UEN Urals EN.

 

TIDMUEN 
 
RNS Number : 3653K 
Urals Energy Public Company Limited 
19 April 2010 
 

19 April 2010 
                      Urals Energy Public Company Limited 
                        ("Urals Energy" or the "Company") 
 
                                Operations Update 
 
 
 Urals Energy is today providing an operational update on activities at 
its Petrosakh licence. 
 
 As announced on 12April 2010, Urals Energy has 
successfully reperforated well #34 and has now completed installation of a 
higher diameter rod pump. As a result, production from the well has increased to 
141 bopd (previously 87 bopd) after the first day of production with further 
potential to increase following a decrease of water cut.   The Company's overall 
production at Petrosakh is now stabilising at 1,577 bopd. 
 
 The Company 
intends to carry out the same completion on well #47, where the rod pump is 
expected to be delivered at the end of May 2010. Since completing the workover 
on well #47 production has continued to increase with constantly decreasing 
water cut. 
 
 Ural Energy is also please to announce that the high octane 
gasoline on Petrosakh, which the Company has recently produced, was certified by 
the Russian State regulatory bodies and is of a higher quality than State Norms 
for some parameters.  This is due to the high quality of Petrosakh oil, which 
does not require deeper refining to produce such product. 
 
 Consequently, from May 2010 the Company intends to start production of 
Gasoline 92 and marketing it on the local market. Net back for Gasoline 92 
(equivalent to Euro 3 gasoline) is currently higher than previously produced 
Gasoline 80 by $20.94/tn and compared to straight run gasoline is currently 
higher by $90.75/tn.  The directors believe that this increase on a net-back 
will positively impact the value of the Petrosakh asset. 
 
 In addition to 
an improved net back, production of high octane gasoline will permit 
uninterrupted year round gasoline sales by the Company, thus removing seasonal 
variations and demand volatility. To date, the demand for this gasoline is 
exceeding supply, with Rosneft currently being the only supplier of this type of 
fuel to Sakhalin. 
 
 Petrosakh has already received orders from customers 
for Gasoline 92 for deliveries in May 2010. 
 
Restructuring 
 
Following the announcement, on 12 April 2010, that the Company had, conditional 
upon shareholder approval, entered into a restructuring arrangement (the 
"Restructuring") with Petraco Oil Company Limited ("Petraco"), the Company 
confirms that the date of the expiration of warrants the Company proposes to 
grant to Petraco pursuant to the Restructuring will be 31 December 2013. 
 
Shareholders in the Company should also be aware that any shares issued to 
Petraco pursuant to the conversion of $2.0 million of current indebtedness owed 
by the Company to Petraco will be subject to lock up arrangements untill 31 
December 2010. 
 
 
Alexei Maximov, Chief Executive commented: 
 
"Since the suspension of trading 
in our shares on AIM was lifted in December 2009, we have made significant 
progress in re-establishing Urals' operations and alleviating any remaining 
funding concerns. 
 
 "Our recent operational successes are encouraging and 
the higher quality fuel that we intend to produce from Petrosakh should increase 
our revenues.  The successful transition of the refinery to producing Gasoline 
92  puts a start to a comprehensive re-haul program presently being developed by 
the Company with the aim of increasing its refined product offering on Sakhalin 
island in parallel with a focused marketing effort." 
 
"We look forward to further investigate hidden opportunities in the existing 
assets and continue building and maximising value to our shareholders." 
 
 
 
 
Enquiries: 
 
+---------------------------------+---------------------------------+ 
| Allenby Capital Limited         | +44 (0)20 3328 5656             | 
+---------------------------------+---------------------------------+ 
| Nick Naylor                     |                                 | 
+---------------------------------+---------------------------------+ 
| Alex Price                      |                                 | 
+---------------------------------+---------------------------------+ 
|                                 |                                 | 
+---------------------------------+---------------------------------+ 
| Pelham Bell Pottinger           | +44 (0)20 7337 1500             | 
+---------------------------------+---------------------------------+ 
| Evgeniy Chuikov                 |                                 | 
+---------------------------------+---------------------------------+ 
| Mark Antelme                    |                                 | 
+---------------------------------+---------------------------------+ 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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