In January-May 2018, Ukrnafta has completed capital workovers on 37 production wells located in 15 fields in Eastern and Western Ukraine. The successful workover campaign has already generated 7.9 ktonnes of oil and condensate and 8.8 mln m3 of gas over the base production exceeding the projections. The workover operations were carried out on time and with minimal capital deployment.
Successful implementation of the annual programme, which includes capital workovers, current workovers and stimulation operations, allows the company to project an increase in hydrocarbons production by the end of 2018. Ukrnafta’s latest estimates show a 5% increase in production of liquids to 1.45 mln tonnes from 1.38 mln tonnes in the business plan. The production of gas is projected to increase by 10% over the business plan target to 1.07 bln m3.
The growth forecast assumes that the company is able to maintain uninterrupted production at all fields and the government will refrain from actions to block production. This year Ukrnafta has already won a number of court cases against the State Geological Service, obligating the regulator to extend its 27 production licenses expiring in 2018. The forecast also assumes that Ukrnafta will be able to sell freely its oil and condensate through the state-run auctions, which is essential for the stability of the cash flow and the company’s ability to finance its investment programme. Since the beginning of the year, four out of nine state-run oil auctions where Ukrnafta is required to sell its liquids by law have failed. Ukrnafta’s proposals to reform the state oil auction have not been implemented in full and the competition at the auctions remains restricted.
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