Продажа нефтедобывающей компании в Калининграде с месторождениями

Translation from Russian into English:

OJSC "KALININGRADNEFT"

oil producing industry

Confidence

Stability

Reliability

2

OJSC "KALININGRADNEFT"

oil producing industry

Company features

OJSC "Kaliningradneft" is a dynamically developing oil company, operating on the territory of the Kaliningrad region since the 90s.

The main activity areas of the company are production and sale of oil.

Currently, 65 people are employed with the company in accordance with the labor law, including:

- Senior managers and heads of departments (services) in the amount of 10 people;

- Specialists of high qualification in number of 8 persons;

- Specialists of average skill level in number of 28 people;

- Specialists of working professions in number of 3 persons;

- Machinists (drivers) of machinery and vehicles in number of 11 people;

- Unskilled workers in number of 5 people.

3

OJSC "KALININGRADNEFT"

oil producing industry

Company features

Average monthly level of oil production is 800 tons of crude oil, which corresponds to the standards and quality in accordance with GOST R 51858-2002 "Oil. General technical specifications" (approved by Resolution No. 2-ст of the State Standard of the Russian Federation dated 08.01.2002) and TU-39 E63-93 "Russian Oil, supplied for export".

The oil quality standard is annually confirmed by the profound expert analysis at "SOEX-Baltiya" ("SOYUZEXPERTIZA» - SOEX Baltiya), which entitles the company to export crude oil.

In 2014 the company produced 9935 tons of crude oil. The total turnover for the reporting period is more than 151.5 million rubles.

4

OJSC "KALININGRADNEFT"

oil producing industry

Company features

While conducting its financial and economic activity, the company uses the movable and immovable property which is in the ownership or long-term lease.

Thus, the following vehicles are used by the company in its daily work:

- Tractor trucks - 3 units;

- Trailers (road train, tanks, trawl) - 4 units .;

- Other cargo specialized equipment - 7 units .;

- Small cargo vehicles - 4 units .;

- Warehouse forklift in - 1 unit .;

- Passenger vehicles - 2 units.

These vehicles are owned by the company.

5

OJSC "KALININGRADNEFT"

oil producing industry

Company features

The following belongs to the immovable assets of the company: land, wells (wells’ stock), buildings and structures, including engineering and road (linear objects) infrastructure.

Thus, the company owns and uses land plots with the total area of ​​more than 12.7 hectares, 60% of which are owned by the company. The company’s wells and engineering infrastructure also belong to the company assets.

The balance sheet value of fixed assets as of 01.01.2015 is more than 234 million rubles.

6

OJSC "KALININGRADNEFT"

oil producing industry

Company features (Novo-Serebryanskoye)

			Years of		Reserves as of	Approved deposites
№	Subject of Federation	Quality	a. discovery	Deposits’	01.01.14
n/n	Distributed, unallocated	characteristic	b. development	category	For oil and condensate
	reserves	of oil, gas, condensate	c. suspension			As of the date	Balance	Body,
	Degree of development (under	ethane, propane		A		of approval	as of	approved
	development, prepared for commercial	butane, sulfur, helium		B			01.01.2015	the deposits
	exploitation, under exploration,	N2 CO2	d. extraction+ loss	A+B			Per category
	suspended)		starting from	C1			A+B+C1	Year of
	Name and type of deposit		development	A+B+C1				protocol №
	Type of accumulation. Address		e. extraction+ loss	C2				approval
	Productive sediments		as of the date of
	Collector (carbonate, terrigenous)		approval of deposit by SRC		geological
	Stratum depth, m		f. depletion of		extracted	For oil and condensate
	License No. and date of registration		reserves, %			geological /extracted
	Gas type		g. water cut,%
			h. recovery rate %
1	Novo-Serebryanskoye deposit КЛГ 10863 НЭ 21.02.2000 Distributed reserves Under development Blanket-like accumulation Cambrian Terrigenous 1520-1540 m	a) 0.846 g / cm3 b) 7,37 c) 0,20-0,24 d) 3,63 e) 8,53 f) 62 g) -2	a) 1986 b) 1990 d) 205 e) 11,4 f) 79 g) 94,9 h) 2,1	B	319 60	519 260	314 55	State Reserves Committee RF Ministry Order №193-2002 of 02.08.2002

