PetroNeft Discovers New Oil Field in License 61

PetroNeft, the owner and operator of Licenses 61 and 67, Tomsk Oblast, Russian Federation, announced the discovery of a new oil field at Arbuzovskaya in License 61.

Highlights:

• Arbuzovskaya No. 1 well discovers oil in main Upper Jurassic target
• Approximately five meters of net oil pay in J1 interval
• Open hole inflow test of 289 bopd (unstimulated)
• Drilling continuing with secondary targets of Middle and Lower Jurassic

Arbuzovskaya No. 1 well

The Arbuzovskaya No. 1 well at the Arbuzovskaya (formerly Varyakhskaya) prospect located 10 kilometers east of the Lineynoye oil field in License 61 was spudded on October 10, 2010. The Upper Jurassic J1, oil reservoir horizon was intersected at 2,566 meters measured depth. Logs indicate that the J1 interval consists of 19.0 meters of sandstone and shale. Approximately 5.0 meters of the upper most part of this interval is considered to be continuous net pay with good reservoir properties and oil saturation throughout. An open hole test was conducted over this interval and tested at a pro-rated inflow of 289 bopd unstimulated. The oil is high quality with an API gravity of 40 degrees which is consistent with other fields in the License area.

The well will now be drilled to basement, at approximately 2,900 meters, targeting higher risk secondary objectives in the Middle and Lower Jurassic intervals. The well should be completed by the end of November at which stage the Company will update shareholders with the final results of the well as part of the operations update due around that time. This discovery well adds a fifth oil field to the northern group of fields and will be included in Phase 2 of the development.

Arbuzovskaya is the first well of a five well exploration program designed to potentially double the Company's 2P reserve base within the next 12 months.

Dennis Francis, Chief Executive Officer of PetroNeft commented, "We are delighted to commence our new exploration campaign with the discovery of a fifth oil field at License 61. This is an especially important discovery, because of the good flow rate it confirms the wider prospectivity of a number of additional structures east of the existing producing Lineynoye oil field which can be easily tied in to the central processing facilities and pipeline at Lineynoye."