RNS Number:0803D
Urals Energy Public Company Limited
16 May 2006


                      Urals Energy Public Company Limited
              Proposed Equity Raising of a Minimum of $180 million
                   Increased 2006 and 2007 Production Targets
                               Operational Update


Urals Energy ("Urals Energy"or the "Company") (LSE: UEN), a leading independent
exploration and production company with operations in Russia which was admitted
to trading on AIM in August 2005, announces a proposed equity raising intended
to raise a minimum of $180 million in connection with the Dulisma acquisition
and an operational update with increased 2006 and 2007 production targets.


Proposed Equity Raising

On 18 April 2006, Urals Energy announced the signing of a definitive Sale and
Purchase Agreement for the $148 million acquisition of the Dulisminskoye Field
together with the LTK transport facilities ("Dulisma").  The Company also
announced that it expected new equity to be the principal funding source for the
acquisition and associated initial development program.

Urals Energy intends to raise a minimum of $180 million to meet this funding
requirement and related obligations. The equity raising will be effected through
a private placement of new shares to institutional investors (the "Placement")
to be arranged by Morgan Stanley Securities Limited.

As previously announced, Urals Energy has made an initial $50 million payment in
accordance with the terms of the Dulisma Sale and Purchase Agreement.  Financing
for this payment was provided by Morgan Stanley & Co. International Limited. The
balance of the consideration is due on closing of the acquisition, estimated for
June 2006. The Placement is intended to enable the Company to complete the
acquisition of Dulisma, fund the initial development program for the
Dulisminskoye Field, and to discharge its obligations to Morgan Stanley & Co.
International Limited associated with the financing of the initial $50 million
payment and certain associated costs.

Urals Energy's independent reservoir engineers DeGolyer and MacNaughton ("D&M")
estimated the Dulisminskoye Field will increase the Company's proved and
probable reserves to 225 million barrels and proved, possible and probable
reserves to 369 million barrels and 1.8 trillion cubic feet of gas. The Company
estimates that its initial development investment will increase the field's
production to 12,000 bopd by the end of 2008.  Urals Energy assumed operational
and financial control of the Field on 18 April 2006.


Operational Update

Increased Production Targets:

Due to a combination of successful 2006 development drilling and the impact of
the two recent acquisitions of Dulisma and Dinyu, the Company is revising upward
its 2006 and 2007 production targets from those communicated previously.

Successful development drilling at Petrosakh and the initial impact of the OOO
Dinyu acquisition boosted production at the end of 2005 to 9,000 bopd from 4,272
bopd in the first half of 2005. As a result, Urals Energy's initial target of
achieving 10,500 bopd by the end of 2007 was revised and brought forward to
12,000 bopd by the end of 2006 and 14,000 bopd by the end of 2007.

Following the acquisition of Dulisma, the Company will be producing
approximately 10,000 bopd. With a 20 well development programme underway across
all its assets and development of the Dulisma Field due to commence shortly,
Urals Energy is further revising its production targets to a new target of
13,000 bopd by the end of 2006 and 19,000 bopd by the end of 2007; more than 80%
higher than its 2007 production target at the time of the IPO in August 2005.

                                             Production target Y/E 2006   Production target Y/E 2007

As at  IPO                                                -                          10,500
As at December 2005                                     12,000                       14,000
As at 16 May 2006, following Dulisma                    13,000                       19,000
acquisition


Development Programme:

Urals Energy has previously announced a 2006 capital expenditure budget of $40
million that includes drilling 20 development wells. Including the proposed
development of the Dulisminskoye field, the 2006 capital budget has now
increased to $66 million. The development programme is progressing according to
plan across all areas.


Sakhalin Island

Development drilling onshore the Okruzhnoye Field is due to commence shortly,
following the arrival of a mobile drilling rig. A total of three new development
wells and three re-entries are planned. Management is now estimating a $1
million per well drilling cost which represents approximately $1 million per
well less than the cost of the first two development wells drilled in 2005.


Komi Republic and Timan Pechora

In Komi, development drilling continues at Dinyu and the Company is on track to
drill nine development wells.

At Arcticneft, the Company is preparing for a four well development drilling
program which is due to commence in the third quarter of the year

At Urals Nord, preparations including rig mobilisation procedures have begun
with drilling of the potentially high impact Nadeshdinsky prospect in Timan
Pechora expected to commence in late 2006.


Udmurtia

The four well 2006 development programme at Chepetskoye NGDU continues in
accordance with the Company's plans.


