Interim Results and Restoration of Trading on AIM

 

TIDMUEN 
 
RNS Number : 2825E 
Urals Energy Public Company Limited 
17 December 2009 
 
? 
17 December 2009 
Urals Energy Public Company Limited 
('Urals Energy' or the 'Company') 
 
 
2009 Interim Results and Restoration of Trading on AIM 
 
 
Urals Energy, an AIM listed independent exploration and production company with 
operations in Russia, today announces its Interim Results for the six months 
ended 30 June 2009. 
 
 
Urals Energy also announces that the suspension of trading of the Company's 
shares on AIM, which commenced on 30 June 2009, will be lifted at 7:00am (GMT) 
on Friday 18th December 2009 and trading in the Company's shares will 
re-commence thereafter. The restoration of trading follows notification of the 
Company's annual audited accounts for the year ended 31 December 2008 and 
interim results for the six months ended 30 June 2009. The Company is now in 
compliance with AIM Rules 18 and 19. 
 
 
 
Highlights 
Strategy 
  *  Following divestiture of Dulisma and Taas Yuriakh, Urals now well positioned to 
  recommence development programmes on two producing fields, Arcticneft and 
  Petrosakh 
  *  Restructuring of Petraco indebtedness is Company's immediate priority as it 
  seeks to advance its strategy 
 
Operations 
  *  Key development projects put on hold and subsequent to period end divested 
  Dulisma and Taas Yuriakh to Sberbank for full discharge of $630 million debt 
  *  Average daily production for the period was 4,251 BOPD (including production at 
  Dulisma 1,780 BOPD.) 
 
Financial 
  *  Gross revenues decreased to US$15.1 million from $110.7 due to divestiture of 
  Komi assets in April 2008 and Chepetskoye NGDU in February 2009 and decrease of 
  oil prices 
  *  Net debt to Petraco was $33.3 million at 17 December 2009 ($45.6 million at 30 
  June 2009) 
  *  Commenced significant cost reduction program 
  *  First export loadings at Petrosakh and Arcticneft were made in July and October 
  2009, respectively 
 
Corporate 
  *  Completed significant corporate transactions including divestiture of Dulisma 
  and Taas Yuriakh post period end 
 
  *  Significant Board and Senior Management changes including appointment of Alexei 
  Maximov as Chief Executive Officer and a Director post period end 
 
Outlook 
  *  Main priority is to agree restructuring of Petraco indebtedness 
  *  Concentrate on early production increase from existing wells 
  *  Complete geological studies in 2010 to develop drilling programmes 
  *  Look for possible corporate transactions to derive maximum value to shareholders 
 
 
 
Alexie Maximov, Chief Executive, commented: 
 
 
"We are pleased to publish our Interim Results and  re-commence trading on the 
London Stock Exchange. 
 
 
The first half of 2009 was characterized by complex and lengthy negotiations 
with Sberbank which have finally come to a successful resolution. Simultaneously 
we introduced a significant cost cuttings programme which reduced our cash burn 
and will help us lift liquidity constrain going forward. 
 
 
We are now focused on renegotiating our remaining debt with Petraco, increasing 
production from our remaining assets and evaluating corporate opportunities to 
increase shareholder value." 
 
 
Enquiries: 
 
 
+-----------------------------------------+---------------------------------------+ 
| Allenby Capital Limited                 | [phone]                   | 
+-----------------------------------------+---------------------------------------+ 
| Rod Venables/Jamie Boyd                 |                                       | 
+-----------------------------------------+---------------------------------------+ 
|                                         |                                       | 
+-----------------------------------------+---------------------------------------+ 
| Pelham PR                               | [phone]                   | 
+-----------------------------------------+---------------------------------------+ 
| Mark Antelme                            |                                       | 
+-----------------------------------------+---------------------------------------+ 
| Evgeniy Chuikov                         |                                       | 
+-----------------------------------------+---------------------------------------+ 
 
 
 
 
 
 
 
 
 
Urals Energy Public Company Limited 
 
 
Interim Condensed Consolidated Financial Information 
 As of and for the Six 
Months Ended 30 June 2009 
 
 
 
 
 
Urals Energy Public Company Limited 
Interim Condensed Consolidated Statement of Financial Position (unaudited) 
(presented in US$ thousands, except as indicated) 
 
 
+-------------------------------------------+------+-------------+---------------+ 
|                                           |      |     30 June |   31 December | 
|                                           |      |        2009 |          2008 | 
+-------------------------------------------+------+             +               + 
|                                           |Note  |             |               | 
+-------------------------------------------+------+-------------+---------------+ 
| Assets                                    |      |             |               | 
+-------------------------------------------+------+-------------+---------------+ 
| Current assets                            |      |             |               | 
+-------------------------------------------+------+-------------+---------------+ 
| Cash and cash equivalents                 |      |       1,190 |           912 | 
+-------------------------------------------+------+-------------+---------------+ 
| Accounts receivable and prepayments       |      |       9,761 |        28,912 | 
+-------------------------------------------+------+-------------+---------------+ 
| Current income tax prepayments            |      |           - |            15 | 
+-------------------------------------------+------+-------------+---------------+ 
| Inventories                               |      |         982 |         4,100 | 
+-------------------------------------------+------+-------------+---------------+ 
| Assets held-for-sale                      |  8   |     325,602 |        99,163 | 
+-------------------------------------------+------+-------------+---------------+ 
| Investment in joint venture classified as |  7   |     514,015 |            -  | 
| held for sale                             |      |             |               | 
+-------------------------------------------+------+-------------+---------------+ 
| Total current assets                      |      |     851,850 |       133,102 | 
+-------------------------------------------+------+-------------+---------------+ 
|                                           |      |             |               | 
+-------------------------------------------+------+-------------+---------------+ 
| Non-current assets                        |      |             |               | 
+-------------------------------------------+------+-------------+---------------+ 
| Property, plant and equipment             |  6   |       4,494 |       336,968 | 
+-------------------------------------------+------+-------------+---------------+ 
| Supplies and materials for capital        |      | -           |        13,892 | 
| construction                              |      |             |               | 
+-------------------------------------------+------+-------------+---------------+ 
| Other non-current assets                  |  9   |      33,124 |        39,885 | 
+-------------------------------------------+------+-------------+---------------+ 
| Investment in joint venture               |  7   |          -  |       751,600 | 
+-------------------------------------------+------+-------------+---------------+ 
| Total non-current assets                  |      |      37,618 |     1,142,345 | 
+-------------------------------------------+------+-------------+---------------+ 
| Total assets                              |      |     889,168 |     1,275,447 | 
+-------------------------------------------+------+-------------+---------------+ 
|                                           |      |             |               | 
+-------------------------------------------+------+-------------+---------------+ 
| Liabilities and equity                    |      |             |               | 
+-------------------------------------------+------+-------------+---------------+ 
| Current liabilities                       |      |             |               | 
+-------------------------------------------+------+-------------+---------------+ 
| Accounts payable and accrued expenses     |      |      58,192 |        29,796 | 
+-------------------------------------------+------+-------------+---------------+ 
| Income tax payable                        |      |       3,759 |         3,810 | 
+-------------------------------------------+------+-------------+---------------+ 
| Other taxes payable                       |      |          30 |           402 | 
+-------------------------------------------+------+-------------+---------------+ 
| Financial instruments                     |  7   |     201,900 |       161,300 | 
+-------------------------------------------+------+-------------+---------------+ 
| Short-term borrowings and current portion |  11  |     499,746 |       629,749 | 
| of long-term borrowings                   |      |             |               | 
+-------------------------------------------+------+-------------+---------------+ 
| Advances from customers                   |  10  |      46,033 |        55,778 | 
+-------------------------------------------+------+-------------+---------------+ 
| Liabilities associated with non-current   |  8   |     186,584 |        10,248 | 
| assets held-for-sale                      |      |             |               | 
+-------------------------------------------+------+-------------+---------------+ 
| Current liabilities before warrants       |      |     996,244 |       891,083 | 
| classified as liabilities                 |      |             |               | 
+-------------------------------------------+------+-------------+---------------+ 
| Warrants classified as liabilities        |      |          57 |           177 | 
+-------------------------------------------+------+-------------+---------------+ 
| Total current liabilities                 |      |     996,301 |       891,260 | 
+-------------------------------------------+------+-------------+---------------+ 
|                                           |      |             |               | 
+-------------------------------------------+------+-------------+---------------+ 
| Long-term liabilities                     |      |             |               | 
+-------------------------------------------+------+-------------+---------------+ 
| Dismantlement provision                   |      | -           |            15 | 
+-------------------------------------------+------+-------------+---------------+ 
| Deferred tax liability                    |      |          34 |        34,344 | 
+-------------------------------------------+------+-------------+---------------+ 
| Total long-term liabilities               |      |          34 |        34,359 | 
+-------------------------------------------+------+-------------+---------------+ 
| Total liabilities                         |      |     996,335 |       925,619 | 
+-------------------------------------------+------+-------------+---------------+ 
|                                           |      |             |               | 
+-------------------------------------------+------+-------------+---------------+ 
| Equity                                    |      |             |               | 
+-------------------------------------------+------+-------------+---------------+ 
| Share capital                             |  12  |       1,131 |         1,122 | 
+-------------------------------------------+------+-------------+---------------+ 
| Share premium                             |  12  |     641,781 |       639,967 | 
+-------------------------------------------+------+-------------+---------------+ 
| Translation difference                    |      |    (59,141) |      (40,321) | 
+-------------------------------------------+------+-------------+---------------+ 
| Retained earnings                         |      |   (690,970) |     (251,045) | 
+-------------------------------------------+------+-------------+---------------+ 
|          Equity attributable to           |      |   (107,200) |       349,723 | 
|          shareholders                     |      |             |               | 
|          of Urals Energy Public Company   |      |             |               | 
|          Limited                          |      |             |               | 
+-------------------------------------------+------+-------------+---------------+ 
| Minority interest                         |      |          33 |           105 | 
+-------------------------------------------+------+-------------+---------------+ 
| Total equity                              |      |   (107,167) |       349,828 | 
+-------------------------------------------+------+-------------+---------------+ 
| Total liabilities and equity              |      |     889,168 |     1,275,447 | 
+-------------------------------------------+------+-------------+---------------+ 
|                                           |      |             |               | 
+-------------------------------------------+------+-------------+---------------+ 
Approved on behalf of the Board of Directors on 17 December 2009 
 
 
 
 
 
 
+---------------------------------------------------+--------------------------------------------+ 
| _________________________________________________ | __________________________________________ | 
| A.D. Maximov                                      | G.B. Kazakov                               | 
| Chief Executive Officer                           | Chief Financial Officer                    | 
+---------------------------------------------------+--------------------------------------------+ 
 
 
 
 
The accompanying notes are an integral part of these interim condensed 
consolidated financial information 
 
 
 
 
Urals Energy Public Company Limited 
Interim Condensed Consolidated Statements of Comprehensive Income (unaudited) 
(presented in US$ thousands, except as indicated) 
 
 
 
 
 
 
+--------------------------------------------+------+-------------+--------------+ 
|                                            |      | Six months ended 30 June   | 
+--------------------------------------------+------+----------------------------+ 
|                                            |Note  |        2009 |         2008 | 
+--------------------------------------------+------+-------------+--------------+ 
|                                            |      |             |              | 
+--------------------------------------------+------+-------------+--------------+ 
|                                            |      |             |              | 
+--------------------------------------------+------+-------------+--------------+ 
| Gross revenues                             |  13  |      15,140 |      110,749 | 
+--------------------------------------------+------+-------------+--------------+ 
| Less: excise taxes                         |      |        (54) |        (195) | 
+--------------------------------------------+------+-------------+--------------+ 
| Less: export duties                        |      |           - |     (19,912) | 
+--------------------------------------------+------+-------------+--------------+ 
| Revenues                                   |      |      15,086 |       90,642 | 
+--------------------------------------------+------+-------------+--------------+ 
|                                            |      |             |              | 
+--------------------------------------------+------+-------------+--------------+ 
| Operating costs                            |      |             |              | 
+--------------------------------------------+------+-------------+--------------+ 
| Cost of sales                              |  14  |     (9,499) |     (70,201) | 
+--------------------------------------------+------+-------------+--------------+ 
| Impairment charges                         |  8   |   (122,127) |            - | 
+--------------------------------------------+------+-------------+--------------+ 
| Selling, general and administrative        |  15  |    (10,386) |     (23,505) | 
| expenses                                   |      |             |              | 
+--------------------------------------------+------+-------------+--------------+ 
| Total operating costs                      |      |   (142,012) |     (93,706) | 
+--------------------------------------------+------+-------------+--------------+ 
|                                            |      |             |              | 
+--------------------------------------------+------+-------------+--------------+ 
| Operating loss                             |      |   (126,926) |      (3,064) | 
+--------------------------------------------+------+-------------+--------------+ 
|                                            |      |             |              | 
+--------------------------------------------+------+-------------+--------------+ 
| Interest income                            |      |       2,056 |        3,169 | 
+--------------------------------------------+------+-------------+--------------+ 
| Interest expense                           |      |    (58,619) |     (55,414) | 
+--------------------------------------------+------+-------------+--------------+ 
| Foreign currency (losses) gains            |      |     (3,881) |        9,571 | 
+--------------------------------------------+------+-------------+--------------+ 
| (Loss) gain from disposal of assets held   |  8   |     (1,090) |        3,629 | 
| for sale                                   |      |             |              | 
+--------------------------------------------+------+-------------+--------------+ 
| Loss from joint venture operations         |  7   |   (237,585) |      (3,535) | 
+--------------------------------------------+------+-------------+--------------+ 
| Change in fair value of financial          |      |    (40,480) |       18,036 | 
| derivatives                                |      |             |              | 
+--------------------------------------------+------+-------------+--------------+ 
| Loss before tax                            |      |   (466,525) |     (27,608) | 
+--------------------------------------------+------+-------------+--------------+ 
| Income tax benefit (charge)                |      |      26,538 |      (3,418) | 
+--------------------------------------------+------+-------------+--------------+ 
| Loss for the period                        |      |   (439,987) |     (31,026) | 
+--------------------------------------------+------+-------------+--------------+ 
|                                            |      |             |              | 
+--------------------------------------------+------+-------------+--------------+ 
|        Attributable to:                    |      |        (62) |           86 | 
|        - Minority interest                 |      |             |              | 
+--------------------------------------------+------+-------------+--------------+ 
|        - Shareholders of Urals Energy      |      |   (439,925) |     (31,112) | 
|        Public Company Limited              |      |             |              | 
+--------------------------------------------+------+-------------+--------------+ 
|                                            |      |             |              | 
+--------------------------------------------+------+-------------+--------------+ 
|        Loss per share of loss attributable |      |             |              | 
|        to shareholders of Urals Energy     |      |             |              | 
|        Public Company Limited:             |      |             |              | 
+--------------------------------------------+------+-------------+--------------+ 
| - Basic loss per share (in US dollar per   |      |    (2.4561) |     (0.1750) | 
| share)                                     |      |             |              | 
+--------------------------------------------+------+-------------+--------------+ 
| - Diluted loss per share (in US dollar per |      |    (2.4561) |     (0.1750) | 
| share)                                     |      |             |              | 
+--------------------------------------------+------+-------------+--------------+ 
|                                            |      |             |              | 
+--------------------------------------------+------+-------------+--------------+ 
| Weighted average shares outstanding        |      |             |              | 
| attributable to:                           |      |             |              | 
+--------------------------------------------+------+-------------+--------------+ 
| - Basic shares                             |      | 179,117,156 |  177,824,274 | 
+--------------------------------------------+------+-------------+--------------+ 
| - Diluted shares                           |      | 179,117,156 |  177,824,274 | 
+--------------------------------------------+------+-------------+--------------+ 
|                                            |      |             |              | 
+--------------------------------------------+------+-------------+--------------+ 
|                                            |      |             |              | 
+--------------------------------------------+------+-------------+--------------+ 
| Loss for the period                        |      |   (439,987) |     (31,026) | 
+--------------------------------------------+------+-------------+--------------+ 
|                                            |      |             |              | 
+--------------------------------------------+------+-------------+--------------+ 
| Other comprehensive income (loss):         |      |             |              | 
+--------------------------------------------+------+-------------+--------------+ 
| -Effect of currency translation            |      |    (20,911) |       19,239 | 
+--------------------------------------------+------+-------------+--------------+ 
| - Accumulative translation adjustment      |      |       2,080 |     (13,480) | 
| relating to disposed subsidiaries          |      |             |              | 
+--------------------------------------------+------+-------------+--------------+ 
|        Total comprehensive loss for the    |      |   (458,818) |     (25,267) | 
|        period                              |      |             |              | 
+--------------------------------------------+------+-------------+--------------+ 
|        Attributable to:                    |      |        (72) |          163 | 
|        - Minority interest                 |      |             |              | 
+--------------------------------------------+------+-------------+--------------+ 
|        - Shareholders of Urals Energy      |      |   (458,746) |     (25,430) | 
|        Public Company Limited              |      |             |              | 
+--------------------------------------------+------+-------------+--------------+ 
 
