Urals Energy Plc Regulatory News (UEN)

Urals Energy PCL

(''Urals Energy'' or the ''Company'')

Update on strategy and trading

Urals Energy PCL (AIM:UEN), the independent exploration and production company with operations in Russia, is pleased to provide the following update on strategy and trading.

Resolution of legacy issues

As previously reported on 7 December 2012, the Company has paid the final loan principal amount to Petraco Oil Company Limited ("Petraco"). The only sum that remains outstanding to Petraco relate to interest and totals approximately US$3.0 million. This remaining interest payment is anticipated to be made before the end of 2013 and is linked to the timing of the next tanker shipment from Arcticneft. Petraco have released the security pledge they held over the Company's Petrosakh asset and the Board are in discussions with Petraco about them releasing their security pledge over Articneft. However, since the release of the pledge is linked to the full discharge of all debts due to Petraco, there can be no guarantee that Petraco will agree to release the pledge earlier than contractually required.

The Board is satisfied with the conclusion of the arbitration against a former director, Vyatcheslav Rovneiko, relating to the repayment of a loan totaling US$3.7 million made by the Company to Mr Rovneiko in 2007. This arbitration has confirmed the Company's legal rights, vindicated its position and issued a final award that the sum in the amount of US$7.5 million (including loan amount, interest and legal costs) must be repaid to Urals Energy together with a daily accumulating interest. The Company has formally demanded payment from Mr Rovneiko and is committed to using all appropriate means to collect the outstanding amount.

Having achieved a satisfactory resolution of these past issues the Board is now able to fully focus on the Company's operations and growth opportunities.

Current operations

Petrosakh

Current production at Petrosakh is 1,440 BOPD. In the competent persons report dated 31 December 2007, by DeGolyer and MacNaughton, the Company had 2P reserves standing at 16 MMbbl and 3P at 20.6 MMbbl. Production between 2008 and 2012 was 3 MMbbl. The Company is currently developing a drilling programme for Petrosakh and plans to drill up to two new wells in 2013, subject to receipt of the necessary Russian regulatory approvals.

Arcticneft

Production is stable and stands at 712 BOPD. In the competent persons report dated 31 December 2007, by DeGolyer and MacNaughton, the Company had 2P reserves at 43.6 MMbbl and 3P at 64.1 MMbbl. Production between 2008 and 2012 was 1.3 MMbbl. The Company has entered into a contract to carry out a passive seismic study for the identification of potential hydrocarbon pools with Geodynamics Worldwide Srl. The technology will be utilised with the aim of increasing the efficiency of drilling via detailed interpretation of hydrocarbons within a specific area. The results are expected to be finalised by summer 2013 and the Board anticipates one new well being drilled at Articneft in 2013.

Trading update

The Board anticipates that the Company's results for the year ended 31 December 2012 will be in line with market expectations.

Outlook

The Board are committed to delivering maximum value to shareholders through the effective management of the Company's existing assets, as well as through new assets. In the short-term the Company will undertake drilling activity at Petrosakh and ArcticNeft. Possible additional wells maybe drilled in the future, based on success of the planned 2013 drilling programme. The aim of further drilling is to increase production at both sites.

In addition to the Company's existing operations, the Board continues to look for additional revenue streams. This maybe through: identifying ways of utilising the upside potential in downstream and marketing opportunities at the Company's existing assets; and, evaluating possible acquisitions and joint venture targets. The Board's medium-term strategy is to expand and optimise the Company's portfolio and build a steady cash flow.

An overview presentation is available from the Urals Energy website and can be downloaded at www.uralsenergy.com/ir_presentations.htm.

Commenting on the update, Andrew Shrager, Non-Executive Chairman of Urals Energy, said: "With the majority of the Company's legacy issues now resolved, Urals Energy enters into 2013 with renewed optimism for executing its strategic plan. This includes further strengthening of our balance sheet, primarily by increasing output at both Petrosakh and Arcticneft, and also, by looking at possible M&A opportunities. The Company is now entering a key period in its corporate development as the Board seeks to create maximum value for shareholders."

- Ends -

For further information, please contact:

Media enquiries: