Volga Gas Spuds Vostochny-Makarovskoye-1 in Russia

Volga Gas has completed the 3-D seismic acquisition of 20 square km over the Vostochny-Makarovskoye license area and has spudded Vostochny-Makarovskoye Well #1 ("VM #1").

On September 25, Volga Gas completed the acquisition of 20km2 of 3-D seismic over the Vostochny-Makarovskoye license area. The acquired data will be processed and interpreted in order to develop a more efficient drilling program. The seismic crew will move to the Karpenskiy License Area to acquire 140 km2 of 3-D seismic over six identified supra-salt structures during the winter of 2007-2008.

On September 30, the Company spudded the first well, VM #1. The Company expects that the well will take up to 6 months to complete including extensive multi-layer testing.

Mikhail Ivanov, CEO of the Company, commented:

"We have committed to bringing Vostochny-Makarovskoye into production by the end of 2008. The completion of the 3-D seismic and commencement of drilling operations mark the first step to meeting this objective. Concurrently, we have placed the initial orders for gas processing plant infrastructure and are confident that we will meet our targets."