West Siberian Resources acquires Saneco for 140 MUSD

West Siberian Resources Ltd has completed negotiations and signed binding agreements to purchase 100% of ZAO “Saneco”, an oil producing company in the Volga-Ural region of Russia, for an aggregate purchase price of 140 MUSD. In 2005, ZAO “Saneco” produced 2.1 million barrels of oil or on average approximately 5,714 barrels per day. The main assets acquired include 4 production licenses and 3 exploration licenses. Following the closing of the acquisition, WSR’s recoverable oil reserves are estimated at 259.3 million barrels under the company’s first ever Society of Petroleum Engineers (SPE) classification and 292.5 million barrels under Russian classification.

Closing of the acquisition is expected to take place in February 2006 and is subject to certain closing conditions, including Federal Antimonopoly Service approval which WSR already obtained. The USD 140 million purchase price shall be paid by USD 70 million in cash and USD 70 million in West Siberian shares valued at SEK 4,74 per share, as initially disclosed in December 2005. West Siberian Resources has agreed to issue 116 500 000 shares, representing 12,8% of WSR pro forma for the issue, to Saneco’s shareholders. In order to fund the cash portion of the acquisition, refinance short term loans, strengthen the balance sheet and fund its near term capital program, WSR plans to raise up to USD 170 million in debt and equity during the first half of 2006. The board is reviewing the terms and tranches for raising debt and equity. Following the completion of the acquisition, WSR’s total proven, probable, and possible oil reserves are estimated to amount to 259.3 million barrels according to DeGolyer and MacNaughton (D&M) estimates. D&M is a leading international petroleum consulting firm with an extensive reserve estimation practice in Russia that recently completed WSR’s first ever reserve appraisals in accordance with reserve definitions consistent with those approved in March 1997 by the SPE. Under Russian classification, ABC1+C2 reserves amount to 292.5 million barrels. The following table summarizes the reserve estimates: [REMOVED GRAPHIC] See attached PDF D&M has not yet estimated potential reserves or resources of numerous additional hydrocarbon structures in Saneco’s exploration licenses nor in the NBNK license in Timano Pechora. Based on the most recent interpretations of 2D and 3D seismic data, company estimates indicate additional recoverable reserves of 83 million barrels for the Saneco licenses and 64.8 million barrels for NBNK. These potential reserves provide for future exploration and growth potential including 5 ready-to-drill prospects and 11 possible leads in the Saneco license areas. Maxim Barski, Managing Director of WSR, commented on the acquisition: “We are acquiring high quality assets with growing production and significant exploration potential. Saneco’s success rate in exploratory drilling is 100%. In the last three months Saneco opened up two new oil fields with substantial oil flow: Borshevskaya and Kovalevskaya. This acquisition allows us to diversify into another Russian oil producing region and is an important milestone in the development as a leading independent oil company in Russia.” “We are excited about the future of WSR and are happy to become its shareholders through this transaction. In our opinion, the acquisition of Saneco will significantly enhance the growth prospects of WSR and will be value-enhancing for all WSR shareholders”, said Oleg Fomenko, representative of Saneco shareholders. An extra shareholders meeting will be held on January 31, in Stockholm to vote on the election of Mr Fomenko to WSRs board of directors and to authorize the board to issue equity. Mr Fomenko, who is a Russian citizen, was born in 1964 and is currently the director of the Management Sciences Center for Fuel Energy and Extractive Industry at the International Research Institute for Management Sciences, an international intergovernmental organisation. Between 1994 and 2004, Mr Fomenko was the commercial director at the Moscow office of JSC Crudex OY, a Finnish oil trading group. Renaissance Capital and SARS Capital acted as financial advisors for ZAO “Saneco” shareholders and WSR respectively.