Operational Update

RNS Number:1121C
Urals Energy Public Company Limited
15 August 2007

                      Urals Energy Public Company Limited

                       ('Urals Energy' or the 'Company')

          Management Appointments and Operational and Financing Update

Urals Energy, a leading independent exploration and production company with
operations in Russia, today announces the appointment of three senior level
managers and provides an operational and financing update.

Highlights

New appointments

*          Appointment of Kerry Kendrick as Chief Operating Officer, Vladimir
Sidorovich as Chief Financial Officer and Viatcheslav Rovneiko as Senior Vice
President for Business Development to strengthen operational and management
teams.

Operations

*          Acquired second drilling rig for the Dulisma field - delivery
expected March 2008.

*          Technical conditions received to tie the Dulisma field into Transneft
ESPO pump station No.8.

*          Water and gas injection begun at Sakhalin to maintain reservoir
pressure.

*          Frac trucks and equipment en-route from Sakhalin to Komi Republic to
begin 25 well fracturing program.

Production

*          Production increased from 8,900 bopd in Q1 to current average of
9,300 bopd during July.

*          Production expected to resume at Dulisma by September following
repairs to temporary oil evacuation route.

*          Production at Sakhalin Island below target due to low reservoir
pressure - program to rectify initiated through gas and water injection.

*          Production now expected to surpass 12,000 bopd before the year end.

Financing

*          As of 3 August 2007 the Company has repaid in full the remainder of
the outstanding $45 million principal of the senior reserve based loan facility
and the $12 million mezzanine facility.

*          The Company has entered into a five-year, $50 million revolving
working capital facility.



Leonid Dyachenko, Chief Executive, commented:

"We have an intensive development programme underway aimed at increasing
production and we are committed to achieving our stated goals. Our long term
outlook remains strong and we are now focused on developing Dulisma to its full
potential.

The appointment of a COO is an important step in the development of Urals Energy
and, given Kerry's extensive experience in major oil projects, including in
Russia, he will be able to drive the development of the important Dulisminskoye
field and help Urals move closer to becoming a significant Russian producer. We
welcome him to the team.

Similarly, we welcome Vladimir Sidorovich as the CFO to the Group. His
experience in Russia and knowledge of international business practices further
strengthens our management team and will enable Urals Energy to operate in the
best possible way in Russia.   And, we thank Stephen Buscher for his valuable
contribution to the Company to date, and for his remaining with the Company for
the transition.

In turn, Mr. Rovneiko has played an instrumental role in the Company's success
to date and his appointment as Senior Vice President for Business Development
will continue to help the Company source new opportunities in Russia."

                                                                  15 August 2007

Enquiries:
Pelham PR
James Henderson                                                    020 7743 6673
Gavin Davis                                                        020 7743 6677
Evgeniy Chuikov                                                    020 3008 5506


Appointment of Chief Operating Officer

Mr Kerry Kendrick has been appointed Chief Operating Officer of the Company with
effect from 1 August 2007.  Mr Kendrick, 52, is a registered petroleum engineer
and an experienced manager of large international E&P projects. Most recently he
was the resident Director General of Vanyoganneft LLP, formerly a joint venture
between TNK/BP and Occidental Petroleum with production of over 45,000 bopd in
Nizhnevartovsk, Russia.  Mr Kendrick has also been in management positions as
both the General Manager and Operations Manager with Hunt Oil Company (Peru and
Yemen), and with Halliburton (Algeria and Venezuela), WellDynamics BV (a Shell
and Halliburton joint venture) and Occidental Oil and Gas. Mr Kendrick's
experience in senior positions at major international companies and in
overseeing substantial upstream projects will be instrumental in accelerating
the Company's development of the Dulisminskoye field as well as delivering
operational management expertise across all other exploration, production and
acquisition efforts.  Mr Kendrick is a member of the Society of Petroleum
Engineers and will be working from the Company's Moscow office.

Appointment of Chief Financial Officer

Mr. Vladimir Sidorovich has been appointed Chief Financial Officer of the
Company and has taken over from Mr. Stephen Buscher with effect from 10 August
2007.  Mr. Sidorovich has extensive experience in the commercial banking,
investment, power utilities and oil and gas sectors in Russia.  Most recently,
he was Director of Strategy at Tambeyneftegas, and was responsible for
programming and budgeting for upstream and downstream development of gas and
condensate fields on Yamal peninsula.  At the end of 2006 and in early 2007,
while at Yamal LNG, he coordinated the sale of South Tambey, one of the largest
natural gas fields in Russia.  From 1997 to 1999, Mr. Sidorovich was the CFO and
a member of the Management Board of the United Energy Systems of Russia (RAO
UES), where he was responsible for the Company's corporate finance, investments
and investors relations.  During the period 1992-1997 he held senior positions
with Batterymarch Financial Management and the European Bank for Reconstruction
and Development. Since 2000 Mr. Sidorovich has been a Board member of "Energia"
(a Russian corporation engaged in launching satellites and manned space
flights), and has also held senior management positions in a number of other
Russian industrial companies.  As the Company's CFO, Mr. Sidorovich will be
responsible for financial management, reporting and operations and will be
working from the Company's Moscow office.

Mr. Buscher will remain with the Company for a transition period to ensure a
smooth handover of responsibilities to Mr. Sidorovich and will also assist the
Company on other financial matters.

Appointment of Senior Vice President - Business Development

Mr. Viatcheslav Rovneiko has been appointed as Senior Vice President of the
Company responsible for Business Development with immediate effect.  Mr.
Rovneiko, 48, was formally Chairman of the company and is one of the co-founders
of Urals Energy. He has been a consultant to the Company since September 2006,
involved in the Company's business development and M&A activities, which will
remain his core focus.

