By Melissa Akin and Katya Golubkova
MOSCOW, July 10 Two veterans of Yukos oil
company, who helped launch post-Soviet Russia to top world
producer status by spreading fracking, have left the country's
only oil firm focused exclusively on hard-to-extract "tight
London-listed RusPetro on Wednesday announced the
departure of Chief Executive Don Wolcott, former vice president
for production and well performance at Yukos.
RusPetro said it would part ways with a non-executive on its
board, Yukos veteran Joe Mach, whose watchword at Yukos was
"frack every well," according to Thane Gustafson's "Wheel of
Fortune: The Battle for Oil and Power in Russia".
The two men led a drive to squeeze more oil more cheaply out
of Siberian fields with horizontal drilling, simple hydraulic
fracturing and enhanced recovery technologies ubiquitous in
Texas but little used in post-Soviet Russia.
The technological changes, hardly remarkable by the current
standards of the shale revolution, helped Yukos double
production in just half a decade and ultimately launched Russia
past Saudi Arabia to become the world's largest oil producer.
Once Russia's top crude producer Yukos was bankrupted and
its owner, Mikhail Khodorkovsky, jailed on tax charges after he
fell out with President Vladimir Putin.
Yukos assets are now operated by state oil company Rosneft
. Russia's big integrated oil companies have started a
drilling campaign in the vast Bazhenov shale and other tight
plays but still concentrate mostly on their conventional
Tight oil refers to hard-to-extract oil trapped in
RusPetro, with proved and probable reserves of over 1.8
billion barrels of oil equivalent in the heart of West Siberia,
was set up to try to recreate the phenomenon of 15 years ago on
a small scale, using more advanced production technologies.
RusPetro's tight oil-focused operations are based in the
Khanty-Mansiysk region of West Siberia, near to fields operated
by Gazprom Neft and TNK-BP - the latter
recently taken over by Rosneft.
It is currently drilling low permeability formations and
ultimately targeting the Bazhenov. The economics of developing
such reserves are difficult because of a heavy tax burden.
Just days before the departures, however, the lower house of
parliament passed a long-promised tax relief package to spur
drilling in West Siberia's tight rock and boost output.
"For all companies in Russia producing tight oil, wellhead
revenue is about $22," RusPetro's head of investor relations,
Dominic Manley, said, estimating the tax breaks would raise it
"That is going to incentivise all kinds of investment in
these kinds of reserves. It is the difference between not making
any money and starting to make some money out of this type of
RusPetro said the departures were by agreement with the
company's shareholders and did not specify a reason. Tatyana
Kalachova, an analyst who covers RusPetro at Otkrytiye
brokerage, said the change was likely instigated by the
shareholders after production downgrades.
RusPetro floated in London in 2012, when it raised $240
million. Its share price, which doubled after the listing, has
since fallen by more than 80 percent, hit by downgrades to
output which hit cash flow projections and hurt the company's
ability to fund drilling.
"They wanted 10,000 bpd but they had less than 6,000, then
they decreased the target for the current year, so they were
underperforming," said Tatyana Kalachova, who covers RusPetro at
Otkrytiye brokerage in Moscow.
RusPetro also said that its current chairman Chris Clark
would step down at the end of July and would be replaced by
Alexander Chistyakov, a shareholder with RusPetro and a former
director with the Russian Federal Grid company.