Urals Energy Completes Private Placement

Urals Energy has successfully completed a previously announced private placement of a total of 28,262,706 new shares at a price of 360 pence per share (the "Placing Shares"), raising $190 million.

The proceeds of the placement will be used to fund the balance of the consideration for the pending acquisition of OOO Dulisma and OOO Lenskaya Transportnaya Kompanaiya ("Dulisma"), which is due to complete in June 2006; to discharge the Company's obligations to Morgan Stanley & Co. International Limited, associated with the financing of the initial $50 million payment for Dulisma; and for funding the Company's capital expenditure program and other working capital needs.

The Placing Shares will be issued credited as full paid and will rank pari passu in all respects with the Company's existing shares, including the right to receive all dividends and other distributions declared, made or paid after the date of issue.

The placement of shares is conditional upon, inter alia, admission of the Placing Shares to trading on the Alternative Investment Market of the London Stock Exchange ("Admission") and upon an increase of the Company's authorized share capital to CY£ 625,000 and authorization to disapply pre-emption rights in relation to 57,000,000 shares at the Annual General Meeting of the Company to be held on 1 June 2006. It is expected that Admission will become effective and that dealings in the Placing Shares will commence on 2 June 2006.

William R. Thomas, Chief Executive Officer, commented:

"Our ability to achieve an oversubscribed placement in very difficult market conditions is a clear recognition by the market of the Group's superior performance since our IPO and the transformational nature of the Dulisma acquisition. The continuing support of our core institutional shareholders and the addition of new investors in the placement confirms our strategy of growth through acquisition and the drillbit. The proceeds of the fundraising will allow us to exploit fully the significant potential of the Dulisma field, which will be a key driver of growth for the group going forward."

Morgan Stanley acted as lead manager in connection with the private placement.