Termination of offer talks and shareholder update

Urals Energy PCL

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

Termination of offer talks and shareholder update

On 14 October 2013, Urals Energy (AIM:UEN), the independent exploration and production company with operations in Russia, announced that it had received a non-binding letter of intent from a third party, whom the Board and the Company's advisers considered to be highly credible, setting out the third party's intention (subject, inter alia, to due diligence) to make an offer for the entire issued share capital of the Company. This potential offer was at an indicative price of 12.25 pence per share.

The Company has today received a letter from the third party stating that they have decided not to proceed further with their interest in a possible acquisition of the Company.

The Company has held discussions with Adler Impex S.A. ("Adler"), who have recently announced that they are the beneficial owner of 25.08% of the issued share capital of the Company. Adler represents the interests of Mr. Shvets, a Russian banker and industrialist with investments in, amongst others, the Oil Sector. Adler have told the Company that their investment in the Company is purely financial and that they fully support the existing management team in the continuation of the Company's declared strategy of raising production as far as commercially feasible. Adler are also supportive of the Company, with its debt free balance sheet, pursuing exploration licenses and pre-production acquisition opportunities.

Adler has confirmed that it will support the existing Board in the upcoming EGM and urges the other shareholders to do the same.

Andrew Shrager, Chairman of Urals Energy, said: "Whilst we are disappointed that the potential offer has not been made to all Urals Energy's shareholders the Board believe that the true value of the Company is significantly higher than the indicated offer price per share.

"Unfortunately the recent attempts by certain parties to destabilise the Company through the alleged debt repayment document and recent police visit to the Company's Moscow office has created a considerable amount of uncertainty for shareholders and the third party who were considering making an offer for the Company.

"The Board continues to believe that the interests of shareholders are best served by voting against the resolutions to be proposed at the extraordinary general meeting convened for 27 January 2014. The Board, who are delighted with the support of the Company's 25% shareholder, will be writing to shareholders early in the New Year to set out again the reasons why shareholders should vote against the resolutions."

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