 
 
 
 
 
The accompanying notes are an integral part of these interim condensed 
consolidated financial information 
 
 
 
 
 
 
 
 
Urals Energy Public Company Limited 
Interim Condensed Consolidated Statements of Cash Flows (unaudited) 
(presented in US$ thousands, except as indicated) 
 
+--------------------------------------------+------+---------------+-------------+ 
|                                            |      | Six months  ended 30 June   | 
+--------------------------------------------+------+-----------------------------+ 
|                                            |      |          2009 |        2008 | 
+--------------------------------------------+------+---------------+-------------+ 
| Cash flows from operating activities       |      |               |             | 
+--------------------------------------------+------+---------------+-------------+ 
| Loss before income tax                     |      |     (466,525) |    (27,608) | 
+--------------------------------------------+------+---------------+-------------+ 
| Adjustments for:                           |      |               |             | 
+--------------------------------------------+------+---------------+-------------+ 
|                        Depreciation and    |      |           355 |      11,144 | 
|                        depletion           |      |               |             | 
+--------------------------------------------+------+---------------+-------------+ 
|                        Impairment charges  |      |       122,127 |           - | 
+--------------------------------------------+------+---------------+-------------+ 
|                        Share-based         |      |         1,823 |       4,297 | 
|                        payments            |      |               |             | 
+--------------------------------------------+------+---------------+-------------+ 
|                        Interest income     |      |       (2,056) |     (3,169) | 
+--------------------------------------------+------+---------------+-------------+ 
|                        Interest expense    |      |        58,619 |      55,414 | 
+--------------------------------------------+------+---------------+-------------+ 
|                        Foreign currency    |      |         3,881 |     (9,571) | 
|                        losses/(gains)      |      |               |             | 
+--------------------------------------------+------+---------------+-------------+ 
| Loss/(gain) from disposal of assets held   |      |         1,090 |     (3,629) | 
| for sale                                   |      |               |             | 
+--------------------------------------------+------+---------------+-------------+ 
|                        Loss from joint     |      |       237,585 |       3,535 | 
|                        venture operations  |      |               |             | 
+--------------------------------------------+------+---------------+-------------+ 
| Release provision on inventory             |      |         (642) |           - | 
+--------------------------------------------+------+---------------+-------------+ 
| Change in fair value of financial          |      |        40,480 |    (18,036) | 
| derivatives                                |      |               |             | 
+--------------------------------------------+------+---------------+-------------+ 
| Other                                      |      |            55 |          64 | 
+--------------------------------------------+------+---------------+-------------+ 
|     Operating cash flows before changes in |      |       (3,208) |      12,441 | 
|     working capital                        |      |               |             | 
+--------------------------------------------+------+---------------+-------------+ 
| Increase in inventories                    |      |       (4,379) |    (25,197) | 
+--------------------------------------------+------+---------------+-------------+ 
| Decrease in accounts receivables and       |      |         2,873 |          25 | 
| prepayments                                |      |               |             | 
+--------------------------------------------+------+---------------+-------------+ 
| Increase in accounts payable and accrued   |      |           208 |      17,669 | 
| expenses                                   |      |               |             | 
+--------------------------------------------+------+---------------+-------------+ 
| Decrease in advances from customers        |      |       (4,357) |       (854) | 
+--------------------------------------------+------+---------------+-------------+ 
| Increase/(decrease) in other taxes payable |      |        10,898 |     (1,098) | 
+--------------------------------------------+------+---------------+-------------+ 
| Cash generated from operations             |      |         2,035 |       2,986 | 
+--------------------------------------------+------+---------------+-------------+ 
|                                            |      |               |             | 
+--------------------------------------------+------+---------------+-------------+ 
| Interest received                          |      |            72 |         879 | 
+--------------------------------------------+------+---------------+-------------+ 
| Interest paid                              |      |             - |    (44,566) | 
+--------------------------------------------+------+---------------+-------------+ 
| Income tax received/(paid)                 |      |           380 |     (1,995) | 
+--------------------------------------------+------+---------------+-------------+ 
|     Net cash generated from/(used in)      |      |         2,487 |    (42,696) | 
|     operating activities                   |      |               |             | 
+--------------------------------------------+------+---------------+-------------+ 
|                                            |      |               |             | 
+--------------------------------------------+------+---------------+-------------+ 
| Cash flows from investing activities       |      |               |             | 
+--------------------------------------------+------+---------------+-------------+ 
| Purchase of property, plant and equipment  |      |       (1,840) |    (59,487) | 
+--------------------------------------------+------+---------------+-------------+ 
| Proceeds from sale of subsidiaries, net of |      |          (52) |      93,125 | 
| cash disposed                              |      |               |             | 
+--------------------------------------------+------+---------------+-------------+ 
| Repayment of promissory notes              |      |             - |      35,002 | 
+--------------------------------------------+------+---------------+-------------+ 
| Change in loans issued                     |      |            25 |    (26,617) | 
+--------------------------------------------+------+---------------+-------------+ 
| Acquisition of joint venture               |      |             - |       (578) | 
+--------------------------------------------+------+---------------+-------------+ 
| Purchase of intangible assets              |      |             - |        (43) | 
+--------------------------------------------+------+---------------+-------------+ 
| Net cash (used in)/generated from          |      |       (1,867) |      41,402 | 
| investing activities                       |      |               |             | 
+--------------------------------------------+------+---------------+-------------+ 
|                                            |      |               |             | 
+--------------------------------------------+------+---------------+-------------+ 
| Cash flows from financing activities       |      |               |             | 
+--------------------------------------------+------+---------------+-------------+ 
| Proceeds from borrowings, net of borrowing |      |             - |      18,000 | 
| costs                                      |      |               |             | 
+--------------------------------------------+------+---------------+-------------+ 
| Repayment of borrowings                    |      |             - |    (18,000) | 
+--------------------------------------------+------+---------------+-------------+ 
| Repayment of loan organization fees        |      |             - |    (10,000) | 
+--------------------------------------------+------+---------------+-------------+ 
| Cash proceeds from issuance of ordinary    |      |             - |       5,892 | 
| shares, net of associated costs            |      |               |             | 
+--------------------------------------------+------+---------------+-------------+ 
| Finance lease principal payments           |      |         (180) |       (222) | 
+--------------------------------------------+------+---------------+-------------+ 
| Cash proceeds from exercise of options     |      |             - |         125 | 
+--------------------------------------------+------+---------------+-------------+ 
| Net cash (used in) financing activities    |      |         (180) |     (4,205) | 
+--------------------------------------------+------+---------------+-------------+ 
| Effect of exchange rate changes on cash    |      |          (24) |          22 | 
| and cash equivalents                       |      |               |             | 
+--------------------------------------------+------+---------------+-------------+ 
| Net increase/(decrease) in cash and cash   |      |           416 |     (5,477) | 
| equivalents                                |      |               |             | 
+--------------------------------------------+------+---------------+-------------+ 
| Cash and cash equivalents  at the          |      |         1,272 |      28,779 | 
| beginning of the period                    |      |               |             | 
+--------------------------------------------+------+---------------+-------------+ 
| ?ash and cash equivalents at the end of    |      |         1,688 |      23,302 | 
| the period                                 |      |               |             | 
+--------------------------------------------+------+---------------+-------------+ 
| Cash and cash equivalents at the end of    |      |         1,190 |      22,504 | 
| the period of the Group, excluding those   |      |               |             | 
| classified as held for sale                |      |               |             | 
+--------------------------------------------+------+---------------+-------------+ 
| Cash and cash equivalents at the end of    |      |           498 |         798 | 
| the period of the assets classified as     |      |               |             | 
| held for sale                              |      |               |             | 
+--------------------------------------------+------+---------------+-------------+ 
 
 
 
 
The accompanying notes are an integral part of these interim condensed 
consolidated financial information 
 
 
 
 
Urals Energy Public Company Limited 
Interim Condensed Consolidated Statements of Changes in Shareholders' Equity 
(unaudited) 
(presented in US$ thousands, except as indicated) 
 
 
 
 
 
 
 
 
 