Operational Update

Urals Energy also announces an update on the Dulisminskoye field, commencement
of the fracture stimulation programme on its producing Komi fields and an update
on its other operations.

East Siberia

At Dulisminskoye, the new mobile drilling unit delivered to the field in April
successfully underwent operational testing by drilling a water source (at 350m)
required for the drilling program. The surface hole for the first development
well was spudded June 26, drilled and cased with pipe to 303m. The drill rig was
skidded on the drilling pad and the surface hole for the second well was spudded
July 18.  Upon completion of electrical power to the site, the rig will begin
drilling the first horizontal well below the surface casing. In addition, the
Company has entered into an agreement to acquire a second Chinese-manufactured
rig for the Dulisma Field to accelerate its drilling programme. This is expected
to be delivered to the field in March 2008.

The Irkutsk Oil Company, which owns and operates a field nearby Dulisminskoye,
has completed repairs and has received all regulatory approvals to operate its
pipeline from Yaraktin to Ust-Kut.  This is the temporary oil evacuation route
from the field until it is tied into Transneft's East Siberia Pacific Ocean
Pipeline (ESPO). While these repairs were taking place the Company temporarily
halted production at Dulisminskoye, however it anticipates resuming
Dulisminskoye oil production by no later than the end of Q3 2007.

Regarding longer term oil evacuation plans, the Company has received the
technical conditions to tie into the ESPO pump station No. 8.  The Company
estimates the Dulisminskoye Field will be connected to the ESPO during the Q1
2009.  Surveying works are ongoing and a contract has been signed with
Giprong-Ekom to begin project works on this. Procurement for the Company's line
pipe will start in August for delivery in Q4 2007.

Sakhalin Island

At the Okruzhnoye Field (Petrosakh), onshore Sakhalin Island, despite an
increase of 372 bopd from the fracturing program, which commenced in late 2006,
a decrease in reservoir pressure in other parts of the field has resulted in an
overall decline of 1,140 bopd from the 2007 forecast.  To remedy the reservoir
pressure decline, the Company recently began a combined program of gas and water
injection in certain wells to provide additional pressure maintenance and reduce
the production decline rate.  In July, the Field produced an average of 2,522
bopd. The Field's new 10,000m(3) storage tank is undergoing final pressure
testing and will be operational by year-end; thus giving the Company increased
storage capacity at Petrosakh ready to support the anticipated production
increase from the new wells currently being drilled there.

Komi Republic

The Urals Energy fleet of frac trucks and equipment is en-route from Sakhalin
Island to Komi Republic where it will begin a 25-well fracture stimulation
program at Dinyu, CNPSEI, South Michayu and Nizhny Omrinskoye. The Company
estimates the fracturing program will result in an increase of over 1,000 bopd
above the current Komi oil production level (4,732 bopd average in July).

The Company has initiated a new reservoir pressure maintenance strategy at the
Dinyu-Savinoborskoye field, where three producing wells have been converted into
water injection wells.  As a result of these well conversions, the Company's
production from the Field has increased by an average of 900 bopd over the last
6 months.

Other operations

Three development wells have been drilled in the Potapovskoye field in Udmurtia.
The first two wells had a combined initial production rate of 133 bopd and the
third well is undergoing completion. Current production from the Field averaged
355 bopd during July.

In Timan Pechora, the Company commenced drilling of its first exploration well
at Urals Nord in the Nadezhdinsky block.  The target depth for the well is 3,750
meters, and to date 3,114 meters have been drilled.  DeGolyer & MacNaughton
ascribes up to 58.6 million barrels of un-risked potential resources to this
block.  On Kolguyev Island, the Company has begun side-tracking a well at
Arcticneft in order to test the lower Permian basin, for which it received the
right to explore and produce in Q1 2007.  In the 1980's, a Soviet test well was
drilled to this depth, and indicated the presence of flowing oil. With this
side-track, the Company hopes to attain an initial indication of the resource
base in this lower horizon.  Results of drilling at both Timan Pechora and
Articneft will be known in September.

Financing

As of 30 March 2007 the senior debt of the Company was composed of $45 million
of principal under the company's 5-year, amortizing senior reserve based loan
facility, and $12 million of principal under a 5-year, bullet mezzanine
facility.  As of 3 August 2007, the Company repaid both facilities in full.  The
sources were internal cash and proceeds from a five-year, revolving working
capital pre-payment facility from Petraco Oil Company Ltd., the Company's crude
oil export purchaser.  This facility, entered into on 30 July 2007, is priced at
a cost lower than the debt that was retired.  It is management's intent to
refinance the senior debt with shorter tenor, non-amortizing funding in due
course, and both Russian and non-Russian lending sources are being considered.

Outlook

The Company's gross oil production has increased from 8,900 bopd in Q1 2007 to a
current average of 9,300 bopd during July. However, given the unexpected
shortfall in production at Petroaskh and the production disruption at Dulisma,
the Company's new year-end production guidance has been adjusted. The management
is confident the Company will achieve a minimum of 12,000 bopd before the end of
December 2007.  Further, the Company now expects to achieve its previously
stated year-end goal of 15,000 bopd by mid-year 2008.  Production is expected to
increase significantly once the company's key asset, Dulisma, is connected to
the ESPO pipeline, allowing full-scale development drilling to be expedited with
the two mobile rigs. It is anticipated that the Dulisminskoye field will be
producing 5,000-7,000 bopd when initially connected to the ESPO in early 2009,
and a peak rate of 30,000 bopd is targeted by 2013.

While focusing on increasing production from existing assets, the Company
continues to assess complementary acquisition opportunities within the region.


                      This information is provided by RNS
            The company news service from the London Stock Exchange
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