Urals Energy has issued 8,693,006 shares with a nominal value of US$0.0063 each to Petraco Oil Company Limited (the "Petraco Shares") pursuant to the restructuring agreement between the Company and Petraco.

In addition, Urals Energy has also issued 117,812 shares with a nominal value of US$0.0063 each (the 'Sidorovich Shares') to Vladimir Sidorovich pursuant to the terms of the Company's Restricted Stock Plan adopted in February 2006 and the terms and conditions of the termination of Mr. Sidorovich's consultancy agreement.

The Petraco Shares and Sidorovich Shares represent approximately 4.61 percent and 0.06 percent respectively of the enlarged issued share capital and will rank parri passu with the existing shares. Application has been made for the Petraco Shares and Vladimir Sidorovich Shares to be admitted to trading on AIM and dealings are expected to commence at 8.00am on 27 May 2010. Following the issue of all of the Petraco Shares and Vladimir Sidorovich Shares, the total number of shares in issue will be 188,519,367 shares with a nominal value of US$0.0063 each.

Operational Update At Petrosakh production remains unchanged on the level of 1,577 BOPD (barrels of oil per day). Since the date of the last operational update the Company has completed the optimisation of production from the recently perforated well 34 and optimisation of a water injection well 42, which resulted in an increase in production by 46 BOPD, which was offset by a decline from other wells. Deliveries of the two rod pumps are expected shortly and will be installed on well 47 and on another well, which is now being assessed.

The Company intends to drill well 35b, the first sidetrack well, in early June 2010. The drilling rig has already been assembled on site and is awaiting final deliveries of drilling equipment before spudding.

Urals has also commenced production of Gasoline 92 with first deliveries priced at 23,600 Roubles per ton ($98/bbl) net of VAT. Despite the recent decrease in crude oil prices the prices for oil products on Sakhalin Island have not to date been impacted.

At Arcticneft, production has stabilised and a moderate increase of 25 bopd to 725 bopd was achieved as a result of the maintenance works performed on the three wells. The Company is now evaluating data from the geological studies commissioned in Q1 2010 in order to determine the remaining field development programme at Arcticneft.

Tags: Urals Energy Public Company