 
+---------------+--------+---------+---------+------------+-------------+-----------+--------------+----------+-----------+ 
|               |        |   Share |   Share | Difference |  Cumulative |  Retained |       Equity | Minority |     Total | 
|               |        | capital | premium |       from | Translation |  earnings | attributable | interest |    equity | 
|               |        |         |         | conversion |  Adjustment |           |           to |          |           | 
|               |        |         |         |   of share |             |           | Shareholders |          |           | 
|               |        |         |         |    capital |             |           |     of Urals |          |           | 
|               |        |         |         |   into USD |             |           |       Energy |          |           | 
|               |        |         |         |            |             |           |       Public |          |           | 
|               |        |         |         |            |             |           |      Company |          |           | 
|               |        |         |         |            |             |           |      Limited |          |           | 
+---------------+--------+---------+---------+------------+-------------+-----------+--------------+----------+-----------+ 
|               |        |         |         |            |             |           |              |          |           | 
+---------------+--------+---------+---------+------------+-------------+-----------+--------------+----------+-----------+ 
| Balance       |        |     990 | 625,111 |          - |      49,919 |   150,744 |      826,764 |    1,604 |   828,368 | 
| at 1          |        |         |         |            |             |           |              |          |           | 
| January       |        |         |         |            |             |           |              |          |           | 
| 2008          |        |         |         |            |             |           |              |          |           | 
+---------------+--------+---------+---------+------------+-------------+-----------+--------------+----------+-----------+ 
|               |        |         |         |            |             |           |              |          |           | 
+---------------+--------+---------+---------+------------+-------------+-----------+--------------+----------+-----------+ 
| Effect        |        | -       |       - | -          |      19,162 |         - | 19,162       | 77       | 19,239    | 
| of            |        |         |         |            |             |           |              |          |           | 
| currency      |        |         |         |            |             |           |              |          |           | 
| translation   |        |         |         |            |             |           |              |          |           | 
+---------------+--------+---------+---------+------------+-------------+-----------+--------------+----------+-----------+ 
| Accumulative  |        | -       |       - | -          |    (13,480) |    13,480 | -            | -        | -         | 
| translation   |        |         |         |            |             |           |              |          |           | 
| adjustment    |        |         |         |            |             |           |              |          |           | 
| relating to   |        |         |         |            |             |           |              |          |           | 
| disposed      |        |         |         |            |             |           |              |          |           | 
| subsidiaries  |        |         |         |            |             |           |              |          |           | 
+---------------+--------+---------+---------+------------+-------------+-----------+--------------+----------+-----------+ 
| Loss          |        | -       |       - | -          |           - |  (44,592) | (44,592)     | 86       | (44,506)  | 
| for           |        |         |         |            |             |           |              |          |           | 
| the           |        |         |         |            |             |           |              |          |           | 
| period        |        |         |         |            |             |           |              |          |           | 
+---------------+--------+---------+---------+------------+-------------+-----------+--------------+----------+-----------+ 
| Total         |        |       - |       - | -          |       5,682 |  (31,112) | (25,430)     | 163      | (25,267)  | 
| comprehensive |        |         |         |            |             |           |              |          |           | 
| income (loss) |        |         |         |            |             |           |              |          |           | 
+---------------+--------+---------+---------+------------+-------------+-----------+--------------+----------+-----------+ 
|               |        |         |         |            |             |           |              |          |           | 
+---------------+--------+---------+---------+------------+-------------+-----------+--------------+----------+-----------+ 
| Issuance      |        |      19 |   5,998 | -          |           - |         - | 6,017        | -        | 6,017     | 
| of            |        |         |         |            |             |           |              |          |           | 
| shares        |        |         |         |            |             |           |              |          |           | 
+---------------+--------+---------+---------+------------+-------------+-----------+--------------+----------+-----------+ 
| Share-based   |        |       - |   4,297 | -          |           - |         - | 4,297        | -        | 4,297     | 
| payment       |        |         |         |            |             |           |              |          |           | 
+---------------+--------+---------+---------+------------+-------------+-----------+--------------+----------+-----------+ 
| Conversion    |        |     113 |       - | (113)      |           - |         - | -            | -        | -         | 
| of share      |        |         |         |            |             |           |              |          |           | 
| capital       |        |         |         |            |             |           |              |          |           | 
| into USD      |        |         |         |            |             |           |              |          |           | 
+---------------+--------+---------+---------+------------+-------------+-----------+--------------+----------+-----------+ 
|               |        |         |         |            |             |           |              |          |           | 
+---------------+--------+---------+---------+------------+-------------+-----------+--------------+----------+-----------+ 
| Balance       |        |   1,122 | 635,406 | (113)      |      55,601 |   119,632 | 811,648      | 1,767    | 813,415   | 
| at 30         |        |         |         |            |             |           |              |          |           | 
| June          |        |         |         |            |             |           |              |          |           | 
| 2008          |        |         |         |            |             |           |              |          |           | 
+---------------+--------+---------+---------+------------+-------------+-----------+--------------+----------+-----------+ 
|               |        |         |         |            |             |           |              |          |           | 
+---------------+--------+---------+---------+------------+-------------+-----------+--------------+----------+-----------+ 
| Balance       |        |   1,122 | 640,080 | (113)      |    (40,321) | (251,045) | 349,723      | 105      |   349,828 | 
| at 1          |        |         |         |            |             |           |              |          |           | 
| January       |        |         |         |            |             |           |              |          |           | 
| 2009          |        |         |         |            |             |           |              |          |           | 
+---------------+--------+---------+---------+------------+-------------+-----------+--------------+----------+-----------+ 
|               |        |         |         |            |             |           |              |          |           | 
+---------------+--------+---------+---------+------------+-------------+-----------+--------------+----------+-----------+ 
| Effect        |        | -       |       - | -          |    (20,901) |         - |     (20,901) | (10)     |  (20,911) | 
| of            |        |         |         |            |             |           |              |          |           | 
| currency      |        |         |         |            |             |           |              |          |           | 
| translation   |        |         |         |            |             |           |              |          |           | 
+---------------+--------+---------+---------+------------+-------------+-----------+--------------+----------+-----------+ 
| Accumulative  |        | -       |       - | -          |       2,080 |   (2,080) | -            | -        | -         | 
| translation   |        |         |         |            |             |           |              |          |           | 
| adjustment    |        |         |         |            |             |           |              |          |           | 
| relating to   |        |         |         |            |             |           |              |          |           | 
| disposed      |        |         |         |            |             |           |              |          |           | 
| subsidiaries  |        |         |         |            |             |           |              |          |           | 
| (Note 8)      |        |         |         |            |             |           |              |          |           | 
+---------------+--------+---------+---------+------------+-------------+-----------+--------------+----------+-----------+ 
| Loss          |        | -       |       - | -          |           - | (437,845) | (437,845)    | (62)     | (437,907) | 
| for           |        |         |         |            |             |           |              |          |           | 
| the           |        |         |         |            |             |           |              |          |           | 
| period        |        |         |         |            |             |           |              |          |           | 
+---------------+--------+---------+---------+------------+-------------+-----------+--------------+----------+-----------+ 
| Total         |        |       - |       - | -          |    (18,821) | (439,925) | (458,746)    | (72)     | (458,818) | 
| comprehensive |        |         |         |            |             |           |              |          |           | 
| income (loss) |        |         |         |            |             |           |              |          |           | 
+---------------+--------+---------+---------+------------+-------------+-----------+--------------+----------+-----------+ 
|               |        |         |         |            |             |           |              |          |           | 
+---------------+--------+---------+---------+------------+-------------+-----------+--------------+----------+-----------+ 
| Issuance      |        |       9 |     (9) | -          |           - |         - | -            | -        | -         | 
| of            |        |         |         |            |             |           |              |          |           | 
| shares        |        |         |         |            |             |           |              |          |           | 
+---------------+--------+---------+---------+------------+-------------+-----------+--------------+----------+-----------+ 
| Share-based   |        |       - |   1,823 | -          |           - |         - | 1,823        | -        | 1,823     | 
| payment       |        |         |         |            |             |           |              |          |           | 
+---------------+--------+---------+---------+------------+-------------+-----------+--------------+----------+-----------+ 
|               |        |         |         |            |             |           |              |          |           | 
+---------------+--------+---------+---------+------------+-------------+-----------+--------------+----------+-----------+ 
|               |        |         |         |            |             |           |              |          |           | 
+---------------+--------+---------+---------+------------+-------------+-----------+--------------+----------+-----------+ 
| Balance       |        |   1,131 | 641,894 | (113)      |    (59,142) | (690,970) | (107,200)    | 33       | (107,167) | 
| at 30         |        |         |         |            |             |           |              |          |           | 
| June          |        |         |         |            |             |           |              |          |           | 
| 2009          |        |         |         |            |             |           |              |          |           | 
+---------------+--------+---------+---------+------------+-------------+-----------+--------------+----------+-----------+ 
|               |        |         |         |            |             |           |              |          |           | 
+---------------+--------+---------+---------+------------+-------------+-----------+--------------+----------+-----------+ 
The accompanying notes are an integral part of these interim condensed 
consolidated financial information 
 
 
Urals Energy Public Company Limited 
Selected Notes to the Interim Condensed Consolidated Financial Information 
(unaudited) 
(in US dollars, tabular amounts in US$ thousands, except as indicated) 
 
 
 
 
Note 1:    Activities 
 
 
Urals Energy Public Company Limited ("Urals Energy" or the "Company" or "UEPCL") 
was incorporated as a limited liability company in Cyprus on 10 November 2003. 
Urals Energy and its subsidiaries (the "Group") are primarily engaged in oil and 
gas exploration and production in the Russian Federation and processing of crude 
oil for distribution on both the Russian and international markets. 
 
 
The registered office of Urals Energy is at 31 Evagorou Avenue, Suite 34, 
CY-1066, Nicosia, Cyprus.  UEPCL's shares are traded on the AIM (Alternative 
Investment Market) Market operated by the London Stock Exchange. On 30 June 2009 
the Company's shares were suspended from trading on LSE AIM due to 
non-compliance with Rule 19 of the AIM rules for not publishing 2008 year-end 
accounts. 
 
 
The Group comprises UEPCL and the following main subsidiaries and joint venture: 
 
 
+---------------------+----------------+--------+--------+------------------------------------------------+ 
| Entity              |   Jurisdiction |     30 |                                        31 December 2008 | 
|                     |                |   June |                                                         | 
|                     |                |   2009 |                                                         | 
+---------------------+----------------+--------+---------------------------------------------------------+ 
| Exploration         |                |        |        | 
| and                 |                |        |        | 
| production          |                |        |        | 
+---------------------+----------------+--------+--------+ 
| OOO                 |       Irkutsk, | 100.0% |                                                  100.0% | 
| Oil                 |        Russian |        |                                                         | 
| Company             |     Federation |        |                                                         | 
| Dulisma             |                |        |                                                         | 
| ("Dulisma")         |                |        |                                                         | 
+---------------------+----------------+--------+---------------------------------------------------------+ 
| ZAO Petrosakh       |      Sakhalin, |  97.2% |                                                   97.2% | 
| ("Petrosakh")       |        Russian |        |                                                         | 
|                     |     Federation |        |                                                         | 
+---------------------+----------------+--------+---------------------------------------------------------+ 
| ZAO                 |       Nenetsky | 100.0% |                                                  100.0% | 
| Arcticneft          |         Okrug, |        |                                                         | 
| ("Arcticneft")      |        Russian |        |                                                         | 
|                     |     Federation |        |                                                         | 
+---------------------+----------------+--------+---------------------------------------------------------+ 
| OOO                 |       Irkutsk, | 100.0% |                                                  100.0% | 
| Lenskaya            |        Russian |        |                                                         | 
| Transportnaya       |     Federation |        |                                                         | 
| Kompaniya           |                |        |                                                         | 
| ("LTK")             |                |        |                                                         | 
+---------------------+----------------+--------+---------------------------------------------------------+ 
|     ZAO Chepetskoye |      Udmurtia, |   0.0% |                                                  100.0% | 
|     NGDU            |        Russian |        |                                                         | 
|     ("Chepetskoye") |     Federation |        |                                                         | 
+---------------------+----------------+--------+---------------------------------------------------------+ 
| OOO                 | Sakha-Yakutia, |  35.3% |                                                   35.3% | 
| Taas-Yuryakh        |        Russian |        |                                                         | 
| Neftegazdobycha     |     Federation |        |                                                         | 
| ("Taas")            |                |        |                                                         | 
+---------------------+----------------+--------+---------------------------------------------------------+ 
|                     |                |        |                                                         | 
+---------------------+----------------+--------+---------------------------------------------------------+ 
| Management          |                |        |                                                         | 
| company             |                |        |                                                         | 
+---------------------+----------------+--------+---------------------------------------------------------+ 
| OOO Urals           |        Moscow, | 100.0% |                                                  100.0% | 
| Energy              |        Russian |        |                                                         | 
|                     |     Federation |        |                                                         | 
+---------------------+----------------+--------+---------------------------------------------------------+ 
| Urals               |         United | 100.0% |                                                  100.0% | 
| Energy              |        Kingdom |        |                                                         | 
| (UK)                |                |        |                                                         | 
| Limited             |                |        |                                                         | 
| (dormant            |                |        |                                                         | 
| starting            |                |        |                                                         | 
| from May            |                |        |                                                         | 
| 2007)               |                |        |                                                         | 
+---------------------+----------------+--------+---------------------------------------------------------+ 
|                     |                |        |                                                         | 
+---------------------+----------------+--------+---------------------------------------------------------+ 
| Exploration         |                |        |                                                         | 
+---------------------+----------------+--------+---------------------------------------------------------+ 
| OOO Urals-Nord      |       Nenetsky | 100.0% |                                                  100.0% | 
| ("Urals-Nord")      |         Okrug. |        |                                                         | 
|                     |        Russian |        |                                                         | 
|                     |     Federation |        |                                                         | 
+---------------------+----------------+--------+---------------------------------------------------------+ 
|                     |                |        |                                                         | 
+---------------------+----------------+--------+--------+------------------------------------------------+ 
 
 
In February 2009, Chepetskoye was sold to a domestic off-taker Galaform for the 
full discharge of the domestic prepayment (Note 8).  In August 2009 and November 
2009 Dulisma and Taas were sold to Sberbank Capital (see Note 4). 
 
 
 
 
Note 2:Seasonality 
 
 
The Group's producing subsidiaries, ZAO Petrosakh and ZAO Arcticneft, operate on 
Sakhalin and Kolguev Islands, respectively, and are not connected to the State 
owned pipeline monopoly, Transneft. Accordingly, the majority of their 
production is exported by tanker. Due to severe weather conditions, shipping 
tankers can generally only load during the period of June through November. 
Outside this period, oil is either stored or processed and sold on the local 
market. During the six months ended 30 June 2009, Petrosakh and Arcticneft 
produced 44.6 and 14.6 thousand tons of crude oil, respectively, and sold 31.2 
and 0.6 thousand tons of crude oil and oil products, respectively. During the 
six months ended 30 June 2008, Petrosakh and Arcticneft produced 49.8 and 19.5 
thousand tons of crude oil, respectively, and sold 46.4 and 0.3 thousand tons of 
crude oil and oil products, respectively.  During 2009, crude oil export sales 
from ZAO Petrosakh commenced in July 2009 and crude oil export sales from ZAO 
Arcticneft commenced in October 2009.  Crude oil and oil products in stock at 
30 June 2009 were 20.4 thousand tons and 38.4 thousand tons in Petrosakh and 
Arcticneft, respectively, and 8.5 thousand tons and 23.2 thousand tons, 
respectively, at 31 December 2008. 
 
 
  Note 3:Summary of significant accounting policies 
 
 
Basis of preparation. This consolidated interim condensed financial information 
has been prepared in accordance with and comply with IAS 34 Interim Financial 
Reporting and should be read in conjunction with the annual financial statements 
for the year ended 31 December 2008, which have been prepared in accordance with 
International Financial Reporting Standards ("IFRS"). 
 
 
The same accounting policies and methods of computation were followed in the 
preparation of this consolidated interim condensed financial information as 
compared with the annual consolidated financial statements for the year ended 31 
December 2008. 
 
 
Use of estimates. The preparation of consolidated interim condensed financial 
information in conformity with IFRS requires management to make estimates and 
assumptions that affect the reported amounts of assets, liabilities, revenues 
and expenses, and the disclosure of contingent assets and liabilities as of the 
reporting date and during the reporting period. Estimates have principally been 
made in respect to fair values of financial assets and financial liabilities, 
impairment provisions, asset retirement obligation and deferred income taxes. 
Actual results may differ from such estimates. 
 
 
Functional and presentation currency. The United States dollar ("US dollar or 
US$ or $") is the presentation currency for the Group's operations as management 
have used the US dollar accounts to manage the Group's financial risks and 
exposures, and to measure its performance. Financial statements of the Russian 
subsidiaries are measured in Russian Roubles, their functional currency. 
 
 
Translation to functional currency. Monetary balance sheet items denominated in 
foreign currencies have been re-measured using the exchange rate at the 
respective balance sheet date. Exchange gains and losses resulting from foreign 
currency translation are included in the determination of profit or loss. The US 
dollar to Russian Rouble exchange rates were 31.2904 and 29.3804 as of 30 June 
2009 and 31 December 2008, respectively. 
 
