VGAS.L Regulatory News (VGAS)

10 Sep 2007 07:01

Volga Gas PLC10 September 2007 10 September 2007 Volga Gas Plc Urozhainoye-2 Licence Acquisition Volga Gas Plc (the "Company"), the independent gas exploration and productioncompany, which currently holds three subsoil licenses in the Volga Region ofEuropean Russia, today announces that it won the Urozhainoye-2 licence atgovernment-mandated auction in Saratov on Friday 7 September. The Company has won the government-mandated licence for the Urozhainoye-2Licence area with a bid of RUR44 million (US$1.7 million). The licence will beissued on payment of the balance of the amount due, RUR4 million ($0.2 million),which has to be paid within 30 days. The licence area covers 354km2 and islocated approximately 15km to the north of the Company's Karpensiy Licence Areaand is in close proximity with up to 30 gas/condensate/oil fields. These fieldsinclude Preobrazhanskoye, Lyubimovskoye and Gorchakovskoye fields ofSaratovneftegas. The Company views the licence area principally as an exploration asset.Notwithstanding, the licence area has had one well drilled on it in 1990 andincludes the Sobolevskoye field which has Russian category C1 recoverablereserves of 0.8 million barrels of oil. There are no C2, C3 reserves as noseismic was previously acquired across the licence area but D1 recoverableresources of 49 million barrels of oil equivalent were estimated. The Companywill publish SPE standard reserves on completion of initial exploration. The Company believes that the nearby Stepnovsky and Kalininsky fields areanalogous with the Urozhainoye-2 Licence Area. These fields produce gas andcondensate from up to three separate layers down to 2,700m at good flow rates. The Company's strategy is to investigate the potential of putting theSobolevskoye field in to production during 1H 2008 whilst acquiring seismic overthe remainder of the licence area to identify potential structures. Mikhail Ivanov, CEO of the Company, commented: "This acquisition is in line with the Company's strategy to utilise management'slocal knowledge to identify, acquire and exploit undervalued assets which areclose to existing markets and infrastructure. The Company will be able to derivesynergies from the licence area's close proximity to the Company's existingareas of operation." For additional information please contact: Financial Dynamics Jonathon Brill +44 (0)20 7269 7170 Billy Clegg +44 (0)20 7269 7157 Ekaterina Alferova +44 (0)20 7269 7257 KBC Peel Hunt (Nominated Adviser) +44 (0)20 7418 8900 Jonathan Marren Alina Savych The information contained in this announcement has been reviewed and verified byMr. Mikhail Ivanov, Director and Chief Executive Officer of Volga Gas plc, forthe purposes of the Guidance Note for Mining, Oil and Gas companies issued bythe London Stock Exchange in March 2006. Mr. Mikhail Ivanov holds a M.S. Degreein Geophysics from Novosibirsk State University. He has also MBA degree fromKellogg School of Management (Northwestern University). He is a member of theSociety of Petroleum Engineers. This information is provided by RNS The company news service from the London Stock Exchange