PetroNeft Makes Oil Discovery at Lineynoye No. 7

PetroNeft Resources, 100% owner of Stimul-T, which is the sole owner and operator of License 61, Tomsk Oblast, Russian Federation, reports an oil discovery with its Lineynoye No. 7 exploration well on the West Lineynoye Prospect, based on the results of core data and initial log interpretation. This is the third well drilled in what has been a successful drilling campaign this year in License 61.

Two meters of net oil pay was confirmed in a sandstone reservoir in the Upper Jurassic J1 interval from -2,395.5 to -2,397.5 metres subsea . This confirms the oil test in the same interval in the Lineynoye No. 5 well drilled in the 1974.

The data indicates a 22-meter gross oil column in the J1 interval at this location and indicates that the structure is filled with oil to the spill point.

The J1 interval will now be flow tested and the results will be reported as soon as they are available.

Lineynoye No. 7 is the last well to be drilled in this year’s drilling program. All three wells have encountered hydrocarbons and confirmed the Company’s structural interpretation of the License area.

The Lineynoye No. 6 appraisal well has 11.2 meters of net oil pay and has been successfully tested at a stabilized flow of 100 bopd on a 1/8th inch choke. This well will be put on pilot production/long term flow test this winter with the oil being sold to a local Tomsk refinery. The well also lowered the oil water contact (owc) for the Lineynoye Field at least 10 meters, which is likely to lead to a modest reserve upgrade for the field.

The Tungolskoye No. 4 appraisal well has 15 meters of net oil pay based on the core data and independent log interpretations. This represents the best reservoir interval encountered of the 17 wells drilled in the block to date. However, the Company has not to date achieved a representative flow test of this interval due to mechanical problems. The well will now be sidetracked to re-access and fully test the relevant reservoir interval. This process should take about 60 days including mobilization of necessary equipment and materials. Based on the wire line log and core data from this well, and the historic data from the Tungolskoye No. 1 well, which tested 332 bopd from the same interval in 1973, we are confident of a positive result.

2007/08 Exploration and Appraisal Programs

The results of this year’s drilling program, along with the seismic programs undertaken over the last two years have already been taken into account in planning next year’s three well drilling program. This three well program, which is expected to commence in February/March 2008, will seek to further delineate the newly discovered West Lineynoye Oil Field and to drill two low risk exploration prospects in the Tungolskoye-Lineynoye oil productive fairway. These two prospects, Korchegskaya and West Korchegskaya, are estimated to contain about 50 million barrels of possible reserves. These wells will be drilled under a turnkey contract utilizing the three drilling rigs currently active or located in License 61. The necessary materials for these wells are currently being moved to the Negotka staging area by river barge and will be moved to the well locations when winter roads are in place later this year.

Development Planning

Once all of the well data has been analysed, both internally and by outside consultants SNIIGMS and Ryder Scott, it will be used to update the current feasibility study for field development, which will then serve as a basis for financing the field development.

The export pipeline survey from the Lineynoye and Tungolskoye fields to the Transneft pipeline at the Raskino pumping station is currently underway.

Dennis Francis, Chief Executive Officer of PetroNeft Resources plc commented:

"We are delighted with the results of this year’s three well drilling program. Not only have we further delineated the Lineynoye and Tungolskoye Oil Fields, but we have made an exciting new oil field discovery at West Lineynoye. While we will need to sidetrack the Tungolskoye No. 4 well in order to get a representative flow test, we are confident in the oil interval and anticipate a positive result in due course. Each of these results represents a significant step forward in the commercialisation of License 61 and are an important component of PetroNeft’s long term strategy.

The drilling results have further enhanced our understanding of the reservoir distribution in License 61 and have already been factored into next year’s three well drilling program in order to reduce risk."