Shareholder update

Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR).

4 May 2018

Urals Energy Public Company Limited

("Urals Energy", the "Company" or the "Group")

Shareholder update

The board (the "Board") of Urals Energy PCL (AIM: UEN), the independent oil and gas exploration and production company with operations in Russia, is pleased to provide the following updates.

Competent Person's Report

Blackwatch Petroleum Services Ltd ("Blackwatch") have completed their assessment of the Company's "Remaining Reserves and Resources Potential" as at 1 January 2018, which is contained within a Competent Person's Report which is in the process of being finalised (the "CPR" or "Report") and is summarised below:

Further details can also be found in the table below:

In addition, Blackwatch have recognised Prospective Resources at the Company's Ordymsky licence ("RK Oil") in the Komi Republic:

Further details can also be found in the table below:

The primary basis for Blackwatch's assessment was a package of data made available by Urals Energy. Where possible, Blackwatch have undertaken a review/audit of the technical work carried out by Urals Energy and its advisors and third party consultants that have worked on the assets for Urals Energy. Blackwatch have carried out independent estimates of reserves, contingent resources and prospective resources and their findings will be summarized in the CPR. In estimating hydrocarbons in place and recoverable volumes, Blackwatch have used the standard geoscience and petroleum engineering techniques. These combine geophysical and geological knowledge with detailed information concerning porosity and permeability distributions, reservoir temperature and pressure conditions and fluid characteristics. There is of course uncertainty inherent in the measurement and interpretation of basic data. Blackwatch have estimated the degree of this uncertainty and have used statistical methods to calculate the range of hydrocarbons initially in place or recoverable. It should be understood that any technical assessment, particularly one involving exploration and future petroleum developments, may be subject to significant variations over time as new information become available. The resources included in this evaluation are therefore estimates and should not be construed as exact quantities. Blackwatch have classified the prospective hydrocarbons according to the SPE/WPC/AAPG/SPEE Petroleum Resources Management System ("PRMS") (Source: http://www.spe.org/industry/docs/Petroleum_Resources_Management_System_2007.pdf).

Once finalised, the Company intends in due course to publish an Executive Summary of the Report on the Company's web site - www.uralsenergy.com

Production and drilling update

Average daily production at Petrosakh declined, as expected, from 1,275 bbls/day in 2016 to 1,079 bbls/day in 2017. Production has now been stabilised at an average of 930 bbls/day through work overs of existing wells.

At Arcticneft, average production in 2017 was 992 bbls/day and this continues to be maintained, with an active well work over programme.

Drilling of the first well at South Dagi was delayed by adverse weather conditions in the first months of the year, but now is underway and should be completed by the end of the second quarter of 2018, as announced on 6 February 2017.

In order to speed up the development of South Dagi, the Board has decided to order the work over of three of the original wells on the licence, with additional equipment acquired on Sakhalin Island. This will assist in mitigating against the decline at Petrosakh and thus increase throughput at the Company's refinery.

Tanker for Arcticneft

The Board anticipates that the first 2018 tanker loading for Articneft will be towards the end of July 2018, with a target of 20,000 tons (158,000 bbls), with a second towards the end of October 2018 with the same volume.

2017 EBITDA and dividend

Reduced production at Petrosakh, combined with the increases in the Mineral Extraction Tax and Excise Duty imposed on domestic sales, offset partially by the effect of a full year of production and revenue due to the acquisition of Artic Oil, will mean that the overall group EBITDA for the year ended 31 December 2017 will be lower than in 2016 (2016 EBITDA: US$ 7.8 million). Results for the year ended 31 December 2017 are expected to be published in June 2018. A recommendation for a dividend will be made at the same time, which will be subject to shareholder approval at the next Annual General Meeting, planned for November 2018. The Board's policy is to maintain a dividend at 10% of EBITDA, subject to no other adverse factors.

