US$43 million Placing

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA OR JAPAN.

PetroNeft Resources plc (“PetroNeft” or the “Company”)

US$43 million Placing

PetroNeft Resources plc (AIM: PTR), the owner and operator of Licences 61 and 67, Tomsk Oblast, Russian Federation, is pleased to announce a conditional placing raising gross proceeds of approximately US$43 million.

Highlights:

• Gross proceeds of US$43 million raised at STG£0.43 per share in a substantially over subscribed placing with international institutional investors

• Funds will be used to finance an accelerated exploration programme, business development and general corporate overhead

• 2010/11 Exploration programme with potential to more than double existing 2P reserves

• Low risk, fully funded development project with significant production upside

• On course to achieve year end 2010 production target of 4,000 bopd by early December, rising to approximately 12,000 bopd by the end of 2012

• Actively evaluating new venture opportunities and developing a diverse portfolio of exploration and production assets

Placing

PetroNeft has agreed the terms of a conditional placing of 63,125,000 new Ordinary Shares at Stg£0.43 (€0.49) per Ordinary Share (the “Placing Shares”), raising gross proceeds of approximately US$43 million (the “Placing”).

The Placing is being executed in two tranches and has been arranged by Davy, Canaccord Genuity and Renaissance Capital. The first tranche of the Placing consists of a conditional placing of 34,395,050 Ordinary Shares (the ''First Tranche Placing Shares') which is conditional, inter alia, on admission of such Ordinary Shares to trading on the AIM Market of the London Stock Exchange ('AIM') and the ESM Market of the Irish Stock Exchange ('ESM'). The second tranche of the Placing consists of a conditional placing of 28,729,950 Ordinary Shares (the ''Second Tranche Placing Shares') which is conditional, inter alia, on admission of such Ordinary Shares to trading on AIM and ESM and upon receiving shareholder approval to complete the Second Tranche Placing at an extraordinary general meeting of the Company to be held on 15 November 2010 (“EGM”). A circular to convene such an EGM will be sent to shareholders shortly.

Operational Update

Production

In late August 2010, year-round oil production commenced from the Lineynoye oil field in Licence 61. The Company’s field development programme was completed on time and substantially on budget. Field production has now reached around 2,000 barrels of oil per day (“bopd”) from the seven wells currently producing. The four remaining wells should all be producing by early December when we expect to reach our year-end target of 4,000 bopd.

A programme of hydraulic fracture stimulation on up to nine wells will be completed by the end of the first quarter of 2011 in order to remove any damage caused by the drilling and completion process, achieve the maximum production levels and enhance longer term oil recovery.

Development is expected to continue in 2011 and beyond with 17 new production wells planned for 2011 and a similar programme in 2012. The Company is aiming to achieve a target production rate of 8,000 bopd by the end of 2011 and 12,000 bopd by the end of 2012. The development programme will be funded entirely from operating cashflows and the Macquarie debt facility.

Exploration

Licence 61 (PetroNeft 100% and Operator)

The Arbuzovskaya No. 1 well at the Arbuzovskaya (formerly Varyakhskaya) prospect located 10 kilometres east of the Lineynoye oil field was spudded on 10 October 2010. The current well depth is 626 metres where the conductor pipe has been set and cemented. Drilling will re-commence today and the reservoir objective should be reached and tested in early November.

There are three identified structures at Arbuzovskaya which contain approximately 30 million barrels of P3 potential reserves based on Ryder Scott's best estimate (P50). The No. 1 well is located at the largest of the three structures which contains 16 million barrels of P3 potential reserves. The Arbuzovskaya prospects have been selected as a priority due to their close proximity to the Lineynoye oil field where the best quality oil reservoirs have been discovered to date and where the pipeline and field facilities are located allowing for a low cost and efficient tie in of wells.

In the first half of 2011, two more rigs will be mobilised in order to drill a delineation well at the Kondrashevskoye oil field and a high impact exploration well at the Sibkrayevskaya prospect. Kondrashevskoye has the potential for further upside above the 8 million barrels of 2P reserves currently identified at this field. Potential by-passed pay has been identified at Sibkrayevskaya which Ryder Scott estimates could contain reserves of up to 44 million barrels of oil.

