Share 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$17.25 million Placing

Corporate Update

PetroNeft (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$17.25 million together with a corporate update.

Highlights:

• Gross proceeds of US$17.25 million raised at Stg£0.05 per share in a placing with institutional and other investors

• US$7.5 million will be used in part repayment of the Macquarie Bank Limited (“Macquarie”) loan facility with the balance to be used to finance the continuation of the 2012-2013 Arbuzovskoye development programme, working capital and transaction costs

• Macquarie borrowing base facility amended

• US$1 million of remaining facility to be converted into equity by Macquarie to retain its pre-placing shareholding

Placing

PetroNeft has agreed the terms of a conditional placing of 216,052,348 new Ordinary Shares at Stg£0.05 (€0.06) per Ordinary Share (the “Placing Shares”), raising gross proceeds of approximately US$17.25 million (the “Placing”).

The Placing is being executed in two tranches and has been arranged by Davy and Canaccord Genuity. The first tranche of the Placing consists of a conditional placing of 41,635,643 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 (the “Second Tranche Placing”) consists of a conditional placing of 174,416,705 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 at an extraordinary general meeting of the Company to be held on 19 November 2012 (“EGM”). A circular to convene the EGM will be sent to shareholders shortly.

US$7.5 million will be used in part repayment of the existing Macquarie loan facility with the balance to be used to finance the continuation of the 2012-2013 Arbuzovskoye development programme, working capital and transaction costs.

Directors’ and Management participation in the Placing

Certain Directors and management of PetroNeft will subscribe for the following Placing Shares:

Directors:	Placing Shares subscribed for	Resulting holding of Ordinary Shares	% of Enlarged Share Capital
Dennis Francis	1,000,000	23,760,416	3.68%
Paul Dowling	400,000	731,583	0.11%
Tom Hickey	400,000	2,226,283	0.35%
Senior management:
Karl Johnson	400,000	932,349	0.14%

Licence 61 – Arbuzovskoye Development Programme

As announced on 22 October 2012, Arbuzovskoye well 102, the second of ten planned new production wells on the Arbuzovskoye oil field, was successfully completed and brought into production at an initial rate of 540 bopd with less than 2% water cut. This production rate was well above the Company’s target rate and further confirms the excellent continuity and good reservoir properties in the eastern portion of the Arbuzovskoye field.

Development will continue with a further eight new production wells planned for the current development programme. Arbuzovskoye well 109, the next well in the drilling sequence, is currently drilling ahead. It is anticipated that the completion of development programme will be funded from operating cashflows and a portion of the proceeds of the Placing.

Arbuzovskoye contains 2P reserves in excess of 13 million barrels of oil according to independent reserve auditors Ryder Scott and is the Company’s second production development.

Macquarie Debt Facility

The Company and Macquarie have agreed to amend the Company’s existing US$30 million borrowing base loan facility. The amendments to the facility include the repayment of US$7.5 million from the proceeds of the Placing, the repayment of a further US$9.1 million in fourteen monthly instalments ($650,000 per month) beginning on 31 March 2013 and the conversion of US$1 million of debt into equity in the Company at the placing price of Stg£0.05 per share (the “Macquarie Shares”). In addition, production covenants will be removed and Macquarie will waive the right to seek additional repayments of the outstanding balance at the next three reviews which were due to take place on 31 December 2012, 30 June 2013 and 31 December 2013. Macquarie will continue to hold US$4 million in a Debt Service Reserve Account (“DSRA”) until the maturity of the loan. The final outstanding balance of US$12.4 million (US$8.4 million net of the DSRA) will be repaid in a lump sum at the maturity of the facility in May 2014. These proposed amendments and the conversion are subject to, amongst other things, the preparation and execution of formal documentation, and the completion of the Placing. The amended facility will be subject to certain financial covenants and lenders approvals for the application of certain funds typical of a facility of this nature.

In May 2012, PetroNeft entered into a three year loan facility for US$15 million with its partner Arawak Energy. This loan facility will be unaffected by the above amendments.

Corporate Development

Positioning the Company so that it can fully exploit the opportunities available to it is of crucial importance. To this end, the Company continues in active discussions with a number of parties about possible farm-outs which, in the long term, should strengthen the Company's financial position and position the Company to extract value from its reserve base and to pursue opportunities.

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

“We are pleased with the outcome of the Placing and the high level of support received from both new and existing institutional shareholders. The combination of the results of recent Arbuzovskoye wells and stable financing base will allow management to continue to focus on materially increasing our production profile and cash flows, substantially increase the value of our reserve base and focus on the numerous corporate development opportunities available to us.”

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 30 October 2012. Application will also be made for the Admission of the Second Tranche Placing Shares and the Macquarie Shares to trading on AIM and ESM, with admission of the Second Tranche Placing Shares and the Macquarie Shares expected on 20 November 2012, subject to the approval of the Second Tranche Placing 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	+353 1 443 3720
Paul Dowling, CFO, PetroNeft Resources plc	+353 1 443 3720
John Frain/Brian Garrahy, Davy (NOMAD and Joint Broker)	+353 1 679 6363
Henry Fitzgerald-O’Connor/Tim Redfern, Canaccord Genuity Limited (Joint Broker)	+44 207 523 8000
Martin Jackson, Citigate Dewe Rogerson	+44 207 638 9571
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.