7

OJSC "KALININGRADNEFT"

oil producing industry

Company features (Veselkovskoye)

			Years of		Reserves as of	Approved deposites
№	Subject of Federation	Quality	a. discovery	Deposits’	01.01.14
n/n	Distributed, unallocated	characteristic	b. development	category	For oil and condensate
	reserves	of oil, gas, condensate	c. suspension			As of the date	Balance	Body,
	Degree of development (under	ethane, propane		A		of approval	as of	approved
	development, prepared for commercial	butane, sulfur, helium		B			01.01.2015	the deposits
	exploitation, under exploration,	N2 CO2	d. extraction+ loss	A+B			Per category
	suspended)		starting from	C1			A+B+C1	Year of
	Name and type of deposit		Development	A+B+C1				protocol №
	Type of accumulation. Address		e. extraction+ loss	C2				approval
	Productive sediments		as of the date of
	Collector (carbonate, terrigenous)		approval of deposit by SRC		geological
	Stratum depth, m		f. depletion of		extracted	For oil and condensate
	License No. and date of registration		reserves, %			geological /extracted
	Gas type		g. water cut,%
			h. recovery rate %
2	Veselkovskoye deposit КЛГ 10862 НЭ 21.02.2000 Distributed reserves Under development		d) 171 f) 40.9 g) 79.3 h) 1.2	C1	684	850	679	Rosnedra Federal Agency on Subsoil Use 11.01.2006 № 18/1-pr Rosnedra 11.01.2006 № 18/1-pr
					252	418	247
	Deposit of Central block Cm2 terrig. 2497 m	a) 0.805-0,821 b) 0.8-2.83 c)0.067 d) 5.2 e) 3.68 f) 94	a) 1973 b) 1992 d) 104 f) 38.9 g) 69.6 h) 0.79	C1	438	540	436
					163	265	161
	Deposit of North-East block Cm2 terrig. 2407 m	a) 0.808 c) 0.06 d) 5.67 e) 5.69 f) 94 g) -11	a) 1973 b) 1992 d) 67 f) 43.6 g) 83.5 h) 1.7	C1	246	310	243	Rosnedra 11.01.2006 № 18/1-pr
					89	153	86

OJSC "KALININGRADNEFT"

oil producing industry

Company features (Sechenovskoye)

			Years of		Reserves as of	Approved deposites
№	Subject of Federation	Quality	a. discovery	Deposits’	01.01.14
n/n	Distributed, unallocated	characteristic	b. development	category	For oil and condensate
	reserves	of oil, gas, condensate	c. suspension			As of the date	Balance	Body,
	Degree of development (under	ethane, propane		A		of approval	as of	approved
	development, prepared for commercial	butane, sulfur, helium		B			01.01.2015	the deposits
	exploitation, under exploration,	N2 CO2	d. extraction+ loss	A+B			Per category
	suspended)		starting from	C1			A+B+C1	Year of
	Name and type of deposit		development	A+B+C1				protocol №
	Type of accumulation. Address		e. extraction+ loss	C2				approval
	Productive sediments		as of the date of
	Collector (carbonate, terrigenous)		approval of deposit by SRC		geological
	Stratum depth, m		f. depletion of		extracted	For oil and condensate
	License No. and date of registration		reserves, %			geological /extracted
	Gas type		g. water cut,%
			h. recovery rate %
3	Sechenovskoye deposit КЛГ 13660 НЭ 04.07.2006 Distributed reserves Under development Blanket-like accumulation Cambrian Terrigenous 1500 m	a) 0.851 b) 16.29 c) 0.30 d) 0.12 e) 9.27 f) 43.5 g) +1	a) 2004	C1	16	16	16
					8	8	8	State Reserves Committee (Rosnedra) protocol №532(m)-2004 of 27.12.2004
3	Sechenovskoye deposit КЛГ 13660 НЭ 04.07.2006 Distributed reserves Under development Blanket-like accumulation Cambrian 1500 m	a) 0.851 b) 16.29 c) 0.30 d) 0.12 e) 9.27 f) 43.5 g) +1	a) 2004	C2	13	13	13
					7	7	7	State Reserves Committee (Rosnedra) protocol №532(m)-2004 of 27.12.2004

