Timan Identifies Prospective Drilling Targets in Caspian Sea Blocks

The Ministry of Natural Resources of the Russian Federation published the following announcement relating to OAO Geotermneftegas, an 80% owned subsidiary of Timan that holds licenses to two offshore exploration and production licenses in the Russian sector of the Caspian Sea:

"On 12 September, OAO Geotermneftegas filed a documentation package with Rosgeolfond for registration on the State Register of Natural Resources of the resources (Category C3) at the Company's license Block No. 2 "Izberbash" on the Caspian Sea shelf.

Following the results of seismic research in the license area, six prospective targets have been identified for forthcoming drilling. The cumulative Category C3 resources were evaluated at 438.7 million tons (approximately 3 billion barrels - company comment), which includes 234.2 million tons (approximately 1.6 billion barrels - company comment) in the largest prospective target. The resource evaluation, which was based on probabilistic methods and the interpretation of seismic data, lead to an evaluation of the total potential resources of block No. 2 "Izberbash" of a maximum of 914.3 million tons (approximately 6.4 billion barrels - company comment), optimum of 397.4 million tons (approximately 2.8 billion barrels - company comment) and minimum of 212.4 million tons (approximately 1.5 billion barrels - company comment). According to the expert certification issued by FGUP BNIGRI (the appraisal and evaluation body of the Ministry of Natural Resources of Russia – company comment), the data from the evaluation has been recommended for inclusion on the State Register of Natural Resources under Category C3.

The filed data will be put on the State Register of Resources and published in accordance with the current procedures for such registration.

OAO "Geotermneftegas", registered in the Republic of Dagestan (a republic in the Russian Federation - company comment) is a subsidiary of the international holding Timan Oil & Gas that invests in geological studies and exploration for as well as production of hydrocarbons.

In August 2007 Rosprirodnadzor inspected Geoterm's compliance with the legislation on usage of the natural resources. According to the press release published by Rosprirodnadzor's press-service on 30th August 2007, the inspection confirmed that no material breaches of the license regime had been found. Rosprirodnadzor issued a recommendation to Rosnedra agency to introduce amendments to the license agreement with Geoterm extending the timeframe for geological research and exploration of the Company's license blocks."

No qualified person from the Company has reviewed and signed off on the level of C3 resources referred to in this governmental announcement as the information was published by the Ministry of Natural Resources of the Russian Federation on its official website. In addition as the Russian State Classification system for oil and gas resource is not an acceptable standard under the AIM Rules, the Company is working on procuring the relevant Competent Person's evaluation of the aforementioned hydrocarbon resources under the SPE definition to be provided and published as soon as is possible.

Under the Russian State Classification system, Category C3 resources are defined as prospective recoverable hydrocarbon volumes located within ready-to-drill prospects, either as (i) traps within established hydrocarbon bearing areas, delineated by geological and geophysical exploration techniques which are proven in such area, or (ii) geological formations within explored fields which have not been penetrated by drilling. Category C3 resources are used in the planning of prospecting and exploration work in areas known to contain other reserve-bearing fields.

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