UEN Urals EN.

RNS Number:1218U
Urals Energy Public Company Limited
15 November 2005

FOR IMMEDIATE RELEASE:

15 November 2005

                      Urals Energy Public Company Limited

Completion of the US$70 million OOO Dinyu Acquisition, Provision of $100 million
             Revolving Loan Facility & Exploration Drilling Update


Urals Energy Public Company Limited ("Urals Energy" or the "Company") today
announces the successful completion of its acquisition of OOO Dinyu, the
provision of $100 million revolving loan facility and an exploration drilling
update.  Urals Energy is a leading independent exploration and production
company with operations in Russia.  Urals Energy shares were admitted to trading
on the London Alternative Investment Market in August 2005, when it placed
shares resulting in a total fund raising of $131.1 million.

Completion of US$70 million acquisition of OOO Dinyu

Further to the Company's announcement on 3 November of the proposed acquisition
of assets in the Komi Region of Russia, Urals Energy today announces that it has
closed the US$70m acquisition of OOO Dinyu. This follows completion of all due
diligence and approval from FAS (Russian Federal Antimonopoly Service). The
Company acquired ownership of OOO Dinyu and its assets from Lonsdacks
Investments Limited.

Following completion, the acquisition gives the Company immediate incremental
production of approximately 2,900 bopd, bringing total Company production to
c.8,700 bopd, an increase of 50%.

The acquisition was satisfied through a cash consideration of US$62 million
funded through a combination of existing cash resources and debt, following
completion of a new senior debt facility referred to below. As part of the
transaction, Urals Energy also assumed US$8 million in debt.

As well as incremental production, the acquisition gives Urals Energy extensive
exploration acreage covering 960 square kilometres in the Komi region and
complements the Company's existing asset base and operating experience in the
area. OOO Dinyu operates two licences, the Dinyu-Savinbor Field (100% ownership)
and the South Michau Field (65% ownership) with combined proved reserves of
approximately 12 million barrels and probable reserves of approximately 10
million barrels, for total 2P additions of at least 22 million barrels.  Urals
Energy is actively negotiating the terms to acquire the remaining 35% of South
Michau not owned by Dinyu.  Current production from the two licences is c.2,900
bopd. A recently acquired 3D seismic survey indicates five exploration prospects
that are analogous to the existing producing structure.

While the South Michau Field is still to be developed, Dinyu-Savinbor is
estimated to add 80% of the total 2P additions of 22 million barrels to the
group bringing total management-estimated Company 2P reserves to 111 million
barrels.  The Company will implement an aggressive appraisal and development
programme at Dinyu with the objective of increasing current Dinyu production
from 2,900 bopd to c.4,500 bopd by the end of 2006.  This would correspondingly
increase Urals Energy's total oil production to approximately 10,300 bopd by the
end of 2006.  Approximately 35% of the acquired assets' current production is
exported with the 65% balance being sold to the domestic market. The producing
fields are connected by a pipeline to Transneft.  Oil quality is light with a
gravity of 36o API.

This acquisition gives Urals Energy c.3,600 bopd of production in the Komi
region and the opportunity to reduce unit costs through economies of scale. The
Komi region represents a core business region for the Company which it will
further develop through a combination of organic growth and acquisitions.

Closing of US$100 million loan facility with BNP Paribas.

The Company also announces that it has closed a five year minimum US$100
million reserve-based revolving loan facility with the potential to increase to
US$150 million. The facility is provided by BNP Paribas with whom Urals Energy
has a long standing relationship. This facility provided a proportion of the
funding required to close the OOO Dinyu acquisition and gives Urals Energy the
financial flexibility to continue its strategy of growing organically and
through acquisition.

Exploration Update - Petrosakh

Urals Energy also announces the commencement of drilling the first exploration
well to test the Pogranichny license offshore Sakhalin Island.  The East
Okruzhnoye No. 1 well spudded on November 1 and is now drilling and has reached
a depth of  550 metres. This well is ahead of schedule and is expected to reach
the target formation, the Pileng horizon, by the end of the year.  The
Pogranichny license area is held by the Company's 97%-owned subsidiary, ZAO
Petrosakh ("Petrosakh").

If the well encounters an oil bearing zone, extensive testing will be conducted
to determine commerciality. Petrosakh is already producing 2,800 bopd from other
wells in the Okruzhnoye field with a 14 well development drilling programme
targeted at increasing production to c. 5,800 bopd.

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

Once the East Okruzhnoye No. 1 well is complete, the East Okruzhnoye No. 2 well
will be drilled and is expected to spud in January. Both these wells are being
drilled with a BU-1600, a Russian rig, which has been improved through the
addition of extra equipment enabling Petrosakh to complete the drilling of these
wells ahead of time and under budget.

On 1 November 2005, the Sakhalin Department of the Federal Services on Natural
Reserves completed an audit of Petrosakh's compliance with the terms of the
Pogranichny exploration license.  The audit confirms that Petrosakh is in full
compliance with the license terms.  Once the two exploration wells have been
drilled, Petrosakh will have fulfilled its work obligations under the terms of
the existing exploration license. The Company is therefore confident of
extending the term of the exploration licence and, in the event of a commercial
discovery, converting to a production licence.

Urals Energy had intended to commence drilling in the first quarter of 2006 on
the Vitnitskaya prospect from a well site approximately 40 kilometres south of
the Okruzhnoye field using the Deutag T-2000 rig. However, due to delays
resulting from damage recently incurred by the barge hired to transport the rig,
it will not be possible to move the rig from the mainland to Sakhalin Island and
complete drilling prior to the start of the Spring thaw and potentially
stranding the rig for a prolonged period and incurring significant additional
cost.

This delay, and consequent negotiations that are in progress regarding the
Deutag rig, may require the Company to adjust its 2005 consolidated income
statement for previously capitalised costs associated with the procurement and
mobilisation of the rig.  However, the Board is confident that it can secure a
cost effective solution that will result in the Vitnitskaya Prospect being
drilled within or under budget.  For example, the Company is evaluating the use
of a local Russian rig to drill the Vitnitskaya Prospect and would as a result
not expect to incur any material incremental cash costs as a result of these
developments.  The Board is also confident that any delay in drilling the
Vitnitskaya prospect will have no impact on either Petrosakh's license
obligations being fully met or the merit of Petrosakh's application to extend
the license term and, in the event of a discovery, conversion to a production
license.

A further update will be provided when appropriate.

William R. Thomas, Chief Executive Officer, commented:

"Urals Energy remains focused on fast, profitable growth through strategic
acquisitions, success with the drill bit and production.

The acquisition of OOO Dinyu is an example of this focus as it provides Urals
Energy with immediate production increases and real exploration potential while
also complementing our existing assets in the Komi region.

We are also pleased that our exploration programme is overall ahead of schedule,
despite the delaying of the T-2000 rig, and we are confident of further success
on the Pogranichny Block."



15 November 2005


Pelham PR

James Henderson                                                  020 7743 6673 /
                                                                 0777 4444 163

Gavin Davis                                                      020 7743 6677 /
                                                                 079 101 046 60


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
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