 
Translation to presentation currency. The Group's financial statements are 
presented in US dollars in accordance with IAS 21, The Effects of Changes in 
Foreign Exchange Rates. The results and financial position of each Group entity 
having a functional currency different from the presentation currency (the 
functional currency of none of which is a currency of a hyperinflationary 
economy) are translated into the presentation currency as follows: 
 
 (i) 
  Assets and liabilities for each balance sheet presented are translated at the 
closing rate at the date of that balance sheet. Goodwill and fair value 
adjustments arising 
 

       on the acquisitions are treated as assets and 
liabilities of the acquired entity. 
(ii)    Income and expenses for each 
statement of comprehensive income are translated at average exchange rates 
(unless this average is not a reasonable approximation 
 

       of the 
cumulative effect of the rates prevailing on the transaction dates, in which 
case income and expenses are translated at the dates of the 
transactions). 
(iii)   All resulting exchange differences are recognised as a 
separate component of equity. 
 
 
When a subsidiary is disposed of through sale, liquidation, repayment of share 
capital or abandonment of all, or part of, that entity, the exchange differences 
deferred in equity are reclassified to statement of comprehensive income. 
 
 
Income tax. Taxes on income in the interim periods are accrued using the tax 
rate that would be applicable to expected total annual earnings. 
 
 
Certain new standards, interpretations and amendments to the existing standards, 
as disclosed in the combined and consolidated financial statements for the year 
ended 31 December 2008, became effective for the Group from 1 January 2009. They 
have not significantly affected the condensed consolidated interim financial 
information of the Group. 
 
 
Adoption of IAS 23 Borrowing Costs (revised in March 2007). The main change is 
the removal of the option of immediately recognising as an expense borrowing 
costs related to assets that take a substantial period of time to get ready for 
use or sale. The revised IAS 23 had no impact on the Group's financial 
information since the Group had already capitalized borrowing costs related to 
assets that take a substantial period of time to get ready for use or sale prior 
to 1 January 2009. 
 
 
Adoption of IAS 1 Presentation of Financial Statements (revised in September 
2007 and effective for annual periods beginning on or after 1 January 2009). The 
main change in IAS 1 is the replacement of the income statement by a statement 
of comprehensive income which includes all non-owner changes in equity, such as 
the revaluation of available-for-sale financial assets. Alternatively, entities 
are allowed to present two statements: a separate income statement and a 
statement of comprehensive income. The Group has elected to present a separate 
income statement and a statement of comprehensive income. The revised IAS 1 also 
introduces a requirement to present a statement of financial position (balance 
sheet) at the beginning of the earliest comparative period whenever the entity 
restates comparatives due to reclassifications, changes in accounting policies, 
or corrections of errors. The revised IAS 1 had an impact on the presentation of 
the Group's financial information but had no impact on the recognition or 
measurement of specific transactions and balances. 
 
 
Adoption of Amendment to IFRS 7 Financial Instruments: Disclosures (issued in 
March 2009; effective for annual periods beginning on or after 1 January 2009). 
The amendment requires enhanced disclosures about fair value measurements and 
liquidity risk. The Group will include the maximum amount of financial 
guarantees in the contractual maturity analysis and will present the additional 
disclosures in its next complete annual financial statements for the year ended 
31 December 2009. 
 
 
Vesting Conditions and Cancellations - Amendment to IFRS 2 Share-based Payment 
(issued in January 2008; effective for annual periods beginning on or after 1 
January 2009). The amendment clarifies that only service and performance 
conditions are vesting conditions. Other features of a share-based payment are 
not vesting conditions. The amendment specifies that all cancellations, whether 
by the entity or by other parties, should receive the same accounting 
treatment. 
 
 
Adoption of IFRS 8 Operating Segments. Effective from 1 January 2009, the Group 
adopted IFRS 8 Operating Segments which replaced IAS 14 Segment Reporting. IFRS 
8 introduces new requirements and guidelines related to disclosure of operating 
segments. The Group operates in one business segment which is crude oil 
exploration and production. The Group assesses its results of operations and 
makes its strategic and investment decisions based on the analysis of its 
profitability as a whole. The Group operates within one geographic segment, 
which is the Russian Federation. 
 
 
The amendments to the IFRSs, which are the part of the IASB's annual 
improvements project published in May 2008, are effective from 1 January 2009. 
In 2007, the International Accounting Standards Board decided to initiate an 
annual improvements project as a method of making necessary, but non-urgent, 
amendments to IFRS. The amendments issued in May 2008 consist of a mixture of 
substantive changes, clarifications, and changes in terminology in various 
standards. The substantive changes relate to the following areas: classification 
as held for sale under IFRS 5 in case of a loss of control over a subsidiary; 
possibility of presentation of financial instruments held for trading as 
non-current under IAS 1; accounting for sale of assets under IAS 16 which were 
previously held for rental and classification of the related cash flows under 
IAS 7 as cash flows from operating activities; clarification of definition of a 
curtailment under IAS 19; accounting for below market interest rate government 
loans in accordance with IAS 20; making the definition of borrowing costs in IAS 
23 consistent with the effective interest method; clarification of accounting 
for subsidiaries held for sale under IAS 27 and IFRS 5; reduction in the 
disclosure requirements relating to associates and joint ventures under IAS 28 
and IAS 31; enhancement of disclosures required by IAS 36; clarification of 
accounting for advertising costs under IAS 38; amending the definition of the 
fair value through profit or loss category to be consistent with hedge 
accounting under IAS 39; introduction of accounting for investment properties 
under construction in accordance with IAS 40; and reduction in restrictions over 
manner of determining fair value of biological assets under IAS 41. Further 
amendments made to IAS 8, 10, 18, 20, 29, 34, 40, 41 and to IFRS 7 represent 
terminology or editorial changes only, which the IASB believes have no or 
minimal effect on accounting. 
 
 
  Note 4: Going concern 
 
 
During 2007, the Group attracted short term financing of $500 million and $130 
million from Savings Bank of Russian Federation ("Sberbank") (totalling $630 
million) to finance acquisitions and mineral development (Note 11). Despite 
detailed discussions with Sberbank this financing was not re-financed during 
2008. As of 30 June 2009, the Group was in default of its financing arrangement 
with Sberbank and the Group's current liabilities exceed its current assets by 
$144.4 million. 
Subsequent to 30 June 2009, the Group's management has been in discussion with 
Sberbank and OOO Sberbank Capital (a 100% subsidiary of OAO Sberbank) concerning 
the default. As a result of these discussions and discussions with other parties 
the following major transactions have taken place to reduce the Group 
obligations - these have resulted in a substantial accounting loss for 
shareholders in 2009: 
 
 
 
· In August 2009, the Groups 100% interest in its exploration and production 
subsidiary Dulisma was exchanged for $60 million of the above $500 million of 
short term financing from Sberbank. Net assets of Dulisma were equal to $179.0 
million as of 31 December 2008. The net asset included the short term debt 
obligation of $130 million owed to Sberbank (see Note 18); 
 
· In November 2009, the Groups 35.3% interest in Taas Yuryakh Neftegaazdobycha 
("Taas) was exchanged for the forgiveness of the remaining $440 million short 
term financing and accumulated interest owed to Sberbank. The carrying value of 
this 35.3% interest in Taas was equal to $514.0 million as of 30 June 2009 (see 
Notes 7 and 18); and 
 
· In November 2009, the Group was released from its put option for an additional 
10.479% in Taas (see Note 18). As of 30 June 2009, a liability of $201.9 million 
was recognised in respect of this put option (see Note 7). 
 
 
Additionally, management continues to be in discussions with its creditors, the 
most significant of which is Petraco Services SA (advances of $45.6 million as 
of 30 June 2009, see Note 10). Through shipments of oil the Group has partially 
reduced this balance during the second half of 2009. 
 
Ongoing discussions with Petraco to re-schedule existing indebtedness have not 
as yet yielded a firm restructuring agreement, though certain transactions have 
continued to take place since period end (see Note 14). As a result there is a 
material uncertainty which may cast significant doubt about the Group's ability 
to continue as a going concern. 
 
 
Despite these uncertainties and based on cash flow projections performed, 
management considers that the application of the going concern assumption for 
the preparation of these financial statements is appropriate. 
 
 
  Note 5:New accounting pronouncements and interpretations 
 
 
Since the Group published its last annual financial statements, certain new 
standards and interpretations have been issued that are mandatory for the 
Group's annual accounting periods beginning on or after 1 January 2010 or later 
and which the Group has not early adopted: 
Improvements to International Financial Reporting Standards (issued in April 
2009; amendments to IFRS 2, IAS 38, IFRIC 9 and IFRIC 16 are effective for 
annual periods beginning on or after 1 July 2009; amendments to IFRS 5, IFRS 8, 
IAS 1, IAS 7, IAS 17, IAS 36 and IAS 39 are effective for annual periods 
beginning on or after 1 January 2010). The improvements consist of a mixture of 
substantive changes and clarifications in the following standards and 
interpretations: clarification that contributions of businesses in common 
control transactions and formation of joint ventures are not within the scope of 
IFRS 2; clarification of disclosure requirements set by IFRS 5 and other 
standards for non-current assets (or disposal groups) classified as held for 
sale or discontinued operations; requiring to report a measure of total assets 
and liabilities for each reportable segment under IFRS 8 only if such amounts 
are regularly provided to the chief operating decision maker; amending IAS 1 to 
allow classification of certain liabilities settled by entity's own equity 
instruments as non-current; changing IAS 7 such that only expenditures that 
result in a recognised asset are eligible for classification as investing 
activities; allowing classification of certain long-term land leases as finance 
leases under IAS 17 even without transfer of ownership of the land at the end of 
the lease; providing additional guidance in IAS 18 for determining whether an 
entity acts as a principal or an agent; clarification in IAS 36 that a cash 
generating unit shall not be larger than an operating segment before 
aggregation; supplementing IAS 38 regarding measurement of fair value of 
intangible assets acquired in a business combination; amending IAS 39 (i) to 
include in its scope option contracts that could result in business 
combinations, (ii) to clarify the period of reclassifying gains or losses on 
cash flow hedging instruments from equity to profit or loss and (iii) to state 
that a prepayment option is closely related to the host contract if upon 
exercise the borrower reimburses economic loss of the lender; amending IFRIC 9 
to state that embedded derivatives in contracts acquired in common control 
transactions and formation of joint ventures are not within its scope; and 
removing the restriction in IFRIC 16 that hedging instruments may not be held by 
the foreign operation that itself is being hedged. The Group does not expect the 
amendments to have any material effect on its financial statements. 
Group Cash-settled Share-based Payment Transactions - Amendments to IFRS 2 
Share-based Payment (effective for annual periods beginning on or after 1 
January 2010). The amendments provide a clear basis to determine the 
classification of share-based payment awards in both consolidated and separate 
financial statements. The amendments incorporate into the standard the guidance 
in IFRIC 8 and IFRIC 11, which are withdrawn. The amendments expand on the 
guidance given in IFRIC 11 to address plans that were previously not considered 
in the interpretation. The amendments also clarify the defined terms in the 
Appendix to the standard. The Group does not expect the amendments to have any 
material effect on its financial statements. 
New requirements for financial assets - Introduction of IFRS 9, Financial assets 
(effective  for annual periods beginning on 1 January 2013; early application is 
permitted). The IFRS 9 replaces the multiple classification and measurement 
models in IAS 39 with a single model that has only two classification 
categories: amortised cost and fair value. A financial asset is measured at 
amortised cost if two criteria are met: i) the objective of the business model 
is to hold the financial asset for the collection of the contractual cash flows, 
and ii) the contractual cash flows under the instrument solely represent 
payments of principal and interest. The Group does not expect to early apply the 
standard in its annual 2009 financial statements. 
IAS 24, Related Party Disclosures (amended November 2009, effective for annual 
periods beginning on or after 1 January 2011). The amended standard simplifies 
the disclosure requirements for government-related entities and clarifies the 
definition of a related party. The Group is currently assessing the impact of 
the amended standard on disclosures in its financial statements. 
The International Financial Reporting Standard for Small and Medium-sized 
Entities ("SMEs") (issued in July 2009) is a self-contained standard, tailored 
to the needs and capabilities of smaller businesses. Under this standard many of 
the principles of full IFRS for recognising and measuring assets, liabilities, 
income and expense have been simplified, and the number of required disclosures 
have been simplified and significantly reduced. The IFRS for SMEs may be applied 
by entities which publish general purpose financial statements for external 
users and do not have public accountability. The Group is not eligible to apply 
the IFRS for SMEs due to the public accountability of its business. 
Additional Exemptions for First-time Adopters - Amendments to IFRS 1 First-time 
Adoption of IFRS (effective for annual periods beginning on or after 1 January 
2010). The amendments exempt entities using the full cost method from 
retrospective application of IFRSs for oil and gas assets and also exempt 
entities with existing leasing contracts from reassessing the classification of 
those contracts in accordance with IFRIC 4 Determining Whether an Arrangement 
Contains a Lease when the application of their national accounting requirements 
produced the same result. The amendments will not have any impact on the Group's 
financial statements. 
Puttable Financial Instruments and Obligations Arising on Liquidation-IAS 32 and 
IAS 1 Amendment (effective for annual periods beginning on or after 1 January 
2009). The amendment requires classification as equity of some financial 
instruments that meet the definition of financial liabilities. There has been no 
impact on the Group's financial statements. 
IFRIC 15, Agreements for the Construction of Real Estate (effective for annual 
periods beginning on or after 1 January 2009). The interpretation applies to the 
accounting for revenue and associated expenses by entities that undertake the 
construction of real estate directly or through subcontractors, and provides 
guidance for determining whether agreements for the construction of real estate 
are within the scope of IAS 11 or IAS 18. It also provides criteria for 
determining when entities should recognise revenue on such transactions. IFRIC 
15 did not have a significant impact on the Group's financial statements. 
IFRIC 16, Hedges of a Net Investment in a Foreign Operation (effective for 
annual periods beginning on or after 1 October 2008). The interpretation 
explains which currency risk exposures are eligible for hedge accounting and 
states that translation from the functional currency to the presentation 
currency does not create an exposure to which hedge accounting could be 
applied. The IFRIC allows the hedging instrument to be held by any entity or 
entities within a group except the foreign operation that itself is being 
hedged. The interpretation also clarifies how the gain or loss recycled from the 
currency translation reserve to profit or loss is calculated on disposal of the 
hedged foreign operation. Reporting entities will apply IAS 39 to discontinue 
hedge accounting prospectively when their hedges do not meet the criteria for 
hedge accounting in IFRIC 16. IFRIC16 did not have any impact on the Group's 
financial statements as the Group does not apply hedge accounting. 
Cost of an Investment in a Subsidiary, Jointly Controlled Entity or 
Associate-IFRS 1 and IAS 27 Amendment (issued in May 2008; effective for annual 
periods beginning on or after 1 January 2009). The amendment allows first-time 
adopters of IFRS to measure investments in subsidiaries, jointly controlled 
entities or associates at fair value or at previous GAAP carrying value as 
deemed cost in the separate financial statements. The amendment also requires 
distributions from pre-acquisition net assets of investees to be recognised in 
profit or loss rather than as a recovery of the investment. The amendments did 
not have any impact on the Group's consolidated financial statements. 
The Group has not early adopted any of the new standards and interpretations 
disclosed in the 'New Accounting Pronouncements' note in its last annual 
financial statements and effective for its annual periods beginning on or after 
1 January 2010. 
 
