Urals Energy Plc Regulatory News (UEN)

2 Feb 2006 07:00

Urals Energy Public Company Limited02 February 2006 Urals Energy Public Company Limited Operational and Trading Update Urals Energy Public Company Limited ("Urals Energy" or the "Company") todayannounces an operational and trading update prior to announcing its AnnualResults for the year ended 31 December 2005 on Friday 31 March 2006. 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 placed shares resulting in a total fundraising $131.1 million. 2005 H2 Production Production in the second half increased by 47% to an average of 6,263 bopdcompared with 4,272 bopd in the first half, giving average production for theyear of 5,256 bopd. Current production has increased to approximately 8,900bopd. This increase has been driven by the combination of the Dinyu acquisition,currently producing approximately 2,800 BOPD, and organic development drilling,specifically at Petrosakh. In line with earlier guidance this means that the Company's initial IPOproduction estimates of reaching 10,500 bopd by the end of 2007 has increased toestimated production of at least 14,000 bopd by the end of 2007. 2005 Year End Reserve Estimates Based on the preliminary 2005 year-end reserve estimate by the Company'sindependent reserve engineers, DeGolyer & MacNaughton, the Company anticipatesthat its proved (1P) reserves will show greater than 100% organic replacement ofproduction during 2005, a clear demonstration of the strength of the Company'score asset portfolio. The Company anticipates that its 1P reserves will total approximately 71 millionbarrels, an increase of 28% as compared to the March 31, 2005 reserve reportprepared in conjunction with the Company's listing in August 2005. In addition,total proved and probable (2P) reserves are estimated at 118 million barrels, anincrease of 32%, and total proved, probable and possible (3P) reserves areestimated at 178 million barrels, an increase of 51%. These preliminary 2005year-end reserve estimates include reserves attributable to OOO Dinyu, a Russianproducer acquired by the Company in November 2005. Exploration The Company's application for an extension of the Pogranichnoye License areaoffshore Sakhalin Island has been successful. The Russian Federal Agency forNatural Resources granted the license extension on 26 January 2005. The licenseperiod was extended to 1 February 2011 and the terms of the amended license nowrequire a total of five exploration wells to be drilled during the period2005-2010. The East Okruzhnoye No. 1 well spudded in 2005 will qualify as thefirst of the five exploration wells required by the amended license. The East Okruzhnoye No. 1 exploration well was spudded on 1 November 2005.Target measured depth of 2,848 meters was reached on 23 January 2006. Loggingoperations are now underway and an update will be provided on completion. Corporate Update As announced in December 2005, the Company signed a five year $12 millionsubordinated loan agreement with BNP Paribas. This financing was finalised on 30January 2006 following shareholder approval which was duly obtained at an EGMheld on 16 January 2006. At the EGM the Company also sought, and was given, approval to increase itsauthorised share capital and the authority to issue shares on a non pre-emptivebasis in certain circumstances. Adjustments to Interim Results to 30 June 2005 The Company announces that management has identified certain minor adjustmentsrelating to the Company's previously reported results for the period ended 30June 2005, which will result in a modest reduction of the loss reported for theperiod. On 23 September 2005, Urals Energy reported a net loss of $1.145 million forthe six months ended 30 June 2005. After the identified adjustments, theCompany now expects the results for the six months ended 30 June 2005 to be aloss of approximately $800 thousand. The minor adjustments include but are notlimited to gross revenues, cost of production and finance costs, andunderstatement of related tax expense. These changes have no material effect onthe Company's cash flows. The Company is working with its auditors, PricewaterhouseCoopers, to finalizethese adjustments. This information is still preliminary and subject to finalconfirmation and approval of both the Company's directors and auditors. UralsEnergy will restate the results for the interim period ending 30 June 2005 assoon as practical and provide information for comparative purposes at that time. William R. Thomas, Chief Executive Officer, commented: "The Company has made significant progress throughout 2005 by continuing toincrease production, replace reserves and identify and complete strategicacquisitions. The awarding of the five year extension of the PogranichnoyeLicense is a positive development enabling Urals to continue its drillingprogramme at Sakhalin Island through 2010. We continue to focus on our strategy of growing organically and by acquisitionand I am confident the Company is well positioned for the future." 2 February 2006 Pelham PRJames Henderson 020 7743 6673Archie Berens 020 7743 6679 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