Chaparral Announces Preliminary 2005 Results

Chaparral Resources, a White Plains, New York-based independent operating in Kazakhstan, has released its unaudited preliminary operating results for the year ended December 31, 2005. The highlights are as follows:


      -  92-percent increase in total revenue - $150.6 million for the year ended
         December 31, 2005 (2004: $78.5 million)
      -  262-percent increase in net income - $30.8 million ($0.77 per share on a
         fully diluted basis) for the year ended December 31, 2005, compared
         to $8.5 million ($0.22 per share) for year ended December 31, 2004.

      -  Record annual production - An increase of 25 percent to 3,534,000 barrels,
         net of royalties, from 2,835,000 barrels net in 2004.
      -  12-percent increase in proved reserves to 45.3 million barrels of oil, net
         of royalties (as at December 31, 2005)
      -  Total well stock at December 31, 2005 rises to 80, including
         61 producers and nine water injection wells.

"During 2005 Chaparral has increased production to over 12,000 barrels per day from the Karakuduk field by the year end and plans to continue to invest in the Karakuduk field throughout 2006," said Chaparral CEO Boris Zilbermints. "As previously reported, however, the suspension of drilling activities, resulting from the decision by Oil and Gas Drilling and Exploration of Krakow (OGEC) to terminate its drilling contract has led to a delay in the company's proposed capital investment program in 2006. This will have an adverse effect on the production levels previously anticipated during the forthcoming year".

The Company has benefited from a 20% increase in sales volumes and the general rise in oil prices over 2005. This has led to a 92% increase in net revenues to $151 million in 2005 from $78 million in 2004 and a 186% increase in income from operations to $80 million for the year ended December 31, 2005 from $28 million in 2004. Cumulative returns on the Karakuduk field have now reached a level that requires ZAO Karakudukmunay to pay Excess Profits Taxes. As a result the Company has made a provision of $3.2 million in the quarter ended December 31, 2005. The Company is unable to quantify the expected effect on the results for 2006 due to the significant impact that small fluctuations in the oil price will have on the calculation of Excess Profits Tax.

The Company drilled 15 wells during 2005 and at December 31, 2005 the total well fund stood at 80 wells. During 2006 the Company intends to drill a further 12 wells. Following the demobilization of the drilling rig by OGEC, a new tender was conducted and there were eight companies that submitted their proposals. The Company anticipates that a new drilling contractor will be selected in time for the drilling program at the Karakuduk field to recommence in the third quarter of 2006.

The Company is also constructing a rail rack to transport Karakuduk crude oil to the Kazakhstan port of Aktau. This will increase our average revenue per barrel by ensuring that the high quality crude oil from Karakuduk is not mixed with lower quality, high sulfur oil in the KTO pipeline system the Company currently uses. The total capital cost of this project is over $13 million.

Chaparral Resources, Inc. is an independent oil and gas exploration and development company. It has a total net 60% interest in ZAO Karakudukmunay ("KKM") that holds a governmental license to develop the Karakuduk field in western Kazakhstan.