Saga Completes Well 102 on East Shaltinsky Field

Saga Oil says that drilling of well no 102, which is the first well drilled under Saga supervision on the East Shaltinsky oil field, has reached 1880 meters. Total depth to be drilled is 2050 meters.

Based on the results from the drilling, there is now available new information for the Tournaisian pay zone located at 1242.5 meters depth:

* Increased acreage of the oil saturated pay zone from 24 km2 to 54 km2 area
* Oil resources increase minimum 20%
* Oil saturation factor increases up to a content of 56 % of oil saturation

The coring and testing of the pay zones below the Tournaisian is ongoing and the preliminary results are expected to be available in about 2 weeks time.

The new coring of the Tournaisian has given a more accurate redefinition of the level for water-oil contact from 1247.5 meters down to 1253 meters depth which increases the acreage of oil saturated pay zone from 24 km2 to approximately 54 km2. The Tournaisian oil saturated pay zone is thereby extended and reaches into Saga's second oil field, the Petrovsky oil field on the south end of the licensed area. Reserves of the Tournaisian pay zone are expected to increase accordingly with a minimum of 20%, the more exact increase of the resources will be determined after the interpretation of the 3D seismic.

The oil saturation factor for the Tournaisian is now approximately 56% which is 6% higher then previously reported.

Saga expects to finalize drilling and production testing of well no 102 by mid-September.

Saga is currently mobilizing a second drilling rig on East Shaltinsky for drilling on pad no.2. The rig is expected to spud well no. 106 by mid-September and is contracted from one of the Gasprom Drilling divisions.

The development of infrastructure for the oil field is on going and the high voltage line is now completed and in operation, construction of the new11 meter wide access road is about 25% completed.

The 3D data collection has been almost completed and we expect first interpretation of data by early October.

Malvin Hoydal, CEO of Saga Oil comments: "We are very pleased to receive test data that exceed our expectations for the East Shaltinsky oil field and specifically increasing of the Tournaisian zone which is the largest.

The new results increase the thickness of the Tournaisian pay Zone by 3,4 meter from 9,4 meter to 12.8 meter which will result in increased productivity and simplifies the well completion.

The test well drilled by the previous owners was unsuccessful in regards of getting accurate data, this was however largely due to lack of proper drilling procedures and control. The current new data from our new well confirm our view that value creation is easily achievable by implementing proper procedures and control throughout the field operation".