SAGA Oil Starts Production at East Shaltinsky

Saga Oil's subsidiary PROMGEOTEK LLC has initiated production on the East Shaltinsky oil field. On December 30, 2006, the first well was perforated and put on initial cleanup production. The second well is scheduled to be perforated and put on initial cleanup production within week two 2007.

Production rates for the wells are expected to be available within three months of test production following a cleanup period and gradual increase of production rates in order to monitor the production capacity of the reservoirs.

CEO of Saga Oil says in a comment: "The start of production is a major milestone for SAGA Oil ASA which we are proud to announce only days after obtaining the production license. It brings Saga Oil further into the industrial development phase, and we will now proceed with the development of the Rodnikovsky license according to plan."