Capital Reduction and Adoption of Dividend Policy

10 July 2014

VOLGA GAS PLC

Capital Reduction and Adoption of Dividend Policy

Volga Gas plc ("Volga" or the "Company"), the oil and gas exploration and production group operating in the Volga Region of Russia, is pleased to announce that the capital reduction approved by shareholders at the Company's Annual General Meeting on 6 June 2014 has become effective. This follows confirmation by the High Court, the filing of the Court Order and a Statement of Capital with Companies House and the fulfilment of certain minor undertakings given to the Court. As a result, the Share Premium Account of the Company has been cancelled and the equivalent sum credited to the Company's Profit and Loss Account, thereby creating distributable reserves.

The Board of Volga has considered the financial condition, continuing cash generation and profitability of the Group and its ongoing capital requirements and has concluded that the Company is in a position to commence providing cash returns to shareholders.

Consequently, the Board has decided, subject to the considerations outlined above, to adopt a policy to distribute approximately 50% of consolidated net profit after tax as a cash dividend. It is the intention that this should be a progressive dividend which can be sustained and increased in line with the future growth in the profits of the Group. Subject to all legal and regulatory requirements and approvals, the Board anticipates announcing an interim dividend together with the publication of the Group's financial results for the six months to 30 June 2014, currently expected to be on or around 18 September 2014.

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