PetroNeft provided an update on its operations in Licenses 61 and 67, Tomsk Oblast, Russian Federation.

Highlights:

•Group 2P reserves increase 36.8% to 96.9 mmbbls ◦Arbuzovskoye 13.2 mmbbls ◦Ledovoye 14.0 mmbbls (net to PetroNeft) •Hydraulic fracturing program nearing completion •Production drilling program has commenced •Exploration drilling program to commence in early April •New Loan facility agreed with Macquarie Bank Ryder Scott Report as at January 1, 2011 Independent reserve auditors, Ryder Scott has completed their assessment of Group petroleum reserves and resources as at 1 January 2011. The principal changes from the previous year's report were the addition of proved and probable reserves at the Arbuzovskoye oil field which was discovered in November 2010 and their first assessment of the reserves and resources at License 67 which was acquired by PetroNeft in January 2010. Total proved and probable (2P) reserves net to PetroNeft have risen by 36.8% to 96.9 mmbbls.

License 67 This is the first time Ryder Scott has reported on the petroleum reserves at License 67, which was acquired following an auction in December 2009. In January 2010, Arawak Energy exercised its right under the terms of the 2008 Area of Mutual Interest agreement to acquire a 50% interest in License 67 with PetroNeft remaining as operator.

Tomsk Geophysical Company was contracted to consolidate, reprocess and re-evaluate 4,432 km of 2D Seismic data acquired in and adjacent to License 67 between 1969 and 2001. They also digitized and reinterpreted the electric logs for 21 vintage wells located in the same region. The results of this study formed the basis for Ryder Scott's report on License 67.

The above prospects all have well defined 4-way dip closure at the relevant seismic horizon. In the case of Cheremshanskaya, Possible (P3) reserves have been recognized due to the existence of a prior well on the structure with potential by-passed pay in the interval.

License 61 Hydraulic fracturing program The hydraulic fracturing of nine wells at Pad #1 at the Lineynoye oil field was completed in February 2011. Mechanical issues with the workover rigs and extremely cold weather in February have slowed getting the wells back on production; however, we are satisfied with the results to date. At present, seven of the fractured wells have come back fully online and are averaging over 400 bopd after clean-up and normal initial decline. We currently anticipate that production will be in the 3,500 bopd to 4,000 bopd range by early April when all wells are back on production and we will provide a further update at that time.

Tags: PetroNeft Resources plc