Urals Energy Plc Regulatory News (UEN)

19 May 2006 07:00

Urals Energy Public Company Limited19 May 2006 Antimonopoly Approval of the Dulisma Acquisition Purchase of Oil & Gas Assets in Komi Republic from Lukoil Urals Energy ("Urals Energy"or the "Group" or the "Company"), a leadingindependent exploration and production company with operations in Russia whichwas admitted to trading on AIM in August 2005, announces: • Receipt of the approval by the Russian Federal Antimonopoly Service for thepreviously announced acquisition of OOO Dulisma ("Dulisma") and OOO LenskayaTransportnaya Kompanaya ("LTK"), and • The acquisition of oil assets located in the Komi Republic from affiliates ofOAO Lukoil with Russian State reserves of 25 million barrels of oil for $1.5million in cash FAS approval of the Dulisma and LTK Acquisitions Urals Energy announces that is has received formal approval from the RussianFederal Antimonopoly Service for the acquisitions of Dulisma and LTK, which wereannounced on 18 April 2006. This approval is an important step towards thecompletion of these transactions. Acquisition of oil and gas assets in the Komi Republic from OAO Lukoil Urals Energy also announces that it has acquired the rights to purchase OOO "Voivozhneft", OOO "Nizhnyomrynskaya Neft" and OOO "Verkhneomrynskaya Neft", eacha Russian limited liability company, from OOO Lukoil-Komi and OAO Komineft,subsidiaries of OAO Lukoil. The acquisition is for $1.5 million in cash pluscertain working capital adjustments and is expected to be completed in June2006. The closing is subject to approval by the Russian Federal AntimonopolyService and other customary conditions. Each of the companies to be acquired owns subsoil licences located near theCompany's existing producing properties in the Komi Republic. The licences tobe acquired have been in production for over 20 years. According to the RussianState reserves body, the main Licence being acquired is credited withapproximately 25 million barrels of C1-C2 reserves. The licence is currentlyproducing approximately 350 bopd. On completion of the acquisition, UralsEnergy intends to re-evaluate the reserves, identify areas for furtherdevelopment and prepare and institute a rehabilitation and productionenhancement program. Based on the Company's experience, the re-evaluation ofthe reserves by the Group's outside reserve evaluation firm, DeGolyer andMacNaughton, normally results in a lower quantity of reportable recoverablereserves than is recorded by the Russian State reserves body. The Group intends to pay for the acquisition out of its existing cash reserves. The acquisition fits Urals Energy's acquisition criteria of acquiring producingand non-producing assets in complementary areas of Russia and the CIS withdevelopment and exploration potential at attractive prices. William R. Thomas, Chief Executive Officer, commented: "The approval of our Dulisma and LTK acquisitions by the Russian authorities isa welcome step in integrating these important assets into our portfolio. Theadded benefit of the acquisition of the additional assets from Lukoil is asignificant low cost bolt-on for the Group, giving us assets near to ourexisting producing properties in Komi. This also evidences our ability to workwith Lukoil, one of the major oil companies in Russia, on its portfoliorationalisation program. We are confident this acquisition will also contributeto our continued growth." Background to Urals Energy Urals Energy is an independent exploration and production (E&P) company with itsprincipal assets and operations in Sakhalin Island, Timan Pechora (includingareas in the Nenets Autonomous Okrug and Komi Republic) and the Republic ofUdmurtia, Russia. The Company was admitted to trading on AIM in August 2005. The Group is focused on the integration of its five recently acquiredsubsidiaries and the exploitation of their assets. In addition, it is activelyseeking to continue to grow and diversify its reserve and production portfoliothrough exploration activities and the acquisition of additional E&P companiesor assets by taking advantage of the ongoing rationalisation of E&P assets inRussia. The Group's six existing E&P subsidiaries have Proved and Probable reserves of116 million barrels of oil equivalent (MMBOE) and produced approximately 6,237barrels of oil per day (BOPD) during the second six months of 2005. The Group's two largest subsidiaries by production, Petrosakh and Arcticneft,own and operate refining assets with a total refining capacity of 5,300 BOPD,which provide the Group with the ability to maximise the value of the oilproduced by choosing between the sale of oil or of refined products depending onmarket conditions, tax considerations and other factors. According to a preliminary 12 April 2006 estimate by the Company's independentengineering consultants, DeGolyer and MacNaughton ("D&M"), the recentlyannounced acquisition of the Dulisma Field will increase Urals Energy reservesby approximately 109 million barrels of proved and probable oil reserves,approximately 87 million barrels of possible oil and condensate reserves and 1.9trillion cubic feet of possible gas reserves as at 31 March 2006, according to areport from DeGolyer and MacNaughton, the Company's engineering consultants. 19 May 2006 Pelham PRJames Henderson 020 7743 6673Gavin Davis 020 7743 6677 This information is provided by RNS The company news service from the London Stock Exchange