Operational Update

Urals Energy PCL

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

Operational update

Urals Energy PCL (AIM:UEN), the independent exploration and production company with operations in Russia, is pleased to announce a drilling update and further information on the recent accident at the Petrosakh refinery.

ArticNeft

A first workover of well #546 at ArticNeft has been successfully completed. After being out of operation for 10 years, this well is now producing 52.15 bbls/day. The workover, the target of which was to perforate new layers, is the first of six well workover programmes at ArticNeft where additional perforation is planned. The aim of these programmes is to bring production at ArticNeft from the current average of 661.1 bbls/day up to an average of 700 to 720 bbls/day by the end of the year. A more aggressive programme to develop fracking capabilities at ArticNeft is being evaluated by the Company's management but, as a result of the current oil price, this is unlikely to be started in 2015.

Petrosakh

Well #112 at Petrosakh is in the final stage of drilling, with 270 metres remaining to the target depth. Results of this drilling are expected in a few weeks. The plan for 2015 at Petrosakh is to drill two more wells and carry out workovers of existing wells. Current production at Petrosakh is 1,155.6 bbls/day and the Company is targeting production at an average rate of 1,325 to 1,355 bbls/day by the end of the year.

Petrosakh refinery

Further investigation shows that mainly electrical control equipment was damaged by the fire on 9 January 2015. The Company is hopeful that it should be able to source the replacement parts locally, although the time required to restart operations remains currently uncertain. In the meantime, adequate storage facilities at the refinery mean that field operations should not be affected if there is a significant delay in restarting the refinery.

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