 
  Note 6: Property, Plant and Equipment 
 
 
+-------------------------------------------------------------+--------------+---------------------------------------------------------------------------------------------------+-------------------+------------------+-------------------+-------------------+-------------------+----------+ 
|                                                             |  Oil and gas |                                                                                                              Refinery |        Buildings |      Other Assets |      Assets under |             Total |          | 
|                                                             |   properties |                                                                                                 and related equipment |                  |                   |      construction |                   |          | 
+-------------------------------------------------------------+--------------+-----------------------------------------------------------------------------------------------------------------------+------------------+-------------------+-------------------+-------------------+----------+ 
| Cost at                                                     |              |                                                                                                                       |                  |                   |                   |                   |          | 
+-------------------------------------------------------------+--------------+-----------------------------------------------------------------------------------------------------------------------+------------------+-------------------+-------------------+-------------------+----------+ 
| 1 January 2008                                              |      596,251 |                                                                                                                10,627 |            5,434 |            16,629 |            77,848 |           706,789 |          | 
+-------------------------------------------------------------+--------------+-----------------------------------------------------------------------------------------------------------------------+------------------+-------------------+-------------------+-------------------+----------+ 
| - Property, plant and equipment of the Group, excluding     |      458,949 |                                                                                                                10,627 |            5,434 |            15,278 |            71,247 |           561,535 |          | 
|   assets held for sale                                      |              |                                                                                                                       |                  |                   |                   |                   |          | 
+-------------------------------------------------------------+--------------+-----------------------------------------------------------------------------------------------------------------------+------------------+-------------------+-------------------+-------------------+----------+ 
| - Property, plant and equipment held for sale               |      137,302 |                                                                                                                     - |                - |             1,351 |             6,601 |           145,254 |          | 
+-------------------------------------------------------------+--------------+-----------------------------------------------------------------------------------------------------------------------+------------------+-------------------+-------------------+-------------------+----------+ 
| Translation difference                                      |       27,755 |                                                                                                                   493 |              252 |               765 |             4,307 |            33,572 |          | 
+-------------------------------------------------------------+--------------+-----------------------------------------------------------------------------------------------------------------------+------------------+-------------------+-------------------+-------------------+----------+ 
| Additions                                                   |          155 |                                                                                                                     - |                - |                 - |            47,590 |            47,745 |          | 
+-------------------------------------------------------------+--------------+-----------------------------------------------------------------------------------------------------------------------+------------------+-------------------+-------------------+-------------------+----------+ 
| Capitalised borrowing costs                                 |                                                                                                                - |                 - |                - |                 - |             2,367 |                       2,367  | 
+-------------------------------------------------------------+------------------------------------------------------------------------------------------------------------------+-------------------+------------------+-------------------+-------------------+------------------------------+ 
| Transfers                                                   |                                                                                                           13,517 |                 - |                - |               512 |          (14,029) |                            - | 
+-------------------------------------------------------------+------------------------------------------------------------------------------------------------------------------+-------------------+------------------+-------------------+-------------------+------------------------------+ 
| Disposals                                                   |                                                                                                             (33) |                 - |                - |              (94) |           (2,307) |                      (2,434) | 
+-------------------------------------------------------------+------------------------------------------------------------------------------------------------------------------+-------------------+------------------+-------------------+-------------------+------------------------------+ 
| Disposals of assets held for sale                           |                                                                                                        (134,775) |                 - |                - |           (1,845) |           (6,241) |                    (142,861) | 
+-------------------------------------------------------------+------------------------------------------------------------------------------------------------------------------+-------------------+------------------+-------------------+-------------------+------------------------------+ 
|                                                             |      502,870 |                                                                                                                11,120 |            5,686 |            15,967 |           109,535 |           645,178 |          | 
| 30 June 2008                                                |              |                                                                                                                       |                  |                   |                   |                   |          | 
+-------------------------------------------------------------+--------------+-----------------------------------------------------------------------------------------------------------------------+------------------+-------------------+-------------------+-------------------+----------+ 
| - Property, plant and equipment of the Group, excluding     |      464,505 |                                                                                                                11,120 |            5,686 |            15,967 |           108,611 |           605,889 |          | 
|   assets held for sale                                      |              |                                                                                                                       |                  |                   |                   |                   |          | 
+-------------------------------------------------------------+--------------+-----------------------------------------------------------------------------------------------------------------------+------------------+-------------------+-------------------+-------------------+----------+ 
| - Property, plant and equipment held for sale               |       38,365 |                                                                                                                     - |                - |                 - |               924 |            39,289 |          | 
+-------------------------------------------------------------+--------------+-----------------------------------------------------------------------------------------------------------------------+------------------+-------------------+-------------------+-------------------+----------+ 
| Accumulated Depreciation, Amortization and Depletion at     |              |                                                                                                                       |                  |                   |                   |                   |          | 
+-------------------------------------------------------------+--------------+-----------------------------------------------------------------------------------------------------------------------+------------------+-------------------+-------------------+-------------------+----------+ 
|                                                             |                                                                                                         (55,719) |           (1,792) |            (964) |           (3,939) |                 - |                     (62,414) | 
| 1 January 2008                                              |                                                                                                                  |                   |                  |                   |                   |                              | 
+-------------------------------------------------------------+------------------------------------------------------------------------------------------------------------------+-------------------+------------------+-------------------+-------------------+------------------------------+ 
| - Property, plant and equipment of the Group, excluding     |     (36,832) |                                                                                                               (1,792) |            (964) |           (3,628) |                 - |          (43,216) |          | 
|   assets held for sale                                      |              |                                                                                                                       |                  |                   |                   |                   |          | 
+-------------------------------------------------------------+--------------+-----------------------------------------------------------------------------------------------------------------------+------------------+-------------------+-------------------+-------------------+----------+ 
| - Property, plant and equipment held for sale               |     (18,887) |                                                                                                                     - |                - |             (311) |                 - |          (19,198) |          | 
+-------------------------------------------------------------+--------------+-----------------------------------------------------------------------------------------------------------------------+------------------+-------------------+-------------------+-------------------+----------+ 
| Translation difference                                      |      (2,788) |                                                                                                                  (90) |             (48) |             (194) |                 - |           (3,120) |          | 
+-------------------------------------------------------------+--------------+-----------------------------------------------------------------------------------------------------------------------+------------------+-------------------+-------------------+-------------------+----------+ 
| Depreciation, depletion  and amortization                   |     (10,232) |                                                                                                                 (351) |            (144) |             (921) |                 - |          (11,648) |          | 
+-------------------------------------------------------------+--------------+-----------------------------------------------------------------------------------------------------------------------+------------------+-------------------+-------------------+-------------------+----------+ 
| Disposals                                                   |                                                                                                                5 |                 - |                - |                22 |                 - |                           27 | 
+-------------------------------------------------------------+------------------------------------------------------------------------------------------------------------------+-------------------+------------------+-------------------+-------------------+------------------------------+ 
| Disposals of assets held for sale (KOMI)                    |       18,695 |                                                                                                                     - |                - |               552 |                 - |            19,247 |          | 
+-------------------------------------------------------------+--------------+-----------------------------------------------------------------------------------------------------------------------+------------------+-------------------+-------------------+-------------------+----------+ 
| 30 June 2008                                                |     (50,039) |                                                                                                               (2,233) |          (1,156) |           (4,480) |                 - |          (57,908) |          | 
+-------------------------------------------------------------+--------------+-----------------------------------------------------------------------------------------------------------------------+------------------+-------------------+-------------------+-------------------+----------+ 
| - Property, plant and equipment of the Group, excluding     |     (42,391) |                                                                                                               (2,233) |          (1,156) |           (4,480) |                 - |          (50,260) |          | 
|    assets held for sale                                     |              |                                                                                                                       |                  |                   |                   |                   |          | 
+-------------------------------------------------------------+--------------+-----------------------------------------------------------------------------------------------------------------------+------------------+-------------------+-------------------+-------------------+----------+ 
| - Property, plant and equipment held for sale               |      (7,648) |                                                                                                                     - |                - |                 - |                 - |           (7,648) |          | 
+-------------------------------------------------------------+--------------+-----------------------------------------------------------------------------------------------------------------------+------------------+-------------------+-------------------+-------------------+----------+ 
|                                                             |                                                                                                                  |                   |                  |                   |                   |                              | 
| Net Book Value at                                           |                                                                                                                  |                   |                  |                   |                   |                              | 
+-------------------------------------------------------------+------------------------------------------------------------------------------------------------------------------+-------------------+------------------+-------------------+-------------------+------------------------------+ 
| 30 June 2008                                                |                                                                                                          452,831 |             8,887 |            4,530 |            11,487 |           109,535 |                      587,270 | 
+-------------------------------------------------------------+------------------------------------------------------------------------------------------------------------------+-------------------+------------------+-------------------+-------------------+------------------------------+ 
| - Property, plant and equipment of the Group,               |      422,114 |                                                                                                                 8,887 |            4,530 |            11,487 |           108,611 |           555,629 |          | 
|   excluding assets held for sale                            |              |                                                                                                                       |                  |                   |                   |                   |          | 
+-------------------------------------------------------------+--------------+-----------------------------------------------------------------------------------------------------------------------+------------------+-------------------+-------------------+-------------------+----------+ 
| - Property, plant and equipment held for sale               |       30,717 |                                                                                                                     - |                - |                 - |               924 |            31,641 |          | 
+-------------------------------------------------------------+--------------+---------------------------------------------------------------------------------------------------+-------------------+------------------+-------------------+-------------------+-------------------+----------+ 
 
 
  Note 6: Property, Plant and Equipment (continued) 
 