Licence 67 (PetroNeft 50% and Operator)

The first phase of work on Licence 67 involved a comprehensive study to re-evaluate vintage seismic and well data located on the licence and adjacent areas including the reprocessing and reinterpretation of 4,430 km of 2D seismic data and 21 vintage wells. All of the seismic data has now been reprocessed, correlation charts have been prepared and the wells have been tied to the seismic data. An initial depth map at the top of the primary Upper Jurassic J1 reservoir has also been prepared. The results of the well re-evaluation are very encouraging and indicate several zones of potential oil pay that were either not properly identified or not properly tested in the old wells.

Work to date has focussed on two potential development opportunities at Ledovoye and Cheremshanskaya. The Company calculates that just the primary objective Upper Jurassic J1 interval reserves for the two fields could be significant - Ledovoye C1+C2 of around 30 million bbls [PetroNeft net 15 million bbls] and at Cheremshanskaya C3 of around 60 million bbls [PetroNeft net 30 million bbls].

Following preliminary discussions with Ryder Scott, the Company believes it will be able to book some 2P reserves at Ledovoye at the end of 2010, but the Company will need to flow test the oil intervals in the Cheremshanskaya structure before it can recognise any 2P reserves there.

The Company plans to drill two exploration wells on Licence 67 in 2011, one at the Ledovoye oil field and one at the Cheremshanskaya prospect.

Exploration Programme

The following table summarises the Company’s Exploration Programme for 2010/11 along with the targeted 2P reserve growth estimates:

* Million bbls net

¹Source: Ryder Scott Petroleum Consultants Report, as at 1 January 2010

² Source: Company estimates

Corporate Development

The Company continues to actively examine a number of exciting potential acquisition opportunities in the Tomsk region and Russia in general. The proceeds of the Placing will allow the Company to advance its corporate development activities.

Use of Proceeds

The proceeds of the Placing will be applied to accelerate the Company’s exploration programme on Blocks 61 and 67 and strengthen its reserve base through potential material P3 to 2P upgrades and to enable the Company to pursue identified business development opportunities.

Dennis Francis, Chief Executive Officer of PetroNeft Resources plc commented:

“We are delighted with the outcome of the Placing and the very high level of support received from both new and existing shareholders. The combination of year-round oil production and the continued development and exploration of Licences 61 and 67, provides an excellent base from which we can generate significant cash flow, target significant 2P reserve growth and take advantage of exciting potential acquisition and new venture opportunities in the Tomsk region.”

Application will be made to the London Stock Exchange and the Irish Stock Exchange for the First Tranche Placing Shares to be admitted to trading on AIM and ESM, with Admission of the First Tranche Placing Shares expected to occur on 22 October 2010. Application will also be made for the Admission of the Second Tranche Placing Shares to trading on AIM and ESM, with admission of the Second Tranche Placing Shares expected on 16 November 2010, subject to the approval of the Second Tranche by the Company's shareholders at the EGM. The Placing Shares will, when issued, rank pari passu in all respects with the Existing Ordinary Shares including the right to receive dividends and other distributions declared following Admission.

For further information, contact:

Dennis Francis, CEO, PetroNeft Resources plc		+1 713 988 2500
Paul Dowling, CFO, PetroNeft Resources plc		+353 1 443 3720
John Frain/Brian Garrahy, Davy (NOMAD and Joint Broker)		+353 1 679 6363
Charles Berkeley/Henry Fitzgerald-O’Connor, Canaccord Genuity (Joint Broker)		+44 207 0506500
Dmitry Zubatyuk/Dmitry Brodsky, Renaissance Capital	+7 495 258 7777
Martin Jackson/Kate Lehane, Citigate Dewe Rogerson		+44 207 6389571
Joe Murray/Ed Micheau, Murray Consultants		+353 1 498 0300

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 35 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. No statement in this announcement is intended to constitute a profit forecast or profit estimate for any period.

Glossary

1P	Proved reserves according to SPE/PRMS standards
2P	Proved and probable reserves according to SPE/PRMS standards
3P	Proved and probable and possible reserves according to SPE/PRMS standards
bopd	Barrels of oil per day
C1	Proved resources according to Russian standards
C2	Probable resources according to Russian standards
C3	Possible resources according to Russian standards
km	Kilometres
mmbo	Million barrels of oil
P3	Possible reserves according to SPE/PRMS standards