Sibir Spuds 1st Exploration Well on the Koltogorsky License

Sibir has spudded its first exploration well on Block 14 of the Koltogorsky exploration licenses 180 kilometers northeast of Nizhneyvartovsk in the Khanty-Mansiysk Autonomous Region in Western Siberia. The well is the first of an eight-well drilling campaign on the Koltogorsky blocks to be conducted through 2008.

The Block 14 well is expected to take 65 days to drill to a depth of 3,050 meters and will target reservoirs in the lower Cretaceous and Jurassic. Drilling operations are being managed by Sibir subsidiary, Magma, together with Russian contractors and drilling rigs.

Comprised of eight license areas the Koltogorsky blocks together cover 2,100 square kilometers (520,000 acres) with an estimated 970 million barrels of C3 resources (Russian classification 1). The blocks lie near the giant Samotlor oil field, one of the largest in the world, and are bordered on the west by a number of Samotlor satellite fields and on the east by a range of other producing properties in Russia's most prolific oil producing region.

Since the licenses were originally issued in 2004, more than 2,500 kilometers of 2D seismic profiles have been acquired, processed and interpreted, indicating the existence of 39 identifiable oil traps in the Lower Cretaceous and Jurassic at depths of 2,600 to 3,200 meters.

"Spudding the block 14 well at Koltogorsky is the first step in Sibir's program of upstream expansion and demonstrates the company's commitment to grow using the drill bit," said Sibir CEO Henry Cameron. "We expect to announce results of the first drilling phase in the first half of 2008."

The Russian classification of C3 hydrocarbon resources constitutes prospective resources presumed to exist based on indicative geological and geophysical evidence, but as yet unverified by drilling.