Naftagaz Improved Production Performance in 2021 Compared to the Previous Period

The oilfield services company Naftagaz announced the production results of the year. The drilling progress amounted to 647,812 metres (166 wells). The share of horizontal drilling increased significantly and reached 83.7% (70.7% in 2020).

The following indicators have increased:
• average annual number of wells constructed per crew: from 11.51 to 13.15,
• drilling progress: from 47,579 meters to 51,324 meters,
• average meterage per well: by 2.75% (to 4155 m),
• average depth of wells constructed: by 59 m to 3,781 m,
• average monthly revenue per crew by 28%.

The average drilling time was reduced by 8.3% to 27.6 days. Thus, the overall drilling rate increased by 3.58%. Consequently, sinking efficiency rose to 6.6 days per 1,000 meters in 2021, compared to 7.4 days in 2020.

Unproductive time is steadily decreasing: in 2021 it reached a record low for Naftagaz and amounted to only 3.1% of the total drilling time. In 2020, the figure was 6.4%, and another year earlier it was 7.2%. There was a record 42.6% decrease in the unproductive time for rig skidding.

Naftagaz continued its cooperation with Gazprom Neft (total drilling volume hit 3 million meters in 2021). In addition to the traditional partnership with GPN subsidiaries and affiliates, a new five-year contract was signed with Meretoyakhaneftegaz for work at the Tazovskoye oil and gas condensate field. A pilot project for batch drilling was launched at the Krainee field jointly with Gazpromneft-Noyabrskneftegaz.

At the end of the year, Naftagaz successfully completed its first gas project with Gazpromneft-Zapolyarye at the Pestsovoye field (a Gazprom asset) in the Yamalo-Nenets Autonomous Okrug. 31 wells were drilled (more than half of them up to 5.5 days ahead of schedule). The productive time ratio in 2021 amounted to 97.4%. In early 2022, a new five-year contract was signed with GPN-Zapolyarye, under which work at the Urengoyskoye oil and gas condensate field will begin in the second half of this year.

Drilling was resumed at the Komsomolskoye and Kamennoye fields for Rosneft NK JSC subsidiaries. Naftagaz significantly increased its productivity at the Kamennoye license area facilities, completing 6 wells ahead of schedule up to 4.04 days. The productive time ratio amounted to 100%.

Investments in equipment and materials in 2021 amounted to about 1 billion rubles. The total investments of the Naftagaz Group over the last 7 years have amounted to 6 billion 700 million rubles. Thanks to consistent upgrading of capital assets, Naftagaz's drilling rig fleet has been modernized by more than 80%, and the average age of the rig has been reduced by 6.5 years. In 2022 the company plans to invest more than 2 billion rubles.

In Q3 two BU 3900 drilling rigs with a capacity of 225 tons were delivered and put into operation at the Gazpromneft-Noyabrskneftegaz fields. In addition, two drilling rigs with a capacity of 320 tons were purchased, for which the company expects an additional increase in the 2022 order book. At the end of the year, Naftagaz and Uralmash NGO Holding also signed a contract for delivery of the BU 6000/400 drilling rig with increased capacity and block-modular design with double tier block arrangement. Investments were also made in the modernization of the existing assets, including the purchase of new TDSs and specialized vehicles, including through industry support programs.

The number of industrial safety accidents decreased by 86%, and their severity decreased as well. The company has significantly strengthened its position in the Process Efficiency and Industrial Safety categories of Gazprom Neft's contractor performance evaluation program, rising five points to become the leader among GPN contractors.

In 2021, the Digital Drilling project was launched. 12 drilling rigs have been equipped with auto drilling tools and a digital platform has been put into operation. The following result was obtained by drilling 11 wells under the project: the positive effect exceeded 10%, while the mechanical drilling speed increased by 30%.

Naftagaz declared 2021 to be the year of personnel policy efficiency: salaries were indexed, a program to improve social and living conditions for the staff was developed and implemented, the number of personnel increased by 5% and amounted to 1,751. A licensed Naftagaz-Razvitiye Training Center began operating in September to provide training and professional development for employees under corporate professional training programs in oil and gas well drilling, rigging-up operations, auto transportation services, well construction supervising, HSE, basic fire safety, first aid administration, defensive driving in winter, safe practices for employees with little experience. About 2 thousand people can be trained at the Center annually.

In 2021 all measures were taken to prevent an outbreak of coronavirus infection among the staff: 88% of employees were vaccinated, and the herd immunity reached 94%. In doing so, effective measures were taken to cut twice the costs for personnel safety in the wake of the pandemic. So, in 2020, 84 million rubles was allocated for this purpose, in 2021 - 37 million.

Comment by Islam Nazaraliyev, Naftagaz CEO: “For the oil field services industry, 2021 was a year of restoring production pace and performance management. In my opinion, Naftagaz has implemented our projects to the highest standard in the past year, improving our results step by step. We finished this year at a good level and feel positive about the future: the main indicators show growth not only compared to the last year, but to all previous years as well. This was made possible due to the maximum involvement of our staff in the improvement of production and business processes. In 2022, Naftagaz intends to work proactively on implementing green technologies in drilling, expanding social obligations, and developing new approaches in corporate governance.”

For reference:
Naftagaz is among top five independent drilling companies. Since its foundation, the company has drilled over 3.8 million metres (970 wells). The company’s production base is in Noyabrsk (Yamalo-Nenets Autonomous Area). The company is a member of the International Association of Drilling Contractors (IADC) and has a credit rating of BBB(RU) with a stable outlook (by ACRA).