Announcement of Independently Audited Reserves


February 19, 2008

PetroNeft Resources plc

Announcement of Independently Audited Reserves

PetroNeft Resources plc ('PetroNeft' or 'the Company'), is pleased to announce a significant increase in Reserves on Licence 61, Tomsk Oblast, Russian Federation, following completion of a Ryder Scott Petroleum Consultants independent reserves audit of the Licence area.

Highlights

  • 81 % increase in 2P reserves to 60.6 million bbls
  • Ryder Scott report net reserves under SPE classification of:
           1P:          6.7  million bbls
           2P:       60.6  million bbls (P1+P2)
           3P:     350.1  million bbls (P1+P2+P3)
  • Long term test/pilot production commences
  • First oil sales achieved
  • 2008 Exploration and Appraisal drilling programme progressing

Ryder Scott Reserves Report

Following the successful exploration and appraisal programme undertaken in Licence 61 during 2007, PetroNeft's net proved and probable (2P) oil reserves as of January 1, 2008 increased by 81% to 60.6 million barrels.  Proved (1P) oil reserves increased to 6.7 million and proved plus probable plus possible (3P) reserves increased to 350.1 million barrels.  A total of 3 oil fields and 26 prospects were included in the report.

PetroNeft's reserves have been revised following the recent independent reserve appraisal conducted by Ryder Scott Petroleum Consultants in accordance with reserve definitions approved by the Society of Petroleum Engineers (SPE) and World Petroleum Congress.

The Russian Registered reserves for Licence 61 are also currently being updated.  It is anticipated that this process will be finished in March and that there will be good alignment with the SPE based reserves.

Click here to see the Ryder Scott Reserves Report

Update on Production Testing

The long term test/pilot production of the Lineynoye No. 6 and No. 7 wells is progressing as planned.  The Lineynoye No. 6 well has now been commissioned and is currently producing at a stabilised flow rate of 226 bopd.  The Lineynoye No. 7 well is currently being hooked-up and should be commissioned in about 10 days, with production starting.  The production tests will continue as long as winter roads are in place to truck the oil.  The production data will assist in planning the optimal well fracture programme to stimulate production and enhance long-term reserve recovery from the fields

Update on Drilling Activities

The three existing drilling rigs are all being moved to the new drilling sites for this year's planned exploration and delineation drilling programme.  The drilling rig for the Korchegskaya Prospect is now completely moved and is being assembled.  This will be the first well drilled, commencing in March as planned.  Ryder Scott estimates 36 million barrels of possible reserves for this prospect.

A truck mounted work-over rig has been contracted and is being prepared to be moved to the Tungolskoye No. 4 well in March to continue the testing of that suspended well.
  
Dennis Francis, Chief Executive Officer of PetroNeft commented:

"This reserves increase shows the major progress that we have made in appraising Licence 61 this past year. Management has successfully made good on its IPO promise: to monetise and add to the value to the portfolio by increasing booked reserves, discovering new reservoirs and moving towards production as soon as possible.

PetroNeft has not only proved a significant reserve base for development, but also has built up a high quality inventory of prospects which offer upside through exploration over the medium term.

We will  continue to maintain our focus on developing the existing fields and keep on track for our targeted pipeline production in 2009, whilst remaining open to any new opportunities which management believes would be worthy of consideration "


For further information, contact:

Dennis Francis, CEO, PetroNeft Resources plc (Houston)
+1 713 988 2500

Paul Dowling, CFO, PetroNeft Resources plc (Dublin)
+353 144 33720

Desmond Burke, Director Investor Relations, PetroNeft Resources plc (Ireland)
+353 52 53226

John Frain/Brian Garrahy, Davy
+353 1 679 6363

Damien Mauvais, Natixis Bleichroeder
+44 207 220 5184

Nick Elwes/Paddy Blewer/Simon Whitehead, College Hill (UK)
+44 207 457 2020

The information contained in this announcement has been reviewed and verified by Mr. Dennis Francis, Director and Chief Executive Officer of PetroNeft, for the purposes of the Guidance Note for Mining, Oil and Gas Companies issued by the London Stock Exchange in March 2006.  Mr. Francis holds a B.S. Degree in Geophysical Engineering and a M.S. Degree in Geology from the Colorado School of Mines.  He has also graduated from the Harvard University Program for Management Development.  He is a member of the American Association of Petroleum Geologists and the Society of Exploration Geophysicists.  He has over 34 years experience in oil and gas exploration and development.
    
Forward Looking Statements

This announcement contains forward-looking statements. These statements relate to the Company's future prospects, developments and business strategies.  Forward-looking statements are identified by their use of terms and phrases such as "believe", "could", "envisage", "potential" "estimate", "expect", "may", "will" or the negative of those, variations or comparable expressions, including references to assumptions.

The forward-looking statements in this announcement are based on current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by those statements. These forward-looking statements speak only as at the date of this announcement.

 

Glossary

Proved Reserves (P1) - Proved reserves are those quantities of petroleum which, by analysis of geological and engineering data, can be estimated with reasonable certainty to be commercially recoverable, from a given date forward, from know reservoirs and under current economic conditions, operating methods, and government regulations.

Probable Reserves (P2) - Probable reserves are those unproved reserves which analysis of geological and engineering data suggests are more likely than not to be recoverable.  In this contest, when probabilistic methods are used, there should be at least a 50 percent probability that the quantities actually recovered will equal or exceed the sum of estimated proved plus probable reserves.

Possible Reserves (P3) - Possible reserves are those unproved reserves which analysis of geological and engineering data suggests are less likely to be recoverable than probable reserves.  In this context, when probabilistic methods are used, there should be at least a 10 percent probability that the quantities actually recovered will equal or exceed the sum of estimated proved plus probable plus possible reserves.