Public Company Limited Investor presentation February 2013 Page 0
Disclaimer This presentation is the sole responsibility of the directors of Urals Energy PCL (the Company ). Allenby Capital Limited ( Allenby Capital ), which is authorised and regulated by the Financial Services Authority, is acting as the nominated adviser and broker to the Company. This presentation does not constitute a recommendation regarding the shares of the Company nor a representation that any dealing in those shares is appropriate. The Company accepts no duty of care whatsoever to the reader of this presentation in respect of its contents and the Company is not acting in any fiduciary capacity. The information contained in the presentation has not been verified, nor does this presentation purport to be all-inclusive or to contain all the information that an investor may desire to have in evaluating whether or not to make an investment in the Company. This document (including its contents) is confidential and is for distribution in the United Kingdom only, to persons who are authorised persons or exempted persons within the meaning of the Financial Services and Markets Act 2000 or any Order made there under, or to persons of a kind described in Articles 19 or 49 or 50 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended) and, if permitted by applicable law, for distribution outside the United Kingdom to professions or institutions whose ordinary business involves them in engaging in investment activities. It is not intended to be distributed or passed on, directly or indirectly, to any other class of persons. No offer or invitation or solicitation of any offer to acquire securities of the Company is being made now nor does this presentation constitute or form part of any invitation or inducement to engage in investment activity under section 21 of the Financial Services and Markets Act 2000. No reliance may be placed for any purpose whatsoever on the information contained in this presentation or any assumptions made as to its completeness and no warranty or representation is given by or on behalf of the Company nor its directors, employees, agents, Allenby Capital and other advisers as to the accuracy or completeness of the information or opinions contained in this presentation and no liability is accepted by any of them for any such information or opinions, provided that nothing in this paragraph shall exclude liability for any representation or warranty made fraudulently. The information and opinions contained in this presentation are provided as at the date hereof. The contents of this presentation are confidential and must not be copied, published, reproduced, distributed or passed in whole or in part to others at any time by recipients. This presentation is being provided to recipients on the basis that they keep confidential any information contained herein or otherwise made available, whether oral or in writing, in connection with the Company. In particular, this presentation should not be distributed, published or reproduced in whole or in part or disclosed by recipients to any other person or entity and, in particular, should not be distributed to United States residents, corporations, or other entities, US persons (as defined in Regulation S promulgated under the United States Securities Act of 1933 (as amended), persons with addresses in the United States of America (or any of its territories or possessions), Canada, Japan, the Republic of Ireland, the Republic of South Africa or Australia, or to any corporation, partnership or other entity created or organised under the laws thereof, or in any other country outside the United Kingdom where such distribution may lead to a breach of any law or regulatory requirement. Notwithstanding the foregoing, the Company can distribute this document to US Persons (as defined above), persons with addresses in the United States of America (or its territories or possessions), United States residents, corporations or other entities if the Company is satisfied that an applicable exemption applies. Distribution of this document in the United States of America in the absence of such an applicable exemption may constitute a violation of United States securities law. Page 1
Urals Energy Public Company Limited Company Cyprus-based E&P holding company Country of operations Russian Federation Assets Two E&P licences: - far North on Kolguyev island - far East on Sakhalin island Current production 2,150 BOPD (December 2012) Exchange AIM, London (IPO in August 2005) Ticker UEN Shares outstanding 252,446,060 Page 2
Area of operations Arcticneft Moscow Russian Federation Petrosakh Page 3
Transition of Urals Energy (2010 2012) Focus on Company turnaround resolution of legacy issues development of Petrosakh and Arcticneft assets Overall cost-cutting measures, downsizing and personnel changes US$9.0 million secondary placement in Q4 2010 Petrosakh change of management, restructuring of sales policies, introduction of results-based remuneration and third party supervision of drilling program Restructuring of Petraco debt Repayment of Taas loan, resolution with Finfund and Sberbank Repayment to Petraco, release of Petrosakh Arbitration with former director with final award in favour of Urals Energy Appointment of new members of the Board Page 4
Assets overview Page 5
Petrosakh - overview Petrosakh is a Russian closed joint stock company, incorporated in July 1991 to develop the Okruzhnoe field on the eastern coast of Sakhalin Island Urals Energy acquired its ownership interest (97.16%) in Petrosakh on 19 November 2004. The remaining minority ownership (2.84%) interest is held by the Administration of Sakhalin Island E&P License was renewed in 2012 until 2037 Operates the only refinery on the island (c.4,200 bopd) Premium quality, light oil with low paraffin and sulphur. Crude sold with a premium to Dubai benchmark HSE 237 employees Operations are in compliance with Russian safety standards and HSE regulations Production of Petrosakh stands at a level of 1,440 BOPD Page 6
Petrosakh - existing infrastructure In-house drilling and oil field services equipment and machinery: two rigs with a capacity of 80 and 100 tons (development and sidetracking drilling up to 2000m) The only refinery on the island refining capacity of circa 4,200 bopd with option to expand wide range of oil products - producing diesel, gasoline, kerosene and fuel oil Additional flexibility rail terminal and an oil processing facility with capacity of circa 8,300 bopd export crude oil storage capacity of 300,000 bbl and an oil product storage capacity of 64,000 bbl existing storage facilities provide for accumulation of production all year round International sea terminal with direct access to export routes renewable license for handling hazardous goods, including oil and oil products suitable for loading/unloading operations access of oil tankers from 6,000 to 80,000 ton deadweight allows export of up to 100% of crude and refined products cost effective option to upgrade to allow export of high margin refined products Page 7
Arcticneft - overview Arcticneft is a Russian closed joint stock company incorporated in 1998 in order to develop the Peschanoozerskoe field E&P license valid till 31 December 2067 Urals Energy acquired 100% of Arcticneft in July 2005 located with direct route to European markets high quality, light oil with low sulphur content crude sold with an a premium to Brent HSE 150 employees associated gas is fully utilised operations are in compliance with Russian safety standards and HSE regulations Page 8
Arcticneft - existing infrastructure Downstream Oil refining unit, circa 440 bopd Produces diesel, fuel oil and straight run gasoline mostly for own needs and local sales points Flexible facilities and infrastructure oil treatment facility with capacity of 2,205 bopd export crude oil storage capacity of 345,000 bbl and oil product storage capacity of 50,000 bbl existing storage facilities allow accumulation of production year round Sea loading point provides 100% export capability located directly off the coast and adjacent to the field s crude oil tank farm allows oil tankers up to 80,000 ton deadweight Page 9
Arcticneft - E&P capability Well work service units APRS 40 with rated capacity up to 40 tonnes UPA 60/80 with rated capacity up to 80 tonnes Russian-made drilling rig «Uralmash-3D-76» max depth of 5,000 m provides options for exploration and production well drilling capacity up to 260 tonnes located on the field Reservoir pressure maintenance system water from an aquifer system of Middle Triassic deposits containing high-pressure waters water wells depth 1,300-1,400 m equipped with bottom-hole pumps Page 10
Strategy Page 11
Strategy overview Short term Drill up to 2 wells at Petrosakh Finalize GeoDynamics survey at Arcticneft Drill 1 well at Arcticneft, if successful evaluate additional wells Mid term Long term Continue drilling program to increase new wells at both Petrosakh and Arcticneft Increase production at both fields Evaluate utilization of maximum upside potential in downstream and marketing esp. at Petrosakh via renewal of export operations of refined products Evaluate possible M&A activities Derive maximum value to shareholders through effective management of old and new assets Increased focus on downstream operations via growth in export and domestic sales of refined products Continue to evaluate possible M&A activities Page 12