Appointment of Brandon Hill Capital Limited

The Board is pleased to announce that Brandon Hill Capital Limited has been appointed as the Group's Financial Adviser to introduce strategic partners such as oilfield services companies and investors, with the aim of forming joint venture partnerships or other suitable structures, and/or raising capital for our development projects for Articneft and in Komi. The intention is to start with the Articneft development, where our plans include fracking and additional wells, taking advantage of the substantial reserves confirmed by Blackwatch and shown at the beginning of this announcement.

Andrew Shrager, Chairman of Urals Energy, commented: "Our Reserve Report confirms the scale of the development potential within our Proven and Probable Reserves, as well as the substantial scope within our Komi Republic portfolio for upgrading to reserves and development. We are continuing to work on possible acquisitions, as well as the partnerships on which Brandon Hill will be assisting us, to advance these opportunities for major development. As always timing is critical, and the recent improvements in the oil price are encouraging, but we need to make sure we achieve the best deals for the benefit of shareholders. A continuation of dividends reflects the Board's confidence in the strong position of the Company."

Further announcements will be made as appropriate.

Mr. Radwan Hadi, who meets the criteria of a qualified person under the AIM Guidance Note for Mining, Oil and Gas Companies, has reviewed and approved the technical information contained within the 'Competent Person's Report' and the 'Glossary of Technical Terms' sections of this announcement. Mr. Hadi is a BSc graduate and was awarded an MSc in Chemical Engineering from the University of Bradford in 1979. He is Deputy Managing Director of Blackwatch Petroleum Services and has over thirty five years of experience in the international oil industry.

For further information, please contact:

Appendix

Glossary of Technical Terms

Reserves Categories:

(Source: http://www.spe.org/industry/docs/Petroleum_Resources_Management_System_2007.pdf - pages 28 & 29)

Proved reserves are those quantities of petroleum, which by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be commercially recoverable, from a given date forward, from known reservoirs and under defined economic conditions, operating methods, and government regulations.

Probable reserves are those additional Reserves which analysis of geoscience and engineering data indicate are less likely to be recovered than Proved Reserves but more certain to be recovered than Possible Reserves.

Possible reserves are those additional reserves which analysis of geoscience and engineering data indicate are less likely to be recoverable than Probable Reserves.

1P - Taken to be equivalent to Proved Reserves; denotes low estimate scenario of Reserves.

2P - Taken to be equivalent to the sum of Proved plus Probable Reserves; denotes best estimate scenario of Reserves.

3P - Taken to be equivalent to the sum of Proved plus Probable plus Possible Reserves; denotes high estimate scenario of reserves.

Prospective Resources Categorization

Source: http://www.spe.org/industry/docs/Petroleum_Resources_Management_System_2007.pdf - pages 31, 39 & 37

Low (P90) resource: With respect to resource categorization, this is considered to be a conservative estimate of the quantity that will actually be recovered from the accumulation by a project. If probabilistic methods are used, there should be at least a 90% probability (P90) that the quantities actually recovered will equal or exceed the low estimate.

Best (P50) resource: With respect to resource categorization, this is considered to be the best estimate of the quantity that will actually be recovered from the accumulation by the project. It is the most realistic assessment of recoverable quantities if only a single result were reported. If probabilistic methods are used, there should be at least a 50% probability (P50) that the quantities actually recovered will equal or exceed the best estimate.

High (P10) resource: With respect to resource categorization, this is considered to be an optimistic estimate of the quantity that will actually be recovered from an accumulation by a project. If probabilistic methods are used, there should be at least a 10% probability (P10) that the quantities actually recovered will equal or exceed the high estimate.

Prospective Resources - those quantities of petroleum which are estimated, as of a given date, to be potentially recoverable from undiscovered accumulations.

Remaining Reserves and Resources - those quantities of petroleum (of any category) which are estimated, as of a given date, to be recoverable after deducting actual petroleum quantities that are already produced.