9

OJSC "KALININGRADNEFT"

oil producing industry

Company features.

The company belongs to the business entities of average level. In accordance with the existing legislation and on a mandatory basis, the company makes sure that the hazardous production facilities and cars are insured, additional insurance premiums are paid with regards to the employees involved in hazardous (heavy) works, and the employees are provided with the special clothing and personal protective equipment. The company has a sufficient level of material and resource provision. Contracts for the supply of specialized equipment and machinery are concluded with the leading Russian factories. In the company there are no debt arrears on payments to the budget and extra-budgetary funds for taxes and obligatory payments.

In 2014, the tax payments to the budgets of various levels amounted to the sum over $ 88 million.

10.

OJSC "KALININGRADNEFT"

oil producing industry

Information on licenses and number of wells.

At the disposal of the company there are three oil fields:

 Veselovskoye deposit with a term of validity of License №КЛГ 10862 НЭ till 31.12.2053, (development wells in number of 2 units., suspended - 3 units.);

 Novo- Serebryanskoye deposit with a term of validity of License №КЛГ 10863 НЭ till 31.12.2029, (development wells in number of 6 units., injection well - 1 unit.)

 Sechenovskiy deposits with a term of validity of License №КЛГ 13660 НЭ till 30.06.2026 (suspended well in number of 1 unit.).

11

OJSC "KALININGRADNEFT"

oil producing industry

Quantity and quality of produced oil.

Indicators of chemical composition of the oil produced in the Kaliningrad region are estimated at a high level, which offers competitive opportunities in sales of such oil at higher prices compared to other regions of the Russian Federation.

So, for example, the oil from Veselovskoye and Novo- Serebryanskoye fields is low-sulfur (up to 0.3%), light (from 0.805 g/cm3 to 0.851 g/cm3), low viscosity (up to 7.37 MPa), with a paraffin content from 0.12 % to 5.7%, low-tarry (3,7-9,27). The oil-dissolved gas is available only in Veselovsky field (gas factor in the Central section - 66.4 m3/t, in the North-East section - 76 m3/t), industrial development is not carried out.

12

OJSC "KALININGRADNEFT"

oil producing industry

Quantity and quality of produced oil.

Table - Composition and gas content of crude oil at Novo- Serebryansky and Veselovsky fields.

Deposit	Novo- Serebryansky		Veselovsky
	Well 11		Wells 2,3,4
Components	Component composition of reservoir crude oil
	Weight %	Mol. %	Weight %	Mol. %
Carbon dioxide	0.005	0.028	0.000	0.000
Nitrogen + rare	0.053	0.469	0.287	1.870
Hydrogen	0.001	0.001	0.000	0.000
Carbon monoxide	0.001	0.004	0.000	0.000
Helium	0001	0003	0000	0000
Methane	0,017	0,269	1,159	13,206
Ethane	0,005	0,045	1,113	6,761
Propane	0,025	0,143	2,140	8,868
Isobutane	0.037	0.160	0.496	1.559
N-butane	0,090	0,387	1,584	4,980
Isopentane	0.170	0.589	0.807	2.044
N-pentane	0.242	0.836	1.197	3.032
Hexanes	1.141	3.301	2.468	5.234
Residue (C7 + higher)	98.214	93.764	88.700	52.400
Total	100.0	100.0	100.0	100.0
Molecular weight, g/mole	249.4		149.5
Gas content, m3 /t	0.84		66.27
m3 / m3	0.71		53.8

13

OJSC "KALININGRADNEFT"

oil producing industry

Operating procedure of crude-oil production.