 
+---------------+------------+---------+------+-----------+------+------+------+---------+--------+--------+ 
|               |        Oil |   Refinery and | Buildings |       Other |   Assets under |  Total |        | 
|               |        and |        related |           |      Assets |   construction |        |        | 
|               |        gas |      equipment |           |             |                |        |        | 
|               | properties |                |           |             |                |        |        | 
+---------------+------------+----------------+-----------+-------------+----------------+--------+--------+ 
| Cost          |            |                |           |             |                |        |        | 
| at            |            |                |           |             |                |        |        | 
+---------------+------------+----------------+-----------+-------------+----------------+--------+--------+ 
|               |    331,038 |          5,550 |     3,689 |      12,131 |        106,627 |         459,035 | 
| 1             |            |                |           |             |                |                 | 
| January       |            |                |           |             |                |                 | 
| 2009          |            |                |           |             |                |                 | 
+---------------+------------+----------------+-----------+-------------+----------------+-----------------+ 
| -             |    229,044 |              - |     2,446 |       8,843 |        103,145 |         343,478 | 
| Property,     |            |                |           |             |                |                 | 
| plant and     |            |                |           |             |                |                 | 
| equipment     |            |                |           |             |                |                 | 
| of the        |            |                |           |             |                |                 | 
| Group,        |            |                |           |             |                |                 | 
| excluding     |            |                |           |             |                |                 | 
| assets        |            |                |           |             |                |                 | 
| held for      |            |                |           |             |                |                 | 
| sale          |            |                |           |             |                |                 | 
+---------------+------------+----------------+-----------+-------------+----------------+-----------------+ 
| -             |    101,994 |          5,550 |     1,243 |       3,288 |          3,482 |         115,557 | 
| Property,     |            |                |           |             |                |                 | 
| plant and     |            |                |           |             |                |                 | 
| equipment     |            |                |           |             |                |                 | 
| held for      |            |                |           |             |                |                 | 
| sale          |            |                |           |             |                |                 | 
+---------------+------------+----------------+-----------+-------------+----------------+-----------------+ 
| Translation   |   (20,698) |          (340) |     (225) |       (763) |        (6,096) |        (28,122) | 
| difference    |            |                |           |             |                |                 | 
+---------------+------------+----------------+-----------+-------------+----------------+-----------------+ 
| Additions     |          - |              - |         - |           - |         10,349 |          10,349 | 
+---------------+------------+----------------+-----------+-------------+----------------+-----------------+ 
| Capitalised   |          - |              - |         - |           - |          4,705 |           4,705 | 
| borrowing     |            |                |           |             |                |                 | 
| costs         |            |                |           |             |                |                 | 
+---------------+------------+----------------+-----------+-------------+----------------+-----------------+ 
| Transfers     |      7,504 |              3 |         - |           4 |        (7,511) |               - | 
+---------------+------------+----------------+-----------+-------------+----------------+-----------------+ 
| Impairment    |  (122,127) |              - |         - |           - |              - |       (122,127) | 
+---------------+------------+----------------+-----------+-------------+----------------+-----------------+ 
| Disposals     |          - |              - |         - |       (386) |          (202) |           (588) | 
+---------------+------------+----------------+-----------+-------------+----------------+-----------------+ 
| Disposals     |    (6,079) |              - |         - |           - |           (51) |         (6,130) | 
| of assets     |            |                |           |             |                |                 | 
| held for      |            |                |           |             |                |                 | 
| sale          |            |                |           |             |                |                 | 
+---------------+------------+----------------+-----------+-------------+----------------+-----------------+ 
|               |            |                |           |             |                |                 | 
| 30            |    189,638 |          5,213 |     3,464 |      10,986 |        107,821 |         317,122 | 
| June          |            |                |           |             |                |                 | 
| 2009          |            |                |           |             |                |                 | 
+---------------+------------+----------------+-----------+-------------+----------------+-----------------+ 
| -             |          - |              - |         - |       4,562 |          1,687 |           6,249 | 
| Property,     |            |                |           |             |                |                 | 
| plant and     |            |                |           |             |                |                 | 
| equipment     |            |                |           |             |                |                 | 
| of the        |            |                |           |             |                |                 | 
| Group,        |            |                |           |             |                |                 | 
| excluding     |            |                |           |             |                |                 | 
| assets        |            |                |           |             |                |                 | 
| held for      |            |                |           |             |                |                 | 
| sale          |            |                |           |             |                |                 | 
+---------------+------------+----------------+-----------+-------------+----------------+-----------------+ 
| -             |    189,638 |          5,213 |     3,464 |       6,424 |        106,134 |         310,873 | 
| Property,     |            |                |           |             |                |                 | 
| plant and     |            |                |           |             |                |                 | 
| equipment     |            |                |           |             |                |                 | 
| held for      |            |                |           |             |                |                 | 
| sale          |            |                |           |             |                |                 | 
+---------------+------------+----------------+-----------+-------------+----------------+-----------------+ 
| Accumulated   |            |         |                         |             |         |                 | 
| Depreciation, |            |         |                         |             |         |                 | 
| Amortization  |            |         |                         |             |         |                 | 
| and Depletion |            |         |                         |             |         |                 | 
| at            |            |         |                         |             |         |                 | 
+---------------+------------+---------+-------------------------+-------------+---------+-----------------+ 
|               |   (44,218) | (1,920) |                 (1,008) |     (4,211) |       - |        (51,357) | 
| 1             |            |         |                         |             |         |                 | 
| January       |            |         |                         |             |         |                 | 
| 2009          |            |         |                         |             |         |                 | 
+---------------+------------+---------+-------------------------+-------------+---------+-----------------+ 
| -             |    (3,361) |       - |                   (424) |     (2,725) |       - |         (6,510) | 
| Property,     |            |         |                         |             |         |                 | 
| plant and     |            |         |                         |             |         |                 | 
| equipment     |            |         |                         |             |         |                 | 
| of the        |            |         |                         |             |         |                 | 
| Group,        |            |         |                         |             |         |                 | 
| excluding     |            |         |                         |             |         |                 | 
| assets        |            |         |                         |             |         |                 | 
| held for      |            |         |                         |             |         |                 | 
| sale          |            |         |                         |             |         |                 | 
+---------------+------------+---------+-------------------------+-------------+---------+-----------------+ 
| -             |   (40,857) | (1,920) |                   (584) |     (1,486) |       - |        (44,847) | 
| Property,     |            |         |                         |             |         |                 | 
| plant and     |            |         |                         |             |         |                 | 
| equipment     |            |         |                         |             |         |                 | 
| held for      |            |         |                         |             |         |                 | 
| sale          |            |         |                         |             |         |                 | 
+---------------+------------+---------+-------------------------+-------------+---------+-----------------+ 
| Translation   |      3,343 |     118 |                      61 |         252 |       - |           3,774 | 
| difference    |            |         |                         |             |         |                 | 
+---------------+------------+---------+-------------------------+-------------+---------+-----------------+ 
| Depreciation, |          - |       - |                       - |       (229) |       - |           (229) | 
| depletion     |            |         |                         |             |         |                 | 
| and           |            |         |                         |             |         |                 | 
| amortization  |            |         |                         |             |         |                 | 
+---------------+------------+---------+-------------------------+-------------+---------+-----------------+ 
| Disposals     |          - |       - |                       - |         131 |       - |             131 | 
+---------------+------------+---------+-------------------------+-------------+---------+-----------------+ 
| Disposals     |      4,267 |       - |                       - |           - |       - |           4,267 | 
| of assets     |            |         |                         |             |         |                 | 
| held for      |            |         |                         |             |         |                 | 
| sale          |            |         |                         |             |         |                 | 
| (KOMI)        |            |         |                         |             |         |                 | 
+---------------+------------+---------+-------------------------+-------------+---------+-----------------+ 
| 30            |   (36,608) | (1,802) |                   (947) |     (4,057) |       - |        (43,414) | 
| June          |            |         |                         |             |         |                 | 
| 2009          |            |         |                         |             |         |                 | 
+---------------+------------+---------+-------------------------+-------------+---------+-----------------+ 
| -             |          - |       - |                       - |     (1,755) |       - |         (1,755) | 
| Property,     |            |         |                         |             |         |                 | 
| plant and     |            |         |                         |             |         |                 | 
| equipment     |            |         |                         |             |         |                 | 
| of the        |            |         |                         |             |         |                 | 
| Group,        |            |         |                         |             |         |                 | 
| excluding     |            |         |                         |             |         |                 | 
| assets        |            |         |                         |             |         |                 | 
| held for      |            |         |                         |             |         |                 | 
| sale          |            |         |                         |             |         |                 | 
+---------------+------------+---------+-------------------------+-------------+---------+-----------------+ 
| -             |   (36,608) | (1,802) |                   (947) |     (2,302) |       - |        (41,659) | 
| Property,     |            |         |                         |             |         |                 | 
| plant and     |            |         |                         |             |         |                 | 
| equipment     |            |         |                         |             |         |                 | 
| held for      |            |         |                         |             |         |                 | 
| sale          |            |         |                         |             |         |                 | 
+---------------+------------+---------+-------------------------+-------------+---------+-----------------+ 
|               |            |         |                         |             |         |                 | 
| Net           |            |         |                         |             |         |                 | 
| Book          |            |         |                         |             |         |                 | 
| Value         |            |         |                         |             |         |                 | 
| at            |            |         |                         |             |         |                 | 
+---------------+------------+---------+-------------------------+-------------+---------+-----------------+ 
| 1             |    286,820 |   3,630 |                   2,681 |       7,920 | 106,627 |         407,678 | 
| January       |            |         |                         |             |         |                 | 
| 2009          |            |         |                         |             |         |                 | 
+---------------+------------+---------+-------------------------+-------------+---------+-----------------+ 
| -             |    225,683 |       - |                   2,022 |       6,118 | 103,145 |         336,968 | 
| Property,     |            |         |                         |             |         |                 | 
| plant and     |            |         |                         |             |         |                 | 
| equipment     |            |         |                         |             |         |                 | 
| of the        |            |         |                         |             |         |                 | 
| Group,        |            |         |                         |             |         |                 | 
| excluding     |            |         |                         |             |         |                 | 
| assets        |            |         |                         |             |         |                 | 
| held for      |            |         |                         |             |         |                 | 
| sale          |            |         |                         |             |         |                 | 
+---------------+------------+---------+-------------------------+-------------+---------+-----------------+ 
| -             |     61,137 |   3,630 |                     659 |       1,802 |   3,482 |          70,710 | 
| Property,     |            |         |                         |             |         |                 | 
| plant and     |            |         |                         |             |         |                 | 
| equipment     |            |         |                         |             |         |                 | 
| held for      |            |         |                         |             |         |                 | 
| sale          |            |         |                         |             |         |                 | 
+---------------+------------+---------+-------------------------+-------------+---------+-----------------+ 
|               |            |         |                         |             |         |                 | 
+---------------+------------+---------+-------------------------+-------------+---------+-----------------+ 
| 30            |    153,030 |   3,411 |                   2,517 |       6,929 | 107,821 |         273,708 | 
| June          |            |         |                         |             |         |                 | 
| 2009          |            |         |                         |             |         |                 | 
+---------------+------------+---------+-------------------------+-------------+---------+-----------------+ 
| -             |          - |       - |                       - |       2,807 |   1,687 |           4,494 | 
| Property,     |            |         |                         |             |         |                 | 
| plant and     |            |         |                         |             |         |                 | 
| equipment     |            |         |                         |             |         |                 | 
| of the        |            |         |                         |             |         |                 | 
| Group,        |            |         |                         |             |         |                 | 
| excluding     |            |         |                         |             |         |                 | 
| assets        |            |         |                         |             |         |                 | 
| held for      |            |         |                         |             |         |                 | 
| sale          |            |         |                         |             |         |                 | 
+---------------+------------+---------+-------------------------+-------------+---------+-----------------+ 
| -             |    153,030 |   3,411 |                   2,517 |       4,122 | 106,134 |         269,214 | 
| Property,     |            |         |                         |             |         |                 | 
| plant and     |            |         |                         |             |         |                 | 
| equipment     |            |         |                         |             |         |                 | 
| held for      |            |         |                         |             |         |                 | 
| sale          |            |         |                         |             |         |                 | 
+---------------+------------+---------+------+-----------+------+------+------+---------+--------+--------+ 
 
 
  Note 7:    Investment in joint venture 
 
 
Acquisition of equity interest of 35.3% in Taas. As of 30 June 2009, management 
has reviewed the change in Taas equity value and revalued the financial 
instruments as required by IFRS. 
 
 
As at 30 June 2009, management assessed an investment in Taas for impairment 
using the information regarding the transaction which was available at that date 
as an indicator of the fair value of the asset. As a result of this analysis, an 
impairment charge of $237.6 million was recognized in the interim condensed 
consolidated statement of comprehensive income in the six months ended 30 June 
2009. 
 
 
This change resulted in an increase of the put option value classified as a 
financial instrument from $161.3 million to $201.9 million as of 31 December 
2008 and 30 June 2009, respectively. 
 
 
 
 
Note 8:Non-current assets held for sale 
 
 
The assets and liabilities of Chepetskoye were presented as held for sale as of 
31 December 2008. 
 
 
In February 2009, Chepetskoye was sold to a domestic off-taker, Galaform, for 
the full discharge of the domestic prepayment granted to the Group in the end of 
2006 (Note 11). As part of the transaction, the Group assigned to the buyer 
intercompany loans amounting to $10.8 million. Sale consideration was equal to 
$5.2 million and included in the sales agreement was a call option for the Group 
to repurchase Chepetskoye for $5.2 million. This call option expires in January 
2010.  The Group has assigned nil value to the call option. Additional loss from 
disposal in the amount of $1.1 million was recognized in the interim condensed 
consolidated statement of comprehensive income in the six months ended 30 June 
2009. 
During the first half 2009, the Group carried on negotiations with Sberbank 
about transfer of its share in Dulisma to Sberbank as part of the loan 
assignment agreement (Note 11). In July 2009, the Group transferred Dulisma to 
Sberbank. As at 30 June 2009, management assessed Dulisma for impairment using 
the information regarding the transaction which was available at that date as an 
indicator of the fair value of the asset. As a result of this analysis, an 
impairment charge of $122.1 million was recognized in the interim condensed 
consolidated statement of comprehensive income in the six months ended 30 June 
2009. 
 
 
The assets and liabilities of Dulisma, as well as Petrosakh and Arcticneft have 
been presented as held for sale as of 30 June 2009. 
 
 
Below is a breakdown of assets and liabilities of non-current assets classified 
as held for sale. 
 
 
+-----------------------------------------------------------------+---------------------+-----------------------+ 
|                                                                 |        30 June 2009 |      31 December 2008 | 
+-----------------------------------------------------------------+---------------------+-----------------------+ 
|                                                                 |                     |                       | 
+-----------------------------------------------------------------+---------------------+-----------------------+ 
| Cash and cash equivalents                                       |                 498 |                   360 | 
+-----------------------------------------------------------------+---------------------+-----------------------+ 
| Accounts receivable and prepayments                             |              10,769 |                 5,545 | 
+-----------------------------------------------------------------+---------------------+-----------------------+ 
| Current income tax prepayments                                  |                  20 |                   551 | 
+-----------------------------------------------------------------+---------------------+-----------------------+ 
| Inventories                                                     |              24,700 |                18,426 | 
+-----------------------------------------------------------------+---------------------+-----------------------+ 
| Property, plant and equipment                                   |             269,214 |                70,710 | 
+-----------------------------------------------------------------+---------------------+-----------------------+ 
| Supplies and materials for capital construction                 |              15,064 |                 2,487 | 
+-----------------------------------------------------------------+---------------------+-----------------------+ 
| Other non-current assets                                        |               5,337 |                 1,084 | 
+-----------------------------------------------------------------+---------------------+-----------------------+ 
|                                                                 |             325,602 |                       | 
| Total non-current assets held for sale                          |                     |                99,163 | 
+-----------------------------------------------------------------+---------------------+-----------------------+ 
|                                                                 |                     |                       | 
+-----------------------------------------------------------------+---------------------+-----------------------+ 
| Accounts payable and accrued expenses                           |              40,612 |                       | 
|                                                                 |                     |                 2,881 | 
+-----------------------------------------------------------------+---------------------+-----------------------+ 
| Income tax payable                                              |                 101 |                     - | 
+-----------------------------------------------------------------+---------------------+-----------------------+ 
| Other taxes payable                                             |               3,062 |                 1,518 | 
+-----------------------------------------------------------------+---------------------+-----------------------+ 
| Advances from customers                                         |                 357 |                   150 | 
+-----------------------------------------------------------------+---------------------+-----------------------+ 
| Short-term borrowings                                           |             130,000 |                     - | 
+-----------------------------------------------------------------+---------------------+-----------------------+ 
| Long -term finance lease obligations                            |                 685 |                   846 | 
+-----------------------------------------------------------------+---------------------+-----------------------+ 
| Dismantlement provision                                         |               1,060 |                 1,423 | 
+-----------------------------------------------------------------+---------------------+-----------------------+ 
| Deferred tax liability                                          |              10,706 |                 3,430 | 
+-----------------------------------------------------------------+---------------------+-----------------------+ 
|                                                                 |             186,584 |                10,248 | 
| Total liabilities directly associated with non-current assets   |                     |                       | 
| classified as held for sale                                     |                     |                       | 
+-----------------------------------------------------------------+---------------------+-----------------------+ 
 
 
 
 
Note 9:  Other Non-Current Assets 
 
 
+---------------------------------------------------------------+---------------------+-------------------------+ 
|                                                               |        30 June 2009 |        31 December 2008 | 
+---------------------------------------------------------------+---------------------+-------------------------+ 
|                                                               |                     |                         | 
+---------------------------------------------------------------+---------------------+-------------------------+ 
| Loan receivable from related party (Note 16)                  |              32,738 |                  31,066 | 
+---------------------------------------------------------------+---------------------+-------------------------+ 
| Advances to contractors and suppliers for construction in     |                  37 |                   8,195 | 
| process                                                       |                     |                         | 
+---------------------------------------------------------------+---------------------+-------------------------+ 
| Intangible assets                                             |                 349 |                     624 | 
+---------------------------------------------------------------+---------------------+-------------------------+ 
|                                                               |              33,124 |                  39,885 | 
| Total other non-current assets                                |                     |                         | 
+---------------------------------------------------------------+---------------------+-------------------------+ 
 
 
Other long-term investments represent US dollar denominated long-term loans of 
$32.7 million and $31.1 million at 30 June 2009 and 31 December 2008, 
respectively, issued by UEPCL to Taas, as part of the acquisition agreement. The 
loans were used to pay organisation fees for a $600 million project finance loan 
facility provided by Sberbank for the development of the Srednebotubinskoye 
field, financing of interest payments and repayment of third party loans at 
Taas. The loans bear interest of 12% and mature in February 2015. The loans are 
unsecured. The fair value of the loans approximated the carrying value at 30 
June 2009 and 31 December 2008. These loans were considered to be fully 
performing as of 30 June 2009 and 31 December 2008. 
 
