Urals Disappointed by Petrosakh Results

Urals announced the results of development Well #51 at Petrosakh, on the eastern coast of Sakhalin Island in Russia.

During the first half of 2011 development Well #51 was spudded. Target depth of 1,650 meters was reached in July 2011. However, as a result of difficult geological conditions, while preparing to run a production string, drilling equipment jammed the well, which prevented completion.

A decision was subsequently made to test the upper horizon and a moderate flow rate of 37 BOPD was recorded, confirming productivity of the well. Consequently, a parallel well was drilled from a depth of 1,370 meters. However, at a depth of 1,460 meters the decision was made to plug and temporarily abandon Well # 51 due to the difficult drilling conditions.

A further drilling update will be contained in the Company's interims which the Board envisages will be released in the next few days.

Commenting on the announcement, Alexei Maximov, CEO, said, "This is clearly a disappointing result but we took the well as far as was prudent and believe that our decision to temporarily abandon it at this stage is the correct one. Production at the other wells in Petrosakh and Arcticneft continue to deliver in line with expectations. We look forward to updating the market more fully at our half year results in the near future."