Siberian Energy Acquires Kondaneftegaz

Siberian Energy Group, Inc., a US.-based oil and gas exploration company, has entered into an Interest Purchase Agreement with Key Brokerage, Inc., a Delaware corporation, the sole owner of Kondaneftegaz, LLC, a Russian limited liability company. Pursuant to the agreement, Siberian Energy is purchasing 100% of Kondaneftegaz's stock. As a result, Kondaneftegaz will become a wholly owned subsidiary of Siberian Energy.

Kondaneftegaz, located in the heart of the major Russian oil-producing region in Western Siberia, Khanty-Mansiysk, has applied for an exploration and production license on the Krasnoleninski parcel in the Khanty-Mansiysk district, as well as exploration and production licenses on nine other parcels in Western Siberia.

The Purchase Agreement consummated the transactions contemplated by the Option Agreement that Siberian Energy entered into with Key Brokerage in September 2006. Under the terms of the agreement, Siberian Energy granted Key Brokerage 250,000 warrants to purchase shares of its common stock at an exercise price of $2.20 per share, exercisable for up to two years from the date of the Option Agreement in September 2006. Siberian Energy has also agreed to issue Key Brokerage an aggregate of 1,900,000 restricted shares of its common stock.

The closing date of the Purchase Agreement is anticipated to occur on or around December 31, 2006.

Siberian Energy is one of the few US-based public oil and gas exploration companies with 100% of its assets located in West Siberia, Russia. The Company evaluates investment and acquisition opportunities in Russia and Eastern Europe with the goal of bringing a portfolio of natural resource licenses and operating companies to Western investors.

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