 
Note 10: Advances from customers 
 
 
+---------------------------------------------------------------+---------------------+-------------------------+ 
|                                                               |        30 June 2009 |        31 December 2008 | 
+---------------------------------------------------------------+---------------------+-------------------------+ 
| Petraco                                                       |              45,602 |                  49,418 | 
+---------------------------------------------------------------+---------------------+-------------------------+ 
| Galaform                                                      |                   - |                   5,474 | 
+---------------------------------------------------------------+---------------------+-------------------------+ 
| Other                                                         |                 431 |                     886 | 
+---------------------------------------------------------------+---------------------+-------------------------+ 
|                                                               |              46,033 |                  55,778 | 
| Total advances from customers                                 |                     |                         | 
+---------------------------------------------------------------+---------------------+-------------------------+ 
 
 
 
 
Petraco Revolving Prepayment Agreement. In July 2007, the Group entered into a 
five year revolving prepayment agreement with Petraco.  Under the terms of the 
agreement, US dollar denominated prepayments shall be made to the Group in one 
or more advances against specified future deliveries of agreed volumes of crude 
oil to be sold to Petraco.  Interest accrues at LIBOR plus 5.00% on prepayments 
for which the related volumes have not been delivered, and LIBOR plus 1% on 
prepayments for which the related volumes have been delivered, in order to 
mirror normal commercial payment terms.  During 2008 the maximum borrowing base 
was increased from $50.0 million to $60.0 million. 
 
 
In December 2008 the original repayment schedule was modified to take into 
account decreased oil prices and Company's financial position. Under this 
schedule Company would have to decrease the amount outstanding to $25.0 million 
by 1 July 2009 with the remaining balance payable by deliveries to be made in 
2009 and 2010. Subsequent to year-end the proposed repayment schedule was not 
feasible, and the Company proposed an amendment to the repayment schedule 
allowing for a more gradual repayment of the currently outstanding $41.5 million 
in and providing additional security to Petraco. At the date of these financials 
statements these discussion were on going. Furthermore, transactions and cash 
flows between Petraco and the Group continue to take place. Specifically, during 
October and November 2009 the Group received from Petraco additional short term 
advances that were used to fund the loading of three tankers, the majority of 
the proceeds from these three tankers are to be used to partially repay the 
advance from Petraco. 
 
 
Galaform domestic crude oil prepayment agreement.  In February 2009, the Group 
transferred to Galaform Chepetskoye for the full discharge of the pre-payment 
(Note 8). 
 
 
 
 
  Note 11: Borrowings 
 
 
Short-term borrowings.  Short-term borrowings at 30 June 2009 and 31 December 
2008 were as follows: 
 
 
+---------------------------------------------------------------+---------------------+-------------------------+ 
|                                                               |        30 June 2009 |        31 December 2008 | 
+---------------------------------------------------------------+---------------------+-------------------------+ 
| Sberbank acquisition loan                                     |             499,635 |                 499,635 | 
+---------------------------------------------------------------+---------------------+-------------------------+ 
| Sberbank field development loan                               |             130,000 |                 130,000 | 
+---------------------------------------------------------------+---------------------+-------------------------+ 
| Other                                                         |                 111 |                     114 | 
+---------------------------------------------------------------+---------------------+-------------------------+ 
| Total short-term borrowings                                   |             629,746 |                 629,749 | 
+---------------------------------------------------------------+---------------------+-------------------------+ 
| Short-term borrowings of the Group, excluding those           |             499,746 |                 629,749 | 
| classified as held for sale                                   |                     |                         | 
+---------------------------------------------------------------+---------------------+-------------------------+ 
| Short-term borrowings classified as held for sale             |             130,000 |                       - | 
+---------------------------------------------------------------+---------------------+-------------------------+ 
 
 
As of 31 December 2008 and 30 June 2009, both loans to Sberbank were overdue. 
Subsequent to 30 June 2009, the Group has settled both loans (Note 18). 
 
 
Weighted average interest rate. The Group's weighted average interest rates on 
short-term borrowings were 19.0% and 14.0% for the six months ended 30 June 2009 
and 2008, respectively. 
 
 
Note 12: Equity 
 
 
At 30 June 2009, authorised share capital was $1,890 thousand divided into 300 
million shares of $0.0063 each and issued share capital was $1,131 thousand 
divided into 179.6 million shares of $0.0063 each. 
+-------------------------------+--------------+-----------+----------+------------+ 
|          Date of Grant        |    Number of |     Share |    Share | Difference | 
|                               |       shares |   capital |  premium |       from | 
|                               | (thousand of |           |          | conversion | 
|                               |      shares) |           |          |   of share | 
|                               |              |           |          |    capital | 
|                               |              |           |          |   into USD | 
+-------------------------------+--------------+-----------+----------+------------+ 
|                               |              |           |          |            | 
+-------------------------------+--------------+-----------+----------+------------+ 
| Balance at 1 January 2009     |      178,144 |     1,122 |  640,080 |      (113) | 
+-------------------------------+--------------+-----------+----------+------------+ 
|                               |              |           |          |            | 
+-------------------------------+--------------+-----------+----------+------------+ 
| Shares issued under           |        1,141 |         7 |      (7) |          - | 
| restricted stock plans        |              |           |          |            | 
+-------------------------------+--------------+-----------+----------+------------+ 
| Early vested shares issued    |          291 |         2 |      (2) |          - | 
| under restricted stock plans  |              |           |          |            | 
+-------------------------------+--------------+-----------+----------+------------+ 
| Share-based payment under     |            - |         - |      900 |          - | 
| restricted stock plans        |              |           |          |            | 
+-------------------------------+--------------+-----------+----------+------------+ 
| Share-based payment related   |            - |         - |      923 |          - | 
| to immediate vesting          |              |           |          |            | 
+-------------------------------+--------------+-----------+----------+------------+ 
|                               |              |           |          |            | 
+-------------------------------+--------------+-----------+----------+------------+ 
| Balance at 30 June 2009       |      179,576 |     1,131 |  641,894 |      (113) | 
+-------------------------------+--------------+-----------+----------+------------+ 
 
 
Restricted Stock Plan.  During the six months ended 30 June 2009 and 2008, $1.8 
million and $4.3 million, respectively, of expense related to share-based 
payments were recognized in the consolidated statement of comprehensive income. 
 
 
At 30 June 2009, restricted stock grants for 1,432,062 shares were fully vested 
and issued. Additional restricted stock grants for 72,500 shares were vested 
during the six months ended 30 June 2009 and issued in July 2009. 
 
 
As of 30 June 2009, the number of unvested restricted stock grants and their 
respective vesting dates are presented in the table below. 
 
 
+----------------------------+-------------+-------------+------------+-------------+ 
|          Date of Grant     |     January |     January |    January |       Total | 
|                            |        2009 |        2010 |       2011 |             | 
+----------------------------+-------------+-------------+------------+-------------+ 
|                            |             |             |            |             | 
+----------------------------+-------------+-------------+------------+-------------+ 
| Total Restricted Stock     |   1,495,575 |   1,401,724 |    778,488 |   3,675,787 | 
| Granted as of 31 December  |             |             |            |             | 
| 2008                       |             |             |            |             | 
+----------------------------+-------------+-------------+------------+-------------+ 
|                            |             |             |            |             | 
+----------------------------+-------------+-------------+------------+-------------+ 
| Forfeitured in the six     |           - |   (140,387) |   (54,391) |   (194,778) | 
| months ended 30 June 2009  |             |             |            |             | 
+----------------------------+-------------+-------------+------------+-------------+ 
| Vested in the six months   | (1,141,481) |           - |          - | (1,141,481) | 
| ended 30 June 2009         |             |             |            |             | 
+----------------------------+-------------+-------------+------------+-------------+ 
| Immediately vested in the  |           - |   (266,680) |   (96,401) |   (363,081) | 
| six months ended 30 June   |             |             |            |             | 
| 2009                       |             |             |            |             | 
+----------------------------+-------------+-------------+------------+-------------+ 
| Total Restricted Stock     |     354,094 |     994,657 |    627,696 |   1,976,447 | 
| Granted as of 30 June 2009 |             |             |            |             | 
+----------------------------+-------------+-------------+------------+-------------+ 
 
 
Earnings per share.  For the six months period ended 30 June 2009 and 30 June 
2008, basic and diluted earnings per share and the corresponding weighted 
average shares outstanding used in each calculation are identical as all 
potentially dilutive instruments are anti-dilutive for the periods presented. 
 
 
 
 
Note 13: Revenues 
 
 
+--------------------------------------------------------+-----------+-----------+ 
|                                                        | Six months ended 30   | 
|                                                        | June:                 | 
+                                                        +-----------------------+ 
|                                                        |                                                   2009 |      2008 | 
+--------------------------------------------------------+--------------------------------------------------------+-----------+ 
| Crude oil                                              |           |           | 
+--------------------------------------------------------+-----------+-----------+ 
|   Export sales                                         |         - |    64,267 | 
+--------------------------------------------------------+-----------+-----------+ 
|   Domestic sales (Russian Federation)                  |     5,927 |    37,913 | 
+--------------------------------------------------------+-----------+-----------+ 
| Petroleum (refined) products - domestic sales          |     8,425 |     7,639 | 
+--------------------------------------------------------+-----------+-----------+ 
| Trading commission                                     |       110 |       190 | 
+--------------------------------------------------------+-----------+-----------+ 
| Other sales                                            |       678 |       740 | 
+--------------------------------------------------------+-----------+-----------+ 
| Total gross revenues                                   |    15,140 |   110,749 | 
+--------------------------------------------------------+-----------+-----------+ 
 
 
The significant decrease in revenues from sales during the six months period 
ended 30 June 2009 was due to disposal of the Group's subsidiaries located in 
Komi region (Dinyu, Michayuneft, Nizhneomrinskaya Neft and CNPSEI) in  April 
2008 and ZAO "Chepetskoye NGDU" in February 2009. Also, due to weather 
conditions at both Petrosakh and Arcticneft, the first tankers with crude oil 
for export were delivered in July and October 2009, respectively. 
 
 
  Note 14: Cost of Sales 
 
 
+------------------------------------------------------------------+---------------+--------------------+ 
|                                                                  |          Six months ended 30 June: | 
+------------------------------------------------------------------+------------------------------------+ 
|                                                                  |          2009 |               2008 | 
+------------------------------------------------------------------+---------------+--------------------+ 
| Wages and salaries including payroll taxes                       |         6,992 |             12,737 | 
+------------------------------------------------------------------+---------------+--------------------+ 
| Unified production tax                                           |         3,385 |             25,298 | 
+------------------------------------------------------------------+---------------+--------------------+ 
| Materials                                                        |         1,680 |              3,226 | 
+------------------------------------------------------------------+---------------+--------------------+ 
| Other taxes                                                      |         1,063 |              1,632 | 
+------------------------------------------------------------------+---------------+--------------------+ 
| Depreciation and depletion                                       |           355 |             11,144 | 
+------------------------------------------------------------------+---------------+--------------------+ 
| Oil treating, storage, transportation and other services         |           198 |              3,756 | 
+------------------------------------------------------------------+---------------+--------------------+ 
| Rent, utilities and repair services                              |           181 |                586 | 
+------------------------------------------------------------------+---------------+--------------------+ 
| Energy services                                                  |            25 |                734 | 
+------------------------------------------------------------------+---------------+--------------------+ 
| Cost of purchased crude oil                                      |             - |             28,650 | 
+------------------------------------------------------------------+---------------+--------------------+ 
| Release of provision on obsolete inventory                       |         (642) |                  - | 
+------------------------------------------------------------------+---------------+--------------------+ 
| Other                                                            |           753 |              2,184 | 
+------------------------------------------------------------------+---------------+--------------------+ 
| Change in finished goods                                         |       (4,491) |           (19,746) | 
+------------------------------------------------------------------+---------------+--------------------+ 
|                                                                  |               |                    | 
+------------------------------------------------------------------+---------------+--------------------+ 
| Total cost of sales                                              |         9,499 |             70,201 | 
+------------------------------------------------------------------+---------------+--------------------+ 
 
 
The significant decrease in cost of sales during the six months period ended 30 
June 2009 was due to the disposal of the Group's subsidiary, ZAO Chepetskoye 
NGDU, the disposal of the producing assets located in Komi region in 2008 and 
the lack of export sales during the period (Note 13). 
 
