Interim management information January-September 2016

Comments from the CEO
Our oil production remained relatively flat at a daily average production of 1,387 barrels of oil per day in the third quarter (408 bopd in Bashkiria and 979 bopd in Komi) but one of our key targets is to increase the production.

On Ayazovskoye water injection was initiated earlier this year to maintain the pressure in the reservoir and the existing water injection system can help sustain the current production. In order to increase the production volumes on Ayazovskoye we want to commence a workover program in the fourth quarter of 2016. This program will include several recompletions as well as so called acid jobs.

In Komi several workovers have been successfully completed and production is expected to increase.

In August 2016, we spudded well #9 on Ayazovskoye. The well has encountered oil in at least two upper Devonian formations, Orlovsky and Pashiysky. Open-hole tests confirmed high potential of the reservoirs. We plan to test Orlovsky first. It will be the first cased-hole test of that horizon on the field. Production on the rest of the field is currently from Pashiysky. If we confirm commercial flow rates it will reduce the future drilling risks.

As part of the infrastructure investments in Bashkiria in 2015 / 2016 equipment to take care of the associated gas will be put into operation. As a consequence we expect savings on energy costs as well as reduced license risk.

Finally, I am pleased that we have managed to reduce the difference between our selling price (oil at the field) and the price of selling oil into Transnefts' pipeline.

Nikolay Millionshchikov
CEO

Upcoming financial reporting
Year-end Report January - December 2016   27 February 2017
Annual report 2016   April 2017
Interim Management Statement January - March 2017   24 May 2017
Interim Report January - June 2017   25 August 2017
Interim Management Statement July - September 2017   24 November 2017
Annual General Meeting 2017   26 May 2017