Re: Acquisition Update

5 Oct 2007 07:00

Volga Gas PLC05 October 2007 5 October 2007 Volga Gas Plc Urozhainoye-2 Completion of Licence Acquisition Additional Data Volga Gas Plc (the "Company"), the independent gas exploration and productioncompany, which currently holds four subsoil licences in the Volga Region ofEuropean Russia, today announces that it has paid the balance due for theUrozhainoye-2 Licence and has received the licence. The licence area covers354km2 and is located approximately 15km to the north of the Company'sKarpenskiy Licence Area and is in close proximity with up to 30 gas/condensate/oil fields. The Company, which on 7 September 2007 won the government-mandated auction forthe Urozhainoye-2 Licence area with a bid of RUR44 million (US$1.7 million), hasmade the final payment of RUR4 million ($0.2 million) and has received thelicence. The Company has also acquired some additional data on Sobolevsky Well #11, whichdiscovered the Sobolevsky field and is currently in conservation. The well wasdrilled to a total depth of 3,307m and the Bobrikovsky horizon was tested in acased hole over four separate perforations between 2,647m and 2,659m in 1991.It initially produced 193m3 of oil per day (1,213bbl/day) and 55.4mcm/day(thousand cubic meters per day) of gas on a 8mm choke. The well produced lightoil; 0.845g/cc (API 35.9). The horizon demonstrated good porosity andpermeability (131 mDarcy). Productivity Index was estimated to be 2.67. The Company intends to acquire the well in order to work it over and startproduction in 2008. 2-D seismic will be conducted over the licence block toidentify further prospective structures to drill. Mikhail Ivanov, CEO of the Company, commented: "The data from Well #11 provides an indication of the potential of Urozhainoye-2licence area. The planned 2-D seismic will help to understand the structure ofSobolevsky field as well as facilitating the identification of other potentialstructures on the licence block. " For additional information please contact: Financial Dynamics Jonathon Brill +44 (0)20 7269 7170Billy Clegg +44 (0)20 7269 7157Ekaterina Alferova +44 (0)20 7269 7257 KBC Peel Hunt (Nominated Adviser) +44 (0)20 7418 8900 Jonathan MarrenAlina 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