Urals Energy Plc Regulatory News (UEN)

12 April 2010

Urals Energy Public Company Limited

('Urals Energy' or the 'Company')

Petraco debt restructuring and operational update

Urals Energy, the AIM listed independent exploration and production company with operations in Russia, is pleased to announce that it has reached agreement with Petraco Oil Company Limited ("Petraco") relating to the restructuring of the Company's prepayment financing arrangements with Petraco (the "Petraco Facility"). In addition, Urals Energy is today providing an operational update.

Petraco Facility restructuring

Urals Energy has reached agreement with Petraco relating to the restructuring of the Petraco Facility (the "Restructuring Agreement"). The principal terms of the Restructuring Agreement are as follows:

·; Total indebtedness owed by the Company to Petraco, as at 31 March 2010, was US$34.3 million, made up as follows:

At 1 April 2010, the Capital Outstanding and Accrued Interest will be added together and carried forward as principal ("Principal"). After 1 April 2010 interest will be accrued on the Principal and will not be compounded. All accrued interest from 1 April 2010 will be paid once the Principal has been repaid and all payments made by the Company according to the payment schedule set out below will be applied against the Principal outstanding. Interest will be charged on the Principal at a rate of 6 month LIBOR plus 5% per annum, non-compounding.

·; Subject to a waiver of preemption rights by shareholders in Urals Energy (the "Shareholders") at an extraordinary general meeting (the "EGM"), Petraco will convert US$2.0 million of the Capital Outstanding into Urals Energy ordinary shares at the volume weighted average price for the five days following the date of this announcement, but at not more than £0.15 per Urals Energy ordinary share. Also, subject to approval from the Shareholders at the EGM, Petraco will receive an option to acquire $5.0 million of new Urals Energy ordinary shares at the volume weighted average price for the five days following the date of this announcement plus 50%.

·; The repayment schedule of the balance for the Capital Outstanding and the Accrued Interest will be as follows:

·; Urals Energy will, subject to the approval by Urals Energy shareholders at the EGM, pledge 100% of the shares it currently holds in CJSC Arcticneft and 97.2% of shares it currently holds in CJSC Petrosakh to Petraco as security against the restructured Petraco Facility.

In accordance with AIM Rule 15 "Fundamental changes of business", completion of the Restructuring Agreement is conditional, inter alia, upon the Urals Energy obtaining certain approvals from its Shareholders and this will form one of the resolutions put to Shareholders at the EGM.

The EGM is being convened for 10.00 a.m. local Cyprus time on 29 April 2010 in Evagoras Building Office 34 3rd Floor 31 Evagorou Avenue, Nicosia, Cyprus.

A circular (the "Circular") setting out the details of the Restructuring Agreement and a notice of the EGM will be posted to Urals Energy shareholders shortly and will, when published, be available, in electronic form, for download on the Company's website at www.uralsenergy.com.

Further details of the Restructuring Agreement will be set out in the Circular.

Operations update

Commencement of drilling of the first side track well in Petrosakh

The Company has signed drilling contracts for the first side track well #35b at Petrosakh. Prepayments for materials and drilling equipment have been made and the Company's management plans to spud this well on or around 1 June 2010. For drilling this well the Company will use its own rig and total costs should not exceed Roubles 16 million ($0.53 million) and production should commence in July 2010. An expected production rate from this well is approximately 225 BOPD.

Management plans to spud the second side-track well in July following the completion of well #35b.

Petrosakh.

Current production remains at 1,500 barrels of oil per day ("BOPD").

The recent decline in production at Petrosakh has been stabilised. The Company has completed two wells with workovers and installed two rod pumps on the other two wells.

Production from well #47 after a workover has increased by 50 BOPD. Following an installation of a rod pump a further increase of 50 BOPD is expected by the management. The Company purchased two rod pumps and expect delivery by the end of April 2010.

Well #34 was reperforated in the interval 1,411-1,651 meters. The total fluid production rate doubled after perforation, but the level of crude oil production remained unchanged. It was decided to stop a nearby water injection well and production rate of crude started increasing. Management plans to increase the diameter of a rod pump to increase the production volume of liquids. At the moment review and assessment of this well's performance is ongoing and preliminary results are expected by the end of this week.

Currently, 100% of production is refined and sold on a local market.

Arcticneft

Current production at Articneft is 700 BOPD.

Since the Company's last operational update the production decline has stabilised. By using internal resources and existing perforators in stock on the island, the Company has performed several minor workovers on the existing wells of the Western Block of the field. As a result production increased by 56 BOPD. Currently 4 wells on the Western Block of the field remain shut, but production is anticipated to restart in April 2010. Before shutting production from these wells was 70 BOPD.

By the end of April, the Company expects to receive preliminary results of a geological update and study which will determine the remaining field development programme in 2010.

As of 11 April 2010 Arcticneft had 103,412 bbls of self produced crude oil in stock. First delivery of crude oil from Arcticneft is expected in July 2010.

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