UEN Urals EN.

RNS Number:5705T
Urals Energy Public Company Limited
03 November 2005

FOR IMMEDIATE RELEASE

3 November 2005


                      Urals Energy Public Company Limited

           Proposed Acquisition to boost Group's production by c.50%

Urals Energy Public Company Limited ("Urals Energy" or the "Group") today
announces that it has agreed to acquire production and exploration assets in the
Komi Region of Russia for US$70 million, including assumed debt.  Urals Energy
is a leading independent exploration and production company with operations in
Russia.  Urals Energy's shares were admitted to trading on the London
Alternative Investment Market in August 2005, with its IPO resulting in a total
fund raising of US$131.1 million.

Proposed Acquisition

Urals Energy has today signed an agreement to acquire producing and exploration
assets in the Komi Region of Russia for US$ 62 million cash plus the assumption
of approximately US$ 8 million in debt; with closing of the transaction
estimated for mid November. The transaction is subject to FAS (Russian Federal
Antimonopoly service) approval and certain other customary conditions.

Consideration for the acquisition will be satisfied through a combination of
existing cash resources and debt, following completion of a new senior debt
facility.  This will have no material impact on the funding of the Group's
existing development and exploration programme.  Nevertheless, taking into
account market conditions and likely future funding requirements, the Group may
consider further equity issuance in due course.

The proposed acquisition gives Urals Energy immediate incremental production of
approximately 2,900 bopd and extensive exploration acreage in an area where the
Group already has a complementary asset base.  On completion in mid November it
is expected that total group production will rise to c.8,700 bopd.  Management
estimates this acquisition will add proved reserves of approximately 12 million
barrels and probable reserves of approximately 10 million barrels for total 2P
additions of at least 22 million barrels. The Group is currently working with
its independent engineering consultants, DeGolyer and MacNaughton, to confirm
these estimated reserves.

The proposed acquisition has an exploration and production license for an area
of 960 square kilometres.  A recently acquired 3D seismic survey indicates five
exploration prospects that are analogous to the existing producing structure.

The acquisition fits Urals Energy's acquisition criteria of acquiring producing
assets in complementary areas of Russia and the CIS with development and
exploration potential. On completion of the transaction the Group intends to
actively develop these assets in order to increase production of the acquired
assets from the current level of 2,900 bopd to 4,500 bopd by the end of 2006.
35% of the acquired assets' current production is exported with the 65% balance
to the domestic market. The producing fields are connected by a pipeline to
Transneft.  Oil quality is light with a gravity of 36 API.

The Group believes the transaction represents a compelling opportunity to
acquire producing assets on attractive terms per 2P barrel in the Komi region, a
region where the Group already has a complementary asset base and which the
Group has identified as a core area to develop a material presence. There is
also the potential to significantly increase reserves through development and
exploration. The assets complement Urals Energy's existing asset base and
operating experience in the Komi region and gives the Group the opportunity to
reduce unit costs through economies of scale.

This proposed transaction follows Urals Energy's acquisition of CNPSEI in
October 2004 which gave the Group its initial presence in the Komi region. For
the six months ended June 2005 CNPSEI achieved average daily production of 1,015
BOPD.

More detailed information will be published following closing of the
transaction.  This will include information about the profitability of the
acquired assets, prepared in accordance with the Company's accounting standards,
following a reconciliation from the existing information which has been prepared
in accordance with Russian Accounting Standards.


William R. Thomas, Chief Executive Officer, commented:

"This proposed transaction fits all our key objectives; it boosts production and
earnings on day one, has material development and exploration potential and
builds our presence in one of our core operational areas; enabling us to add
value through new investment and reducing existing unit costs."

3 November 2005

Pelham PR
James Henderson                                                  020 7743 6673
Charles Vivian                                                   020 7743 6672


About the company:

Urals Energy is an independent exploration and production (E&P) company with its
principal assets and operations in Sakhalin Island, Timan Pechora (including
areas in the Nenets Autonomous Okrug and Komi Republic) and the Republic of
Udmurtia, Russia. The company listed on AIM in August 2005.

The Company is focused on the integration of its five recently acquired
subsidiaries and the exploitation of their assets. In addition, it is actively
seeking to continue to grow and diversify its reserve and production portfolio
through exploration activities and the acquisition of additional E&P companies
or assets by taking advantage of the ongoing rationalisation of E&P assets in
Russia.

The Company's five E&P subsidiaries have Proved and Probable reserves of 89.7
million barrels of oil equivalent (MMBOE) and produced approximately 5,600
barrels of oil per day (BOPD) during the first six months of 2005.

The Company's two largest subsidiaries by reserves and production, Petrosakh and
Arcticneft, own and operate refining assets with a total refining capacity of
5,300 BOPD, which provide the Company with the ability to maximise the value of
the oil produced by choosing between the sale of oil or of refined products
depending on market conditions, tax considerations and other factors.




                      This information is provided by RNS
            The company news service from the London Stock Exchange
END

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