PetroNeft, owner and operator of Licences 61 and 67, Tomsk Oblast, Russian Federation, provided an update on its operations.

Highlights: •Pipeline pressure testing successfully completed •Fourth production well successfully drilled •Construction of production facilities on schedule •Arbuzovskaya exploration well site preparations substantially complete. Pipeline Construction Hydro-static pressure testing of the pipeline has been completed on schedule. The 60 km pipeline was successfully tested to design pressure which is twice the normal operating pressure. The water used in the testing procedure will now be removed from the pipeline in preparation for the commencement of oil production.

Development Drilling Drilling of the fourth of nine production wells at the Lineynoye oil field has now been completed ahead of schedule. Preliminary log and survey data indicate that this well has the highest quality reservoir and net pay characteristics encountered to date in the development program.

Well No. Top of Reservoir Vertical Depth Subsea (meters) Gross Hydrocarbon Interval (meters) Net Oil Pay (meters) Comments 113 2,396 17.6 14.6 Interval is completely saturated with oil

Production casing will now be run in well No. 113 and cemented. The drilling rig will then be moved along its rails and drilling of the fifth well, No. 114, will commence shortly. A work-over rig is continuing the process of perforating and installing electrical submersible pumps in wells 109, 110, 112 and 113.

Production Facilities Construction of production facilities continues and is on schedule to be completed for first oil production in the third quarter of 2010.

Arbuzovskaya Exploration Well Rig-up operations for the Arbuzovskaya exploration well are substantially complete and drilling is scheduled to commence in October after the nine well production drilling program has been completed. This is the first of at least three exploration/delineation wells to be drilled in the northern part of License 61 in 2010 and 2011. This program has the potential to materially increase both Group reserves and the long term production potential of License 61.

Dennis Francis, Chief Executive Officer of PetroNeft, commented, "Successful completion of pipeline testing is another major milestone and construction of production facilities remains on schedule. We are very encouraged by the result of the latest production well which is the best drilled so far and look forward to achieving first production in the third quarter and our year-end production target of 4,000 bopd."

Tags: PetroNeft Resources plc