SAGA Commences Commercial Oil Production

SAGA Oil has achieved a commercial break through in Russia and signed its first agreement for delivery and sales of oil and will now start commercial production.

SAGA Oil's subsidiary PROMGEOTEK has finalized all the required formalities for commercial sale of its oil production and has signed the first sales contract on Friday, October 26. The deliveries will commence by truck this week, with a gradual build up of the production volume for each well, as the wells are brought back on stream after the previous shut in period.

The new contract secures the sale and delivery capacity for the expected production during the coming 6 months. However, SAGA will continue to negotiate and secure additional delivery volumes with several other local companies. This will secure delivery of the oil production while the planning and construction of SAGA's new pipeline that will connect the Rodnikvsky fields directly to the main pipeline.

Malvin Høydal, President and CEO comments:

"SAGA continues its progress in Russia and through signing the first commercial sales agreement we have proven that adhering to our strategy of ensuring that all legal and formal matters must come first does work as expected. It is a major achievement for SAGA and its production company PROMGEOTEK to manage bringing a large Greenfield Development such as the Rodnikovsky licensed area, into production in such a short time frame. This milestone brings SAGA into the first start of commercial return on the faithful investors funding of the SAGA strategy for Russia and FSU market".