Contract with Petraco Oil Company Limited

Urals Energy PCL

(''Urals Energy'' or the ''Company'')

Contract with Petraco Oil Company Limited

Urals Energy PCL (AIM:UEN), the independent exploration and production company with operations in Russia, announces details of a contract it entered into with Petraco Oil company Limited ("Petraco") on 7 August 2012 in relation to the sale of all of the oil produced by the Company at its Arcticneft property (the "Contract").

The Contract replaced an original contract with Petraco which was entered into on 1 September 2006 and is on broadly comparable terms with that original contract.

The Contract is a master sales contract which governs the overriding terms of the sales and purchase relationship between the Company and Petraco. The Contract includes a formula for calculating the sale price of the oil which is based on Brent Crude oil price plus a premium to reflect the increased quality of the oil from Arcticneft. The exact commercial terms of each tanker shipment are determined yearly by way an addendum to the Contract which details specific quantities, delivery details and the final sales price.

Related party transaction

In view of the fact that Ingeborg Srenger is, and was at the time the Contract was entered into, a director of both Urals and Petraco and the control she exercises over Petraco, the Contract is considered to be a related party transaction pursuant to Rule 13 of the AIM Rules for Companies. The Company's directors (with the exception of Ingeborg Srenger), having consulted with the Company's nominated adviser, Allenby Capital Limited, consider that the terms of the Contract are fair and reasonable insofar as the Company's shareholders are concerned.

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