Urals Energy Plc Regulatory News (UEN)

2 Mar 2006 07:02

Urals Energy Public Company Limited02 March 2006 FOR IMMEDIATE RELEASE: 2 March 2006 Urals Energy Public Company Limited Petrosakh Exploration Drilling and Operational Update and Corporate Update Urals Energy Public Company Limited ("Urals Energy" or the "Company") todayannounces an exploration drilling and operational update for its subsidiary ZAOPetrosakh located on Sakhalin Island. Urals Energy is a leading independent exploration and production company withoperations in Russia. Urals Energy listed its shares on the London AlternativeInvestment Market in August 2005, and since listing has developed its asset baseboth organically and by acquisition growing production from 4,272 bopd toc.9,000 bopd. Exploration Drilling The East Okruzhnoye No. 1 exploration well reached its total measured depth of2,848 meters on 23 January 2006. Logs have been run and interpreted and aVertical Seismic Profile (VSP) was shot. Based on log results, casing was setand cemented on 19 February 2006. The logs indicate that two potentialoil-bearing formations were encountered in drilling, the Borsky formation(2,402-2,466 meters MD) and the Pileng formation (2,696-2,807 meters MD).Preparations are now underway to test at least five different intervals withinthe Borsky and Pileng formations. Testing operations are estimated to lastseveral weeks. Following analysis of the well logs, it is not yet possible to determineaccurately oil saturation parameters and whether the formations encountered willflow commercial volumes of oil. Certain data indicates the reservoir(s) may betight due to low permeability, but this can only be determined by furthertesting the identified intervals. As previously announced, the Company was granted an extension of thePogranichnoye License on 26 January 2006. This extension provides the Companyfive additional years to properly evaluate the prospectivity of this licensearea. Results of the East Okruzhnoye No. 1 will help in planning futureexploration activity. The Company will provide a further update when appropriate information isavailable. 2006 Capital Budget Approved - Driving Increased Production The Company announces that total projected capital expenditure of $40 millionfor 2006 has been approved by the Board of Directors. Capital investment in2006 remains focused on increasing production through development drilling andexploring the Company's high-impact prospects in Sakhalin Island and TimanPechora. The company now has a year-end production target of approximately 12,000 BOPDand is currently working towards total production of 14,000 BOPD by the end of2007. This exceeds the IPO production estimate of 10,500 BOPD by 12 months. Annual General Meeting Urals Energy will hold its 2006 Annual General Meeting in London on 25 May 2006.Further details will be provided nearer the time. William R.Thomas, Chief Executive Officer, commented: "We have made good progress with our first exploration well offshore SakhalinIsland, the East Okruzhnoye No. 1 and as such we have a better understanding ofthe geology and formations in the area . However, we need to test the well inorder to ascertain its commerciality. The presence of oil-bearing reservoirs,if confirmed, is encouraging for the other prospects located in our licensearea. The data gathered from this well will be invaluable in determining ourfuture activities on the licence area" 2 March 2006 Pelham PRJames Henderson 020 7743 6673Gavin Davis 020 7743 6677 About the Company: 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 listed on AIM in August 2005. The Company 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 Company's six E&P subsidiaries have Proved and Probable reserves of 118million barrels of oil equivalent (MMBOE) and produced approximately 6,237barrels of oil per day (BOPD) during the second six months of 2005. The Company's two largest subsidiaries by reserves and production, Petrosakh andArcticneft, own and operate refining assets with a total refining capacity of5,300 BOPD, which provide the Company with the ability to maximise the value ofthe oil produced by choosing between the sale of oil or of refined productsdepending on market conditions, tax considerations and other factors. This information is provided by RNS The company news service from the London Stock Exchange