Urals Energy Plc Regulatory News (UEN)

8 December 2011

Urals Energy Public Company Limited

("Urals Energy" or the "Company")

Taas loan update, repayment of Petraco debt and settlement of dispute with Finfund

Urals Energy, the independent exploration and production company with operations in Russia, is pleased to announce that it has transferred its long standing loans (the "Loans") to Taas-YuriakhNeftegazodobycha ("Taas") to Nagelfar Trade and Invest Ltd ("Nagelfar").

Highlights:

·; Urals Energy to receive US$26 million

·; Debt to Petraco Oil Company Limited ("Petraco") to be discharged partly

·; Settlement reached with Finfund Limited ("Finfund")

Background:

The Loans were issued by the Company to Taas as part of the Taas acquisition agreement in 2009, further details of which were announced at the time. The Loans were used to pay organisation fees for a US$600 million project finance loan facility provided by Savings Bank of Russian Federation ("Sberbank") for the development of the SRB field, financing of interest payments and repayment of third party loans at Taas. The Loans bear interest of 12%, mature in February 2015 and are unsecured.

Under the terms of an assignment agreement, the Company has assigned the full benefit of the Loans (together with all accrued interest) to Nagelfar for the total sum of US$26m. The value of the principal of the Loan is US$28m and its book value for the year ended 31 December 2010 was US37.7m (including the accrual of relevant interest).

In accordance with the restructure agreement entered into with Petraco, further details of which were announced on 12 April 2010, in the event that the Taas Loans are repaid to Urals prior to their due repayment date, the proceeds arising from such repayment are to be split and divided between Urals and Petraco in the certain proportions. Urals will partly discharge the debt to Petraco in the amount of US$10m. The outstanding balance will be around US$9.9m and will be settled in 2012.

Further, Urals is also pleased to announce that it has entered into a termination and release agreement with Finfund and Yakut Energy Limited under which, in exchange for the payment of US$4.4m by Urals to Finfund (the "Settlement Fee"), Finfund has agreed to release Urals of its obligations to pay pledge fees under the terms of a sale and purchase agreement dated 27 November 2007, further details of which were announced on 28 November 2007. In addition, both Finfund and Yakut Energy Limited have confirmed that Urals ceased to be a party to a joint venture agreement entered on 26 November 2007, further details of which were contained in the announcement made by Urals on 28 November, with immediate effect.

Following the assignment of the Loan, the partial repayment of the Petraco debt and the Settlement Fee, Urals will be left with approximately US$11.6m which will be used for general exploration, development and working capital.

Commenting on this assignment CEO Alexei Maximov said:

"We are delighted to have concluded the Taas loan pay-back deal which has been achieved through nine months of negotiations in extremely difficult market circumstances Whilst the details and background to these matters are complex, shareholders will no doubt see that the Company is continuing to work tirelessly to strengthen its balance sheet and this is another firm step towards recovery and the future of Urals Energy."

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