Baltic Oil's Exploration of Western Siberia Yields Some Shows

Baltic Oil Terminals provided an update on the company’s exploration drilling in the Kurgan region, Western Siberia, Russia.

As announced on 15 January 2008, the Company has completed the drilling and MDT testing of its second exploration well Mok-1 in the Mokrousovsky licence area in the Kurgan region, where Baltic is an operator and holds 50% working interest together with Siberian Energy Group.

The Mok-1 well was drilled to the total depth of 2,400 metres and encountered hydrocarbon shows in various sections of the hole, including two sections with shows of heavier hydrocarbons in them, which is encouraging for future exploration activity. A comprehensive suite of data, including logs and samples, was acquired across the intervals of interest.

The results of the Mok-1 well, together with the completed MDT test, are currently being evaluated by Baltic’s geological consultants RPS of the UK. It is expected that the final report on Mok-1 will be issued within two months. This report will contain a significant quantity of new data relating to the prospect. Separately, Baltic has also commissioned Sibnefteofizika to prepare their report on the MDT testing and implications for further exploration.

Following completion of drilling at the Mok-1 well, Baltic’s Board conducted a thorough strategic review of its exploration activities. The hydrocarbon shows in the Mok-1 well, together with shows in the Privolny-1 well, support the Board’s belief that the region remains prospective and represents a new exploration frontier. However, the strategic review concluded that significant time and resource will be required to realise its full potential and accordingly short, medium and long term growth in shareholder value will be most effectively achieved by concentrating the Company’s financial and operational resources on its core terminal businesses and related infrastructure activities in Kaliningrad. These businesses are either already generating revenues or are close to doing so.

Given the increasingly attractive market dynamics of shipping in Kaliningrad and management’s extensive experience of building and operating oil-related infrastructure, there exists considerable potential for Baltic to build upon its existing position in Kaliningrad.

The Board is now examining a range of options in relation to its exploration activities in Kurgan, which are intended to reduce Baltic’s financial and operational exposure to exploration and will enable Baltic to deploy all of its resources towards and to concentrate on developing and growing its core oil infrastructure and shipping activities.

Based on the results to date, which the Board considers to be encouraging, and the large scale of its licences, together with the significant amount of high quality and recent geological and operational data yielded by its exploration efforts thus far, the Board believes it is in a strong position to maximise the value of its exploration interests for the benefit of shareholders.