Second quarter 2007 oil production and exploration update

West Siberian Resources Ltd’s oil production for the second quarter 2007 amounted to 2,417,700 barrels (1,752,737 barrels) and the average daily production for the period increased to 26,568 barrels per day (19,051 barrels per day). The oil production for the first 6 months 2007 amounted to 4,682,358 barrels (3,174,605 barrels). The 2007 production plan target of 12 million barrels remains unchanged, despite production being slightly below target in the first half of the year. In the second half of 2007, production is expected to exceed the production target of 7 million barrels following recent positive drilling results. Currently, production amounts to 28,600 barrels per day.

Significant reserve increases are expected at the Kluchevskoye field in the Tomsk region, at the North- and Lek Kharyaga fields in Timano-Pechora and at several fields in the Volga-Urals region where new exploration and production licenses recently were and will be obtained.

Average gross oil prices received in the second quarter 2007 increased to approximately USD 40 per barrel from USD 30.83 received in the first quarter 2007. The increase in gross prices resulted in average second quarter netbacks, after transportation costs, preliminarily improving to USD 31 per barrel from USD 21.87 in the first quarter.

Tomsk region
Total production in the Tomsk region for the second quarter was 844,035 barrels (592,785 barrels). Following recent drilling results that clarified the location of the oil-water contact in the field, the estimated oil reserves in the Kluchevskoye oil field are expected to increase significantly. 14 workovers were accomplished at existing wells in the region.

In the Kluchevskoye field, 5 new wells were drilled out of which 3 were put into production and 1 into water injection for maintaining reservoir pressure. The new wells confirmed that oil reserves will be upgraded as the productive oil formation in the field extends beyond previous estimates and net oil pay was larger than expected (7.5 m vs. 3.5 m planned). The water injection system’s surface infrastructure was completed and put into operation.

At the Middle Nyurola oil field the current well production optimization program continues and has resulted in decreased decline rates. A sidetrack of a currently non-producing well has started.

At the Puglalymskoye oil field, 7 production wells were drilled. 3 wells were put into operation and 4 are being completed. Hydro fracturing was performed on 4 wells including 2 of the new wells. The installation of a temporary pipeline pump station facility and the construction of an in-field oil-gathering pipeline system were completed.

At the Khvoinoye oil field, 3D seismic covering 83 km2 was shot, with interpretation results expected in the 3rd quarter 2007. A drilling pad is being prepared for drilling which is planned for the fall 2007.

Timano-Pechora region
Total Timano-Pechora region oil production for the second quarter 2007 amounted to 637,778 barrels (690,799 barrels). 5 workovers aimed at supporting production levels were successfully performed.

At the North Kharyaga oil field, 4 new producing wells were drilled. 3 wells were put into operation and the 4th well is under completion. Production rates exceed expectations and the drilling confirmed an increase in net oil pay from 22 m to 28 m, which indicates the field’s oil reserves will be upgraded. The reserve increase will be determined following the interpretation of the field’s 3D seismic data which is planned to be completed during the third quarter 2007.

The field’s power supply has been secured through the installation of a 10 kW, 19.2 km high-voltage line connecting the oil field with the power generating complex at the Middle Kharyaga oil field.

At the Lek-Kharyaga field, the first oil well was drilled and is under completion. Field evaluation and preliminary 3D seismic interpretation results show a significant increase in the field size and a net oil pay of 25 m as compared to previously estimated 10 m. A significant reserve upgrade is expected. The construction of an in-field oil gathering pipeline system alongside with a high-voltage line (10 kW, 26 km long) connecting the oil field with the power generating complex at the Middle Kharyaga oil field has been completed.

The processing of 3D seismic covering the Kolvinskoye oil field has started and the field development plan is being prepared.

Volga-Urals region
Total Volga-Urals oil production for the second quarter amounted to 935,887 barrels (469,149 barrels). 11 workovers were carried out to support production levels.

A 20 year exploration and production license for the Solnechnoye oil field, where an oil discovery
recently was made, was granted. For the newly discovered Borschevskoye and Kovalevskoye oil fields the exploration and production licenses will be applied for once the necessary technical and legal documentation has been prepared.

At the Kovalevskoye oil field, 2P (proven and probable) oil reserves are expected to increase significantly following the successful drilling of well # 2. 6.85 meters of oil-field formation was encountered in the Bashkirian horizon at a depth of 2,600 meters. Previous reserve estimates were based on a formation thickness of 2.7 meters. Production is planned to start in the fourth quarter 2007.

At the Kochevnenskoye oil field, well #115 which was drilled in the first quarter was completed and put into production with an initial flow rate of 870 barrels per day. Drilling of the next well has started. At the West-Kochevnenskoye oil field, well #11 was drilled and put into production with an initial flow rate of 1,000 barrels per day. Drilling of production well #10 started.

Exploration drilling at the West Borschevskoye confirmed a new commercial field discovery. 4 meters of oil pay was encountered in the Baskirskiy formation and an additional 2 meters in the Bobrikovskiy formation. The discovery will result in a reclassification of reserves to the 2P category.

The processing of 3D seismic data covering the Kochevnenskoye, West-Kochevnenskoye and Solnechnoye fields has been completed and interpretation has started. Preliminary results indicate extensions of the current hydrocarbon accumulations.

The Kochevnenskoye oil treatment facility has been operating at full capacity which limited and
delayed production increases in the second quarter as well. In the quarter capacity constraints resulted in production reductions of approximately 73,000 barrels of oil. Additional three-phase separators will be installed and capacity constraints are expected to be fully eliminated in the fourth quarter 2007.