18 December 2018

Urals Energy Public Company Limited

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

Statement regarding Petrosakh Press Release

The board of Urals Energy (the "Board"), the independent exploration and production company with operations in Russia, has noticed that an English language statement, that is said to be made on behalf of Mr Sergey Kononov, addressed to the Company's shareholders (the "Statement") has been issued on the website of Urals Energy's 98.56% owned subsidiary, JSC Petrosakh ("Petrosakh").  Mr Kononov is the President of Petrosakh. The Statement was made without the Board's knowledge or consent.

The Board views the allegations against the Board made within the Statement as being without substance and not supported by the facts.  The Board stands by the Company's recent Regulatory Information Service announcements concerning Mr Kononov and his actions.  Urals Energy's shares are traded on AIM and the Board has always taken care to ensure that any information it announces is not misleading, false or deceptive and does not omit anything likely to affect the import of such information.

The Board notes commentary within the Statement which relates to Mr Kononov becoming the President of Petrosakh in 2017, following a time of alleged underperformance and mismanagement of that company. The Board notes, however, that Mr Kononov was responsible for Petrosakh from 2014, as he became the General Director of Urals Energy LLC, the former management company for the Group's operations in 2014.

Contrary to the impression given in the Statement that the Board's members have not participated in local Russian matters, the Board notes that the Company's Chief Executive Officer, Mr Leonid Dyachenko was in Russia until the fourth quarter of 2018, when he decided to come to London to advise the Board. The Board also notes that Mr Kononov has not accepted an invitation to meet with the Board and the Company's Nominated Adviser in London in the fourth quarter of 2018. 

In terms of the commentary in the Statement in relation to the independent accountant's review of Petrosakh's transactions and the effects of these transactions, the Board notes that the independent review of transactions by Petrosakh that were outside of the ordinary course of business by Crowe Russaudit LLC (the results of which were announced on 22 November 2018) was initially proposed by Mr Kononov via his representatives and its terms of reference were agreed with those representatives.  As announced on 22 November 2018, the Board decided to delay the implementation of the review of the short-term working capital requirements of the Group for the forward-looking period to 30 June 2019 by the London affiliate office of Crowe, Crowe U.K. LLP, until Mr Kononov has indicated whether or not he will take personal responsibility for the loans and transactions made by the Group that were not authorised by the Board and organise their prompt repayment, and thus secure the financial position of the Company.  In respect of this matter, as announced on 17 December 2018, the Board notes that Mr Kononov has made certain early stage indications that he may provide support in respect of the Group's working capital deficit. However, there is no evidence of progress in respect of this matter.

The Board acknowledges that Mr Kononov, as the President of Petrosakh, has certain powers under Russian Law.  However, as a company with its shares traded on AIM, the Board believes that these powers should be only exercised with the approval of the Board, so as to ensure that the Company is able to comply with its obligations under the AIM Rules for Companies at all times, and it has been the rule and practice of the Group that these powers will only be used with the approval of the Board. Mr Kononov followed this practice until the recent loans and transactions made/undertaken by Petrosakh that were not authorised by the Board (as described in detail in the Company's announcement of 22 November 2018).

As announced on 11 December 2018, the Company has received a requisition notice from Adler Impex S.A., a company that is the registered holder of 44.59% of the Company's ordinary shares, which the Board believes is owned by a trust for the benefit of the family of Mr Kononov, for the replacement of all of the current Board directors.  As referenced in the Company's announcement of 17 December 2018, the Company intends to convene an extraordinary general meeting of the Company in due course, in line with the applicable provisions of Cyprus law.  Further information regarding why the Board believes that shareholders should vote against these resolutions will be set out in the circular proposed to be sent to shareholders in respect of this extraordinary general meeting.

- Ends -

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