UEN Urals EN.

RNS Number:8009X
Urals Energy Public Company Limited
02 February 2006



                      Urals Energy Public Company Limited
                         Operational and Trading Update


Urals Energy Public Company Limited ("Urals Energy" or the "Company") today
announces an operational and trading update prior to announcing its Annual
Results for the year ended 31 December 2005 on Friday 31 March 2006.



Urals Energy is a leading independent exploration and production company with
operations in Russia.  Urals Energy listed its shares on the London Alternative
Investment Market in August 2005, and placed shares resulting in a total fund
raising $131.1 million.



2005 H2 Production



Production in the second half increased by 47% to an average of 6,263 bopd
compared with 4,272 bopd in the first half, giving average production for the
year of 5,256 bopd. Current production has increased to approximately 8,900
bopd. This increase has been driven by the combination of the Dinyu acquisition,
currently producing approximately 2,800 BOPD, and organic development drilling,
specifically at Petrosakh.



In line with earlier guidance this means that the Company's initial IPO
production estimates of reaching 10,500 bopd by the end of 2007 has increased to
estimated production of at least 14,000 bopd by the end of 2007.



2005 Year End Reserve Estimates



Based on the preliminary 2005 year-end reserve estimate by the Company's
independent reserve engineers, DeGolyer & MacNaughton, the Company anticipates
that its proved (1P) reserves will show greater than 100% organic replacement of
production during 2005, a clear demonstration of the strength of the Company's
core asset portfolio.



The Company anticipates that its 1P reserves will total approximately 71 million
barrels, an increase of 28% as compared to the March 31, 2005 reserve report
prepared in conjunction with the Company's listing in August 2005.  In addition,
total proved and probable (2P) reserves are estimated at 118 million barrels, an
increase of 32%, and total proved, probable and possible (3P) reserves are
estimated at 178 million barrels, an increase of 51%.  These preliminary 2005
year-end reserve estimates include reserves attributable to OOO Dinyu, a Russian
producer acquired by the Company in November 2005.



Exploration



The Company's application for an extension of the Pogranichnoye License area
offshore Sakhalin Island has been successful.  The Russian Federal Agency for
Natural Resources granted the license extension on 26 January 2005.  The license
period was extended to 1 February 2011 and the terms of the amended license now
require a total of five exploration wells to be drilled during the period
2005-2010.  The East Okruzhnoye No. 1 well spudded in 2005 will qualify as the
first of the five exploration wells required by the amended license.



The East Okruzhnoye No. 1 exploration well was spudded on 1 November 2005.
Target measured depth of 2,848 meters was reached on 23 January 2006.  Logging
operations are now underway and an update will be provided on completion.



Corporate Update



As announced in December 2005, the Company signed a five year $12 million
subordinated loan agreement with BNP Paribas. This financing was finalised on 30
January 2006 following shareholder approval which was duly obtained at an EGM
held on 16 January 2006.



At the EGM the Company also sought, and was given, approval to increase its
authorised share capital and the authority to issue shares on a non pre-emptive
basis in certain circumstances.



Adjustments to Interim Results to 30 June 2005



The Company announces that management has identified certain minor adjustments
relating to the Company's previously reported results for the period ended 30
June 2005, which will result in a modest reduction of the loss reported for the
period.



 On 23 September 2005, Urals Energy reported a net loss of $1.145 million for
the six months ended 30 June 2005.  After the identified adjustments, the
Company now expects the results for the six months ended 30 June 2005 to be a
loss of approximately $800 thousand.  The minor adjustments include but are not
limited to gross revenues, cost of production and finance costs, and
understatement of related tax expense. These changes have no material effect on
the Company's cash flows.



The Company is working with its auditors, PricewaterhouseCoopers, to finalize
these adjustments. This information is still preliminary and subject to final
confirmation and approval of both the Company's directors and auditors.  Urals
Energy will restate the results for the interim period ending 30 June 2005 as
soon as practical and provide information for comparative purposes at that time.


William R. Thomas, Chief Executive Officer, commented:



"The Company has made significant progress throughout 2005 by continuing to
increase production, replace reserves and identify and complete strategic
acquisitions.  The awarding of the five year extension of the Pogranichnoye
License is a positive development enabling Urals to continue its drilling
programme at Sakhalin Island through 2010.



We continue to focus on our strategy of growing organically and by acquisition
and I am confident the Company is well positioned for the future."



                                                                 2 February 2006


Pelham PR
James Henderson                                                    020 7743 6673
Archie Berens                                                      020 7743 6679



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 six E&P subsidiaries have Proved and Probable reserves of 118
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 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
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