Results of East Okruzhnoye No. 1

On 2 March 2006 the Company announced that the East Okruzhnoye No. 1 exploration
well reached its total measured depth of 2,848 meters and that the logs
indicated two potential oil bearing formations with low permeability. Well
testing was completed on 10 May 2006 and five different intervals within the
Borsky and Pileng formations were evaluated. During testing the formations
failed to produce commercial volumes of oil or gas.

Further analysis of a recently conducted vertical seismic profile (VSP), logs
and seismic re-interpretation indicate that the well location is probably low on
structure. An intensive 3D seismic re-processing and re-interpretation program
on the area is now underway and the Company is currently planning to resume
offshore drilling in summer 2007. As previously announced, the Company has
secured an extension of the Pogranichnoye Licence, which provides Urals Energy
five additional years to properly evaluate the prospectivity of this license
area.


First Quarter Crude Oil and Refined Products Selling and Netback Prices

The Company announces the results of first quarter 2006 crude oil and refined
products selling prices.  For the period, average volume-weighted gross selling
prices for domestic and refined products were $41.30 per barrel and for exports
were $57.70 per barrel.  Netback prices after transportation, export taxes and
VAT realized for the same period were $29.90 per barrel for domestic and refined
products and $30.40 per barrel for exports.

Completion of Syndication of the US$100 million loan facility with BNP Paribas
The Company also announces that it has completed the syndication of a five year
US$100 million loan facility underwritten by BNP Paribas with whom Urals Energy
has a long standing relationship.  The ten banks forming the Urals Energy
syndicate are BCEN, Commerzbank, HVB, Moscow Narodny, Natexis, Standard Bank,
West LB, NordKap, Raiffeisen and Societe Generale.

William R. Thomas, Chief Executive Officer, commented:
"Urals Energy has successfully built up a very material production base of
almost 10,000 bopd within a short space of time. This has been achieved through
successful acquisitions and an aggressive development programme.

We look forward to our next phase of growth which we expect will see production
almost double by the end of 2007."

16 May 2006

Pelham PR
James Henderson/ Gavin Davis - 020 7743 6673


NOTES:


 1. Background to Urals Energy
    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 was admitted to trading on AIM in
    August 2005.

    The Group 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 Group's six E&P subsidiaries have Proved and Probable reserves of 116
    million barrels of oil equivalent (MMBOE) and produced approximately 6,237
    barrels of oil per day (BOPD) during the second six months of 2005.

    The Group'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 Group 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.

 2. In connection with the Placement, it is anticipated that Morgan Stanley
    Securities Limited, as stabilising manager, or any of its agents, may (but
    will be under no obligation to), to the extent permitted by applicable law,
    over-allot and effect other transactions with a view to supporting the
    market price of the ordinary shares of the Company at a level higher than
    that which might otherwise prevail in the open market.  Morgan Stanley
    Securities Limited is not required to enter into such transactions and such
    transactions may be effected on any stock market, over-the-counter market or
    otherwise.  Such stabilising measures, if commenced, may be discontinued at
    any time.  Save as required by law or regulation, neither Morgan Stanley
    Securities Limited nor any of its agents intends to disclose the extent of
    any over-allotments and/or stabilisation transactions under the Placement.

 3. In connection with the Placement, it is anticipated that Morgan Stanley
    Securities Limited, as stabilising manager, will enter into over-allotment
    arrangements with the Company, pursuant to which Morgan Stanley Securities
    Limited, or any of its agents, may subscribe, or procure subscribers for,
    additional ordinary shares of the Company up to a maximum of 10 per cent. of
    the total number of ordinary shares comprised in the Placement at the
    placing price.  The over-allotment arrangements will be exercisable in whole
    or in part, upon notice by Morgan Stanley Securities Limited, at any time
    during the period commencing on the date of announcement of the placing
    price and ending on the 30th day after the date of allotment of the ordinary
    shares comprised in the Placement.  Any ordinary shares made available
    pursuant to the over-allotment arrangements will rank pari passu with all
    other ordinary shares of the Company and will form a single class for all
    purposes with the other ordinary shares.

This announcement is for information purposes only and does not constitute an
offer or an invitation to acquire or dispose of any securities of Urals Energy
Public Company Limited.  Morgan Stanley Securities Limited and its affiliates
are acting for the Company only in connection with the matters referred to in
this press release, and no one else, and will not be responsible to anyone other
than the Company for providing the protections offered to their clients nor for
providing advice in relation to the matters referred to herein.




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