UEN Urals EN.

RNS Number:9759S
Urals Energy Public Company Limited
21 October 2005


21 October 2005


                      Urals Energy Public Company Limited
                Sakhalin Island Drilling and Exploration Update

Urals Energy Public Company Limited ("Urals Energy") today announces an
operational update and the successful completion of its second development well
at its Petrosakh subsidiary.  Urals Energy is a leading independent exploration
and production company with operations in Russia.  Urals Energy listed its
shares on the London Alternative Investment Market in August 2005, and placed
shares resulting in a total fund raising $131.1 million.

Development Drilling

The Group's Russian subsidiary Petrosakh is currently producing 2,800 bopd from
16 wells in the Okruzhnoye Field at Sakhalin Island.  A 14 well development
drilling programme targeted at increasing production to c. 5,800 bopd is
underway. The results of drilling the first two wells of this program, as
further described below, provide confidence this target will be achieved.

The first well, Well 43, was recently drilled and is flowing at a sustained rate
of 360 bopd.  The second well, Well 44, has now been completed and is producing
at a stabilised rate of approximately 660 bopd on a 13mm choke with 4% water
cut.  Well 44 was drilled to a total depth of 1,856 metres where it encountered
the Pileng formation at 1,546 metres. The Pileng formation was perforated at
various intervals from 1,741 to 1,583 metres.

DeGolyer and MacNaughton, Urals Energy's independent engineering consultants,
has projected a rate of 350 bopd per each new development well for the field.
Well 43's production rate is in line with this estimate while the results of
Well 44 significantly exceeds DeGolyer and MacNaughton's projection.

Drilling of a further 12 development wells on this field is scheduled to
commence in the second quarter of 2006.

Exploration Programme

Petrosakh is also currently mobilising drilling equipment for the exploration of
the Pogranichny Block offshore Sakhalin Island with the intention of using two
drilling rigs, the Deutag T-2000 rig and a local Russian rig.

The Russian rig, a BU-1600, will drill two wells to test the East Okruzhnoye
prospect located approximately 1.5 kilometers offshore.  The BU-1600 rig is now
on location and 80% rigged-up.  The drilling of Urals Energy's first offshore
exploration well to test the Pogranichny Block, East Okruzhnoye No. 1, is now
scheduled to begin by early November, a month earlier than originally planned.

DeGolyer and MacNaughton estimates this prospect to contain unrisked potential
resources of approximately 50 million barrels.

The Group is also targeting the Vitnitskaya and the Severo Rymnikskaya prospects
offshore Sakhalin Island estimated by DeGolyer and MacNaughton to have combined
unrisked potential resources of approximately 247 million barrels.

William R. Thomas, Chief Executive Officer, commented:

"These development drilling results are significantly ahead of expectations and
should boost production by about 1,000 bopd allowing us to benefit from
attractive commodity prices. With a further 12 development wells scheduled for
next year the potential of Petrosakh is very encouraging.

Our exploration programme is on track with our first exploration well due to
spud within the next two weeks, targeting a high potential prospect offshore
Sakhalin Island.

Our strategy of exploiting our asset base to build the Group organically is
already generating returns. We continue to assess a number of potential
acquisition opportunities to capitalise on the rationalisation in Russia and the
CIS."



 21 October 2005


Pelham PR
James Henderson                                                   020 7743 6673
Gavin Davis                                                       020 7743 6677




About the company:

Urals Energy is an independent exploration and production (E&P) company with its
principal assets and operations in Sakhalin Island, Timan Pechora (including
areas in the Nenets Autonomous Okrug and Komi Republic) and the Republic of
Udmurtia, Russia. The company listed on AIM in August 2005.

The Company is focused on the integration of its five recently acquired
subsidiaries and the exploitation of their assets. In addition, it is actively
seeking to continue to grow and diversify its reserve and production portfolio
through exploration activities and the acquisition of additional E&P companies
or assets by taking advantage of the ongoing rationalisation of E&P assets in
Russia.

The Company's five E&P subsidiaries have Proved and Probable reserves of 89.7
million barrels of oil equivalent (MMBOE) and produced approximately 5,600
barrels of oil per day (BOPD) during the first six months of 2005.

The Company's two largest subsidiaries by reserves and production, Petrosakh and
Arcticneft, own and operate refining assets with a total refining capacity of
5,300 BOPD, which provide the Company with the ability to maximise the value of
the oil produced by choosing between the sale of oil or of refined products
depending on market conditions, tax considerations and other factors.




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

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