Following the admission to AIM of Timan Oil & Gas Plc at the end of December 2006, the Board of Timan has finalised an internal review of its proposed pilot production project at the Nizhnechutinskoye field or “NGPT Field” in northeast European Russia (the “Pilot Project”) and commenced drilling operations on 20th January 2007. The Pilot Project envisages drilling 25 wells, of which 21 are production and 4 water injection wells. The Company is using 3 “Mustang” drilling rigs operating in 2 shifts.

As of 19th February 2007, the drilling of 12 production and 4 water injection wells has been completed, despite the impact of extreme low temperatures (-35 to -40C) experienced in the area. The wells have all been drilled to the planned depth of 115 meters, fully penetrating the oil bearing sands of Reservoir I (as defined in the admission document of 22 December 2006). Timan intends to finalise drilling the Pilot Project wells during March 2007.

The preliminary results indicate the presence of hydrocarbons in all wells drilled to date. All the production wells have been flow tested, and initial natural flow rates from these wells have averaged 15-25 barrels per day with the subsequent decline due to the lack of reservoir pressure. This is the anticipated scenario prior to water injection. Water injection, a technique covered by Miller and Lents Ltd in the competent person report, is expected to start 6-8 weeks after the completion of drilling and testing.

The Company is also on track with its exploration programme on the Geoterm offshore prospects in the North West Caspian, and has completed processing and interpretation of a 2D seismic survey over Izberbash Block 2. A full competent person’s report by Miller and Lents Ltd on the prospectivity of the Geoterm licenses is anticipated to be published later this year.