OIL DRILLING UPDATE

14 August 2020

Volga Gas plc

("Volga Gas", the "Company" or the "Group")

OIL DRILLING UPDATE

Volga Gas plc, the oil and gas exploration and production group operating in the Volga Region of Russia, is pleased to provide the following update on its 2020 development and exploration drilling activities and to provide information on plans for the remainder of the year.

Drilling activities in the year to date

In light of the significant reduction in commodity prices experienced during 1H 2020, the Board of Volga Gas decided to reduce capital expenditures on its gas and condensate fields. As such, investments in the VM and Dobrinskoye fields have been adjusted to minimal levels required to maintain operational integrity. In particular, earlier plans to drill two new VM wells have been deferred for the time being.

The focus of investment during 2020 has been on a continuation of the slim hole drilling programme, which commenced during 2019, within the oil resources in and around the Group's Uzen field in the Karpenskiy licence area.

In summary, the key activities comprise:

· 11 new oil production wells (8 of which have been completed for production) in the proved areas of the Uzen field, both in the mature Aptian reservoir (where there remain small pockets of untapped oil) and in the less developed and shallower Albian reservoir;

· 3 exploration and appraisal wells on Uzen field. These confirmed the presence of oil in a previously unevaluated Upper-Aptian reservoir and also confirmed hydrocarbons in a separate geological block to the east of the existing field;

· Technical preparations for exploratory drilling undertaken, including upgrades to mud circulation, coring, logging, open and cased hole testing; and

· Developed a method of drilling wider bore slim well ("fat slim holes") to fit 4 inch casing, which is suitable for installation of electrical submersible pumps and for fracking. These have already been successfully applied to three wells (Uz-33, Uz-31, Uz-19).

The benefit of this activity has been to offset the sharp declines in production from the Group's mature conventionally drilled wells. As recently reported, oil production in the period 1 January to 31 July 2020 averaged 482 barrels per day, which compared to 410 bopd for the equivalent period in 2019, a 17.5% increase. Currently more than 50% of Uzen field production is from slim hole wells, having commenced in November 2019.

Plans for the remainder of 2020

· 6 exploratory wells are planned to be drilled, each testing separate structures with potential recoverable oil, estimated by management, of 0.3 to 8.1 million barrels. The combined unrisked resources in these prospects are estimated by management to total approximately 14 million barrels (see cautionary note re: resource estimate).

· Drilling is underway on the first of these wells, the North-Uzen structure. The well is at a depth of 1,250 metres and is planned to reach its final target at a depth of 1,350 metres, after which open hole testing will be attempted.

· In addition, development drilling will continue with 3 more wells in Uzen and East Uzen fields.

Further announcements will be made as results become available. A brief presentation providing additional non-price sensitive details and location maps will shortly be available for download from the Company's website.

Cautionary note regarding resource estimate

The potential indicative management resource estimates described in this release are conceptual in nature and are based on mapping and interpretation of seismic data carried out by the Group's in house geological and technical departments. There has been no independent determination of a resource to SPE standards and the Company cautions that there is a risk further exploration will not result in the delineation of a resource or reserve. The data should therefore not be relied upon until the Company can confirm such estimate to a Standard.

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

For further information, please contact:

Notes

The information contained in this announcement has been reviewed and verified by Mr. Andrey Zozulya, Chief Executive Officer of Volga Gas plc, for the purposes of the Guidance Note for Mining, Oil and Gas companies issued by the London Stock Exchange in June 2009. Mr. Andrey Zozulya holds a degree in Geophysics and Engineering from the Groznensky Oil & Gas Institute and is a member of the Society of Petroleum Engineers.

The Company records production in metric tonnes (for oil and condensate) and in cubic meters (for gas). Conversions from metric to standard oil field units are used for illustrative purposes only and are based on the Company's estimate of the applicable ratios. The ratios used are 7.833 barrels per tonne for oil and 8.75 barrels per tonne for condensate and 11.735 barrels per tonne for LPG. Gas volumes are translated using 35.3 cubic feet per cubic meter and 6,000 cubic feet per barrel of oil equivalent.

Glossary

bpd Barrels per day

boepd Barrels of oil equivalent per day

mmcfd Millions of standard cubic feet per day