PetroNeft Increases Russian Reserves by 81%

PetroNeft Resources plc announced a significant increase in Reserves on Licence 61, Tomsk Oblast, Russian Federation, following completion of a Ryder Scott Petroleum Consultants independent reserves audit of the Licence area.

Following the successful exploration and appraisal program undertaken in Licence 61 during 2007, PetroNeft's net proved and probable (2P) oil reserves as of Jan. 1, 2008 increased by 81% to 60.6 million barrels. Proved (1P) oil reserves increased to 6.7 million and proved plus probable plus possible (3P) reserves increased to 350.1 million barrels. A total of 3 oil fields and 26 prospects were included in the report.

PetroNeft's reserves have been revised following the recent independent reserve appraisal conducted by Ryder Scott Petroleum Consultants in accordance with reserve definitions approved by the Society of Petroleum Engineers (SPE) and World Petroleum Congress.

The Russian Registered reserves for Licence 61 are also currently being updated. It is anticipated that this process will be finished in March and that there will be good alignment with the SPE based reserves.

"This reserves increase shows the major progress that we have made in appraising Licence 61 this past year," said Dennis Francis, CEO of PetroNeft. "PetroNeft has not only proved a significant reserve base for development, but also has built up a high quality inventory of prospects which offer upside through exploration over the medium term. We will continue to maintain our focus on developing the existing fields and keep on track for our targeted pipeline production in 2009, whilst remaining open to any new opportunities which management believes would be worthy of consideration."

The long term test/pilot production of the Lineynoye No. 6 and No. 7 wells is progressing as planned. The Lineynoye No. 6 well has now been commissioned and is currently producing at a stabilised flow rate of 226 bopd. The Lineynoye No. 7 well is currently being hooked-up and should be commissioned in about 10 days, with production starting. The production tests will continue as long as winter roads are in place to truck the oil. The production data will assist in planning the optimal well fracture program to stimulate production and enhance long-term reserve recovery from the fields

The three existing drilling rigs are all being moved to the new drilling sites for this year's planned exploration and delineation drilling program. The drilling rig for the Korchegskaya Prospect is now completely moved and is being assembled. This will be the first well drilled, commencing in March as planned. Ryder Scott estimates 36 million barrels of possible reserves for this prospect.

A truck mounted work-over rig has been contracted and is being prepared to be moved to the Tungolskoye No. 4 well in March to continue the testing of that suspended well.