Operational and Corporate Update

12 November 2014

Volga Gas plc

("Volga Gas" or "the Company")

OPERATIONAL AND CORPORATE UPDATE

Volga Gas plc ("Volga Gas" or the "Company"), the oil and gas exploration and production group operating in the Volga Region of Russia, provides the following updates.

Drilling operations on VM Well #3

As announced with the Interim Results on 15 September 2014 drilling operations on the VM #3 well on the Vostochny Makarovskoye ("VM") field had encountered mechanicals difficulties, with drill pipe being stuck at a depth of 2,556 metres. Subsequent attempts by the drilling contractor to release the stuck drill pipe have not been successful and operations have been suspended. Volga Gas is working with the contractor to resolve this technical matter and, pending a cost effective solution, which is likely to involve drilling a sidetrack from the existing bore hole at a depth of 1,900 metres, it has been decided to continue suspension of operations. It is therefore likely that VM #3 will not be completed until H1 2015. This will have the effect of delaying the expected production growth from the VM field until mid-2015. The well is being drilled on a turnkey contract basis and therefore the cost to date has not been materially affected.

The existing wells on the VM field continue to produce strongly and maintain total group production at a level of approximately 4,700 barrels of oil equivalent per day ("boepd"), slightly ahead of the average of 4,419 boepd achieved in H1 2014.

Update on Formal Sale Process

As announced on 5 June 2014, the Board of Volga Gas has been exploring strategic options for the business, including seeking potential offerors for the Company by means of a formal sale process pursuant to the City Code on Takeovers and Mergers. The process remains ongoing and further announcements will be made in due course.

For further information, please contact:

Editors' notes:

Volga Gas is an independent oil and gas exploration and production company operating in the Volga region of Russia. The company has 100% interests in its four licence areas.

The information contained in this announcement has been reviewed and verified by Mr. Mikhail Ivanov, Director and 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. Mikhail Ivanov holds a M.S. Degree in Geophysics from Novosibirsk State University. He also has an MBA degree from Kellogg School of Management (Northwestern University). He is a member of the Society of Petroleum Engineers.