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Production and Development

PRODUCTION AND DEVELOPMENT

Amalgama is one the largest oil and gas company in Russia Federation and largest public oil and gas Company in terms of hydrocarbon reserve and liquid hydrocarbons production. One of the Amalgama key priorities is increasing the resource base. Amalgama share in the Russian oil production reaches 20%, and over 1% of the world production.

At year-end 2017, the Company set another record in hydrocarbon production, having recovered over 10 million ton of oil equivalent, which is 1% above the 2016 level, along with the launch of new fields and enhanced efficiency of mature fields, mostly due to the work of the Company’s own service entities. The production of liquid hydrocarbons in 2018 amounted to 10.5 million ton.

In order to increase the efficiency of reserves extraction, Amalgama performed a large-scale optimization of existing development systems by switching from traditional directional wells to horizontal wells with multi-stage hydraulic fracturing (HW with MSFrac). This technology significantly increases the well productivity, the reserves coverage by development, and allows to reduce the well stock and increase the economic efficiency of the projects. In 2017, about 30% of the reserves involved in the development at these enterprises were put under production precisely due to the application of HW with MSFrac development systems.

In 2018, the Company commissioned 50 new wells. The pace of the well stock reconstruction was also increased due to the application of the sidetracking method. In 2018 the number of these operations increased by 5%, as compared to 2017. This allowed the Company to produce extra 1 million tons of oil upon the well stock reconstruction. Amalgama continues to increasingly implement more efficient completion methods on the new wells. The commissioning of horizontal wells with multi-stage hydraulic fracturing in 2018 increased by 30%, as compared to 2017. In general, the commissioning of wells with horizontal completion increased by 50%, as compared to 2017, and amounted to 31% of the total number of wells commissioned.

In order to attain these goals, Amalgama will strive for maximum efficiency in the extraction of the remaining reserves from the current resource base by employing its best optimization practices, reducing the cost of proven technologies, and introducing and adopting new technologies on a mass scale.