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Volga Gas Provides VMŁ1 Well Drilling Update

Source: www.gulfoilandgas.com 2/7/2008, Location: Asia

Volga Gas provided an update on well VMŁ1 on the Vostochny-Makarovskoye license area. VMŁ1 was spudded on 30 September targeting the Bobrikovsky sandstone and Evlano-Livensky carbonate formations. The Bobrikovsky horizon was successfully tested in December 2007 and drilling continued to the Evlano-Livensky horizon.

The original discovery well drilled in 1989-90, by LUKoil-Nizhnevolzhskneft encountered a 47m gross pay zone with gas down to 2,322m (TVD MSL) in the Evlano-Livenskiy horizon. The gas-water contact was not established.

To date VMŁ1, having reached a true vertical depth of 2,402m has encountered in excess of 100m of gross pay zone; confirmed by core data and open-hole testing. Drilling, testing and coring operations on the Evlano-Livensky horizon are continuing until the gas-water contact is reached.

Drill stem testing in both the Bobrikovsky and Evlano-Livensky horizons confirmed commercial production rates.

As a result of the extended drilling, operations on the well are expected to continue for several more weeks. However, the Company still expects first production from this field by the end of 2008. A detailed update will follow the well completion and upgraded reserve estimates according to both Russian and SPE classifications will be released this year.

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