The Company has not received any official warning or notification with regard to violations or Ministry investigations. Furthermore, the Company is confident that no violations have occurred and these accusations will be shown to be false should any examination take place.
Urals Energy is committed to best practice in all of its production and development operations in Russia. The Group averaged production of around 10,000 boepd in 2006 across its operations and is committed to further investment in Russia. The Group is currently targeting production of 50,000 boepd by 2013. This year Urals Energy will invest approximately US$93 million on the development of its assets. Across its eight different subsidiaries Urals Energy's operations are routinely reviewed and inspected by the relevant Ministry agencies and in each case has received the necessary approvals. The Group operates all of its assets in accordance with Russian regulations and legislation.
Urals Energy published a reserves report by the independent reserves engineer DeGolyer & MacNaughton in April 2007, in accordance with SPE standards. This report updated all of the Group's reserves including its gas reserves at the Dulsiminskoye field. The Company notes that all of its reserves as well as the gas reserves attributed by DeGolyer & MacNaughton are less than the reserves certified by the GKZ, the Russian State Reserves Committee.
"These allegations are without foundation," said Leonid Dyachenko, Chief Executive of Urals Energy. "Urals Energy has an excellent track record of compliance within all of its operating subsidiaries. We have offered our full cooperation to the Ministry today to clear these misunderstandings and look forward to working with them. I am confident that this issue will be quickly resolved."
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