 Drilling of producing wells (the drilling is performed by specialized contractor organizations, control and management of the drilling process is provided by the customer - OJSC "Kaliningradneft");

 Oil production from the wells. The procedure is as follows:

- Full-time surveillance over the operation regime of the wells by the operators;

- Transportation of water-oil liquid pulled from the wells, by mechanical or free-flow production method, through pipelines from the wellhead to the measuring unit and further to water discharge unit with the addition of an emulsion breaker;

- Daily measurement of the produced fluid;

- Maintaining of oil-field water discharge process, involving separating the fluid in the separator, separating water from oil in the process settling drums,

- Collection and shipment of extracted oil emulsion and oil-field water to preparation and disposal stations by motor vehicles of "Kaliningradneft" or other contractors;

- Monitoring the current state of the wells and the producing formation, conducting hydrodynamic and geophysical research;

- Current well servicing,well workover and repairs of well equipment;

- Maintenance of the area around the wells and access roads;

- The end product, the oil corresponding to GOST R 51858-2002 "Oil. General technical specifications" and TU-39 E63-93" Russian oil supplied for export ", prepared at CGS "Lukoil-Kalinigradmorneft " and transferred to OJSC" Kaliningradneft " according to the Transfer and acceptance certificate.

 When preparing a certain quantity of end product, the oil is shipped to consumers according to the concluded contracts by loading oil into the railway tanks.

14

OJSC "KALININGRADNEFT"

oil producing industry

Expected future development of OJSC "Kaliningradneft" up to 2018

Main development prospects (long-term program) are connected with:

drilling new well №16 at Novo-Serebryansky oil field	2014-2015 Total sales of more than 85 mln. rubles
completion of development of Veselovsky deposit under the terms of the license agreement. For this purpose, according to the technical project "Supplement to technological plan for the development of Veselovsky oil field", it is necessary to drill two development wells -Veselovskaya №18 and №19	2015-2016 year Total sales of more than 150 mln. rubles
obtaining four licenses for exploration of mineral resources at the Shuvalovsky, Lublinsky, West- Gusevsky and Vesnovsky sections	2015
an increase in growth of stocks C1 and C2 category due to the discovery of the new South Veselovsky oil field, for which purpose it is necessary to drill exploratory well on the territory of the Lublinsky licensed section	2016-2017 Total sales of more than 45 mln. rubles.
drilling a side-track of well № 11 of Veselovsky oil field	2018 Total sales of more than 50 mln. rubles.

The long-term development program is designed up to 2018, the total investment volume required for the implementation of the program is more than 330 mln. rubles.

15

OJSC "KALININGRADNEFT"

oil producing industry

Licensed blocks of the company on the overview map of the Kaliningrad region.

Map symbols:

	Auto roads	Borders of licensed blocks	Licensed blocks of OJSC "Kaliningradneft"
Populated places	Railways
Airport	RF state border	Swamp land	1. Novo- Serebryanskoye field
Rivers	Borders of administrative districts	Ports	2. Veselovskoye field
			3. Sechenovskoye field

16

OJSC "KALININGRADNEFT"

oil producing industry

Bank details of the Company

15 May 2015

’POLYGLOT’ Foreign Languages Bureau hereby certifies that this translation made on 16 pages completely corresponds to the Russian original and does not contain any erasures, additions, crossed out words and other unmentioned corrections.

Address: 236000 Kaliningrad, p. Pobedy 4a, tel. 8 (4012) 716 713 e-mail: рolyglot@gazinter.net

Director of ’POLYGLOT’ Foreign Languages Bureau M. V. Tikhanova.