 
Note 15: Selling, General and Administrative Expenses 
 
 
+------------------------------------------------------------------+----------------+-------------------+ 
|                                                                  | Six months ended 30 June:          | 
+------------------------------------------------------------------+------------------------------------+ 
|                                                                  |           2009 |              2008 | 
+------------------------------------------------------------------+----------------+-------------------+ 
| Wages and salaries                                               |          4,692 |             7,707 | 
+------------------------------------------------------------------+----------------+-------------------+ 
| Share-based payments                                             |          1,823 |             4,297 | 
+------------------------------------------------------------------+----------------+-------------------+ 
| Audit and professional consultancy fees                          |          1,012 |             3,229 | 
+------------------------------------------------------------------+----------------+-------------------+ 
| Transport, loading and storage services                          |            743 |             2,673 | 
+------------------------------------------------------------------+----------------+-------------------+ 
| Office rent and other expenses                                   |            714 |             1,243 | 
+------------------------------------------------------------------+----------------+-------------------+ 
| Trip expenses and communication services                         |            327 |               849 | 
+------------------------------------------------------------------+----------------+-------------------+ 
| Other                                                            |          1,075 |             3,507 | 
+------------------------------------------------------------------+----------------+-------------------+ 
|                                                                  |                |                   | 
+------------------------------------------------------------------+----------------+-------------------+ 
| Total selling, general and administrative expenses               |         10,386 |            23,505 | 
+------------------------------------------------------------------+----------------+-------------------+ 
 
 
The significant decrease in selling, general and administrative expenses during 
six months period ended 30 June 2009 was a result of the disposal of the Group's 
subsidiaries located in Komi region in April 2008 and ZAO Chepetskoye NGDU in 
February 2009. Also, in 2009, the Group substantially decreased personnel in the 
management Company, Urals Energy LLC. Therefore, within wages and salaries 
during the first six months of 2009 were included severances to personnel in the 
amount of $1,047 thousand. 
  Note 16:    Balances and Transactions with Related Parties 
 
For the purposes of this interim condensed consolidated financial information, 
parties are considered to be related if one party has the ability to control the 
other party, is under common control, or can exercise significant influence over 
the other party in making financial or operational decisions as defined by IAS 
24, Related Party Disclosures, which also treats key management personnel as 
related parties. In considering each possible related party relationship, 
attention is directed to the substance of the relationship, not merely the legal 
form. 
 
 
Balances and transactions with related parties. 
 
 
+-----------------------------------------------------------+----------------------+---------------------+ 
|                                                           | Six months ended 30                        | 
|                                                           | June:                                      | 
+                                                           +--------------------------------------------+ 
|                                                           |                                                      2009 |                 2008 | 
+-----------------------------------------------------------+-----------------------------------------------------------+----------------------+ 
| Interest income from Taas, net                            |                1,672 |               1,294 | 
+-----------------------------------------------------------+----------------------+---------------------+ 
| Interest income from other related parties, net           |                  341 |                 348 | 
+-----------------------------------------------------------+----------------------+---------------------+ 
| Other expenses                                            |                  (6) |                (35) | 
+-----------------------------------------------------------+----------------------+---------------------+ 
|                                                           |                      |                     | 
+-----------------------------------------------------------+----------------------+---------------------+ 
|                                                           |                                            | 
+-----------------------------------------------------------+--------------------------------------------+ 
|                                                           |         30 June 2009 |    31 December 2008 | 
+-----------------------------------------------------------+----------------------+---------------------+ 
|                                                           |                      |                     | 
+-----------------------------------------------------------+----------------------+---------------------+ 
| Accounts and notes receivable                             |                   65 |                  73 | 
+-----------------------------------------------------------+----------------------+---------------------+ 
| Loans receivable                                          |                5,222 |               5,250 | 
+-----------------------------------------------------------+----------------------+---------------------+ 
| Interest receivable                                       |                  941 |                 875 | 
+-----------------------------------------------------------+----------------------+---------------------+ 
| Impairment provision on receivable from related parties   |              (1,243) |             (1,243) | 
+-----------------------------------------------------------+----------------------+---------------------+ 
| Receivables from related parties                          |                4,985 |               4,955 | 
+-----------------------------------------------------------+----------------------+---------------------+ 
|                                                           |                      |                     | 
+-----------------------------------------------------------+----------------------+---------------------+ 
| Loans issued to Taas                                      |               28,099 |              28,099 | 
+-----------------------------------------------------------+----------------------+---------------------+ 
| Interest receivable from Taas                             |                4,639 |               2,967 | 
+-----------------------------------------------------------+----------------------+---------------------+ 
| Advances from and payable to related parties              |                 (13) |                (13) | 
+-----------------------------------------------------------+----------------------+---------------------+ 
| Loans payable                                             |                 (61) |                (61) | 
+-----------------------------------------------------------+----------------------+---------------------+ 
|                                                           |                      |                     | 
+-----------------------------------------------------------+----------------------+---------------------+ 
 
 
Compensation to senior management.  The Group's senior management team 
compensation totalled $4,506 thousand and $7,833 thousand for the six months 
periods ended 30 June 2009 and 30 June 2008, respectively, including salary and 
bonuses of $2,683 thousand and $3,536 thousand respectively, and stock 
compensation of $1,823 thousand and $4,297 thousand, respectively, and no other 
compensation was paid for both periods.  There were no bonuses announced or paid 
to senior management in 2009. 
 
 
Within loans receivable the largest part relates to a short-term loan provided 
to one of the senior managers of the company in the amount of $4.2 million, 
including accrued interest. The loan bears 15% interest and matures on 30 
September 2008. The loan is secured with real estate properties located in 
Moscow. The loan receivable was past-due and impaired at 31 December 2008 by 
$1.2 million as a result of valuation of the pledge which decreased following 
lack of liquidity in the real estate market in Moscow. As a partial payback 
scheme, the Company has taken over all payments to the manager and has reached 
an understanding for further consideration. 
 
 
  Note 17:Contingencies, Commitments and Operating Risks 
 
 
Operating environment. The Russian Federation continues to display some 
characteristics of an emerging market economy. These characteristics include, 
but are not limited to, the existence of a currency that is not yet fully 
convertible in most countries outside of the Russian Federation, and relatively 
high inflation. The tax and customs legislation within the Russian Federation is 
subject to varying interpretations and changes that can occur frequently. 
 
 
The future economic direction of the Russian Federation is largely dependent 
upon the effectiveness of economic, financial and monetary measures undertaken 
by the Government, together with tax, legal, regulatory, and political 
developments. 
 
 
Oilfield licenses.The Group is subject to periodic reviews of its activities by 
governmental authorities with respect to the requirements of its oil field 
licenses. Management of the Group correspond with governmental authorities to 
agree on remedial actions, if necessary, to resolve any findings resulting from 
these reviews. Failure to comply with the terms of a license could result in 
fines, penalties or license limitations, suspension or revocations. Management 
believes any issues of non-compliance will be resolved through negotiations or 
corrective actions without any materially adverse effect on the financial 
position or the operating results of the Group. 
 
 
Management believes that proved reserves should include quantities, which are 
expected to be produced after the expiry dates of the Group's production 
licenses. These licenses expire between 2008 and 2067, with the most significant 
licenses expiring between 2012 and 2067. 
 
 
The principal licenses of the Group and their expiry dates are: 
 
 
+--------------------------+--------------------------+-------------------------+ 
| Field                    | License holder           |     License expiry date | 
+--------------------------+--------------------------+-------------------------+ 
|                          |                          |                         | 
+--------------------------+--------------------------+-------------------------+ 
| Okruzhnoye               | Petrosakh                |                    2012 | 
+--------------------------+--------------------------+-------------------------+ 
| Peschanozerskoye         | Arcticneft               |                    2067 | 
+--------------------------+--------------------------+-------------------------+ 
| Dulisminskoye            | Dulisma                  |                    2019 | 
+--------------------------+--------------------------+-------------------------+ 
| Srednebotuobinskoye      | Taas-Yuryakh             |                    2016 | 
|                          | Neftegazdobycha          |                         | 
+--------------------------+--------------------------+-------------------------+ 
| Kurungsky                | Taas-Yuryakh             |                    2032 | 
|                          | Neftegazdobycha          |                         | 
+--------------------------+--------------------------+-------------------------+ 
|                          |                          |                         | 
+--------------------------+--------------------------+-------------------------+ 
 
 
Management believes the licenses may be extended at the initiative of the 
Company and management intends to extend such licenses for properties expected 
to produce subsequent to their license expiry dates. 
 
 
Subsequent to 30 June 2009, the Group forfeited the licences for Dulisminskoye 
field and Srednebotuobinskoye and Kurungsky fields due to its shares in Dulisma 
and Taas being transferred to Sberbank (Note 18). 
 
Taxation. Russian tax, 
currency and customs legislation is subject to varying interpretations, and 
changes, which can occur frequently. Management's interpretation of such 
legislation as applied to the transactions and activity of the Group may be 
challenged by the relevant regional and federal authorities. Recent events 
within the Russian Federation suggest that the tax authorities may be taking a 
more assertive position in their interpretation of the legislation and 
assessments, and it is possible that transactions and activities that have not 
been challenged in the past may be challenged. As a result, significant 
additional taxes, penalties and interest may be assessed. Fiscal periods remain 
open to review by the authorities in respect of taxes for three calendar years 
preceding the year of review. Under certain circumstances reviews may cover 
longer periods. 
 
 
Management believes that its interpretation of the relevant legislation is 
appropriate and the Group's tax, currency and customs positions will be 
sustained. Where management believes it is probable that a position cannot be 
sustained, an appropriate amount has been accrued for in this interim condensed 
consolidated financial information. 
 
Insurance policies.The Group insured all of its major assets, including oil in 
stock, plant and equipment, transport and machinery with a total limit of $1.9 
million. Also, a liability insurance policy covering property, plant and 
equipment, hazardous objects, including environmental liability, was put in 
place with a total limit of $1.7 million and directors and officers liability 
with total limit up to $100.0 million. Staff and personal insurance includes 
casualty, medical and travel insurance for losses of up to $2.4 million. The 
associated expenses are included within selling, general and administrative 
expenses in the consolidated income statement. 
 
 
Restoration, rehabilitation and environmental costs.The Group companies have 
operated in the upstream and refining oil industry in the Russian Federation for 
many years and its activities have had an impact on the environment. The 
enforcement of environmental regulations in the Russian Federation is evolving 
and the enforcement posture of government authorities is continually being 
reconsidered. The Group periodically evaluates its obligation related thereto. 
The outcome of environmental liabilities under proposed or future legislation, 
or as a result of stricter enforcement of existing legislation, cannot 
reasonably be estimated at present, but could be material. Under the current 
levels of enforcement of existing legislation, management believes there are no 
significant liabilities in addition to amounts which are already accrued and 
which would have a material adverse effect on the financial position of the 
Group. 
 
 
Legal proceedings.The Group is involved in a number of court proceedings (both 
as a plaintiff and a defendant) arising in the ordinary course of business. In 
the opinion of management, there are no current legal proceedings or other 
claims outstanding, which could have a material effect on the result of 
operations or financial position of the Group and which have not been accrued or 
disclosed in this interim condensed consolidated financial information. 
 
 
Impact of the ongoing global financial and economic crisis. The ongoing global 
financial and economic crisis that emerged out of the severe reduction in global 
liquidity which commenced in the middle of 2007 (often referred to as the 
"Credit Crunch") has resulted in, among other things, a lower level of capital 
market funding, lower liquidity levels across the banking sector and wider 
economy, and, at times, higher interbank lending rates and very high volatility 
in stock and currency markets. The uncertainties in the global financial markets 
have also led to failures of banks and other corporations, and to bank rescues 
in the United States of America, Western Europe, Russia and elsewhere. The full 
extent of the impact of the ongoing financial crisis is proving to be difficult 
to anticipate or completely guard against. 
 
 
The availability of external funding in financial markets has significantly 
reduced since August 2007. Such circumstances may affect the ability of the 
Group to obtain new borrowings and re-finance its existing borrowings at terms 
and conditions similar to those applied to earlier transactions. 
 
 
Management is unable to reliably determine the effects on the Group's future 
financial position of any further deterioration in the liquidity of the 
financial markets and the increased volatility in the currency and equity 
markets. Management believes it is taking all the necessary measures to support 
the sustainability and development of the Group's business in the current 
circumstances. 
 
 
Other capital commitments.  At 30 June 2009, the Company had no significant 
contractual commitments for capital expenditures. 
 
 
  Note 18:  Subsequent events 
 
 
Repayment of Sberbank loans.  Subsequent to 30 June 2009 the Company sold it's 
100% interest in Dulisma (August 2009) and 35.3% interest in Taas (November 
2009) for the full discharge of the Company's debt to Sberbank Capital plus 
assumption of all trade accounts payable accrued by Dulisma and Taas at the date 
of the transaction. Additionally, subsequent to the two sales the Company was 
released from any obligations under Taas Shareholders' agreement and terminated 
the Put Option agreement with Ashmore for nil consideration.  Registration and 
actual release of the pledges associated with termination of Put option 
agreement were ongoing at the date of these financial statements. This matter is 
discussed in greater detail in Note 4. 
 
 
Suspension of Company's shares trading.  On 30 June 2009 the Company's shares 
were suspended from trading on LSE AIM due to non-compliance with Rule 19 of the 
AIM rules for not publishing 2008 year-end accounts. Management considered in 
June 2009 that due to uncertainties over the direction of negotiations with 
Sberbank Capital it was not in a position to complete its 2008 annual financial 
statements. Also in August 2009 Morgan Stanley retired from Nominated Adviser 
("NOMAD") and Company's Broker positions. As a result of the above the Company's 
shares were suspended from trading. 
 
 
In October 2009 the Company appointed a new NOMAD, Allenby Capital. Following 
the appointment of the NOMAD and following the completion of the transactions 
with Sberbank Capital and others, and release of this interim 2009 accounts and 
report management believes that the Company is now compliant with AIM rules. As 
a result of this management expects there will be a resumption of trading of the 
Company's shares on LSE AIM. 
 
 
Changes to management.  In October 2009, Vyacheslav Ivanov resigned from the 
positions of CEO and Chairman of the Board of Directors and Mr. Leonid Dyachenko 
was appointed as a Chairman of the Board of Directors and as interim Chief 
Executive Officer. In November 2009, Mr. Alexei Maximov was appointed as a Chief 
Executive Officer of the Company and as a director in the Board of Directors. 
 
 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
 IR KDLBFKLBLFBE