PetroNeft Resources’ wholly owned subsidiary “LLC Lineynoye” won the State Auction for the Ledovy Licence No. 67 in the Tomsk Region of Western Siberia in December 2009. Highlights: Ledovy Licence 67 is located in the main oil bearing region of the Tomsk Oblast west of the Ob River The large 2,447 km2 Licence is surrounded by proven and producing oil and gas fields and is located close to existing road, power and pipeline infrastructure Russian registered C3 (possible) recoverable resources are 55 million barrels in 3 prospects There is believed to be significant upside within existing discoveries — two structures have previously tested oil but require further appraisal Discoveries have potential to form the basis of a future development project Modest initial 3 year work commitment involves reprocessing old well and seismic data, acquisition of 750 km of new seismic data and drilling of one well Location The Ledovy Licence area is located west of the Ob River in the main oil bearing part of the Tomsk Oblast (Figure 1). The Licence has an area of 2,447 km2 and is surrounded by proven and producing oil and gas fields. Two producing oil fields, Grushevoye and Lomovoye, containing about 90 million barrels of C1+C2 reserves are located within the Licence area, but are excluded from the Licence. However, two existing drilled structures, Ledovoye and Sklonavaya, included in the Licence area have previously tested oil and may form the basis of a future development project (Figure 2). The Vasyugan-Raskino oil pipeline and electric power lines run through the middle of the Licence area. There is a paved road and oil pipeline that runs to Strezhevoy through the northwestern tip of the Licence area. Both pipelines have the potential to accommodate production from any incremental discoveries in the Licence. Brief History Exploration on the Ledovy Licence began in the 1950s with wells being drilled on large prospects identified by vintage seismic data. Modern 2D seismic data was subsequently acquired from 1980 to 2001. Russian registered C3 (possible) resources are currently 55 million barrels. A total of 8 wells have been drilled on the Licence. PetroNeft has reviewed the drilled and currently mapped undrilled structures and believes that there is significant upside within existing discoveries, potentially by-passed pay and new exploration prospects within the block. Two of the previously drilled structures, Ledovoye and Sklonavaya, have tested oil but have not to date been assigned any C1+C2 (proved and probable) reserves. PetroNeft believes that these discoveries have potential to form the basis of a future development project on the Licence, but also intends to pursue an active exploration programme. Source rocks are present in the Lower Jurassic Togur and Upper Jurassic Bazhenov formations. Nearby oil fields produce primarily from Upper Jurassic sandstone reservoir objectives and also Cretaceous sandstones. Licence and Work Programme The Licence is an exploration licence for 5 years but can be extended based on an agreed work programme. Discovered fields will convert into production licences once the discovery is registered. The minimum work commitments are to re-analyse the data from old wells and seismic surveys, acquire 750 km of new 2D seismic and drill one well within 3 years. The bid consideration was 42 million Roubles (US$1.39 million). The planned 2010 work programme will focus on the overall re-evaluation of all the previous data on the Licence area with modern technology. Well and seismic data will be reprocessed and the results of this evaluation used to acquire 750 km of new seismic data, which will help to determine the exploration priorities for the Licence area. It is also possible that some of the old wells could become workover candidates. This analysis will also be part of the 2010 work programme. Arawak Area of Mutual Interest The Licence is within Western Siberia and thus falls within the 2008 Area of Mutual Interest agreement between PetroNeft and Arawak Energy Limited (Arawak). Under this agreement Arawak is entitled to participate in up to a 50 percent interest in the Licence and will confirm its intentions by the end of January 2010. PetroNeft will remain as operator of the Licence.