Volga Gas Plc has paid the balance due for the Urozhainoye-2 Licence and has received the licence. The licence area covers 354km2 and is located approximately 15km to the north of the Company's Karpenskiy Licence Area and is in close proximity with up to 30 gas/condensate/oil fields.

The Company, which on 7 September 2007 won the government-mandated auction for the Urozhainoye-2 Licence area with a bid of RUR44 million (US$1.7 million), has made the final payment of RUR4 million ($0.2 million) and has received the licence.

The Company has also acquired some additional data on Sobolevsky Well 11, which discovered the Sobolevsky field and is currently in conservation. The well was drilled to a total depth of 3,307m and the Bobrikovsky horizon was tested in a cased hole over four separate perforations between 2,647m and 2,659m in 1991. It initially produced 193m3 of oil per day (1,213bbl/day) and 55.4mcm/day (thousand cubic meters per day) of gas on a 8mm choke. The well produced light oil; 0.845g/cc (API 35.9). The horizon demonstrated good porosity and permeability (131 mDarcy). Productivity Index was estimated to be 2.67.

The Company intends to acquire the well in order to work it over and start production in 2008. 2-D seismic will be conducted over the licence block to identify further prospective structures to drill.

Mikhail Ivanov, CEO of the Company, commented, “The data from Well 11 provides an indication of the potential of Urozhainoye-2 licence area. The planned 2-D seismic will help to understand the structure of Sobolevsky field as well as facilitating the identification of other potential structures on the licence block.”