellent group of partners to build our asset value. Preparations for an aggressive drill campaign in Rodnikovskogo over the next year have advanced significantly with the first well anticipated to spud by the end of September.
Located 17 kilometers from Ukhta, a major town in the Republic of Komi. The oil plays are situated approximately 1,200 km from Moscow. Its surrounding areas have well-established infrastructure, allowing all year access for field operations. Power lines and a major highway pass through the territory. There is also a branch of the Transneft pipeline between Ukhta and Moscow that passes directly over the project.
The Company has successfully drilled 4 of the 30 wells to date, and all four are currently producing approximately 5,200 barrels per day. PrimeGen is in the process of closing the sale of seventy five percent (75%) working interest in proposed well numbers 11 through 30 of the 30 well program. The sale of this interest would give the Company the capital injection required to immediately pursue an accelerated drill program on the Rodnikovskogo property. PrimeGen will continue to own its original interest in wells 1 through 10.
The first well at the Rodnikovskogo field is expected to spud at the end of September, 2009. The rig, materials and other equipment are currently being mobilized. Numerous additional locations have also been identified and are being evaluated for possible future drilling. Interpretation of reprocessed vintage seismic data is currently underway. The new data has provided a clearer image of vast sub-basins within the field and a technical re-evaluation has begun. Various exploration strategies such as appraisal drilling, offset exploration drilling, and conventional 2D or 3D seismic exploration are being considered.
Liquidity and Capital Resources
The Company anticipates that funding its Strategic Plan through 2010 will require $20-$40 million of additional capital in excess of the expected cash flow to be generated from future crude oil sales. The Company expects to fund its Strategic Plan using the most viable funding sources available such as the credit facility with Ehrlich Kohlberg PLC, the proceeds from sale of the Company's Timan-Pechora project and additional third party debt or equity financing.
Robert Charlton, CEO, commented: "The strategic goals outlined above are designed to maximize the value of PrimeGen's highly prospective assets. The Company intends to implement this strategy to maintain significant upside for shareholders. In the short-term, the Company believes that significant value can be generated from an aggressive drilling program.
The operational progress made over recent months justifies the continued confidence of the Company in the quality of its assets. In particular, by completing the evaluation of the extensive 3D seismic data over identified leads in Rodnikovskogo, PrimeGen should be able to mature a viable portfolio of new prospects, which will lead to enhanced value for PrimeGen's shareholders."
The Company has recently engaged a new attorney that specializes in efficiently filing disclosures with the Pinksheets. Further details will be announced in the near future.