The board of Urals Energy, the independent exploration and production company with operations in Russia, provides the following updates.

Further to the Company's announcement of 22 November 2018, the Company announces that a total of Russian Roubles 12 million (equivalent to approximately US$0.17 million) of loans made by the Company's 98.56% owned subsidiary, JSC Petrosakh ("Petrosakh") but not authorised by the Board, have been repaid including interest. These loans included a total of Russian Roubles 7 million lent to Bondaruk Alla Borisovna, via two loans which were due in November 2018, and a loan of Russian Roubles 5 million made to Shvets Roman Viktorovich which had a due date of 25 December 2022. The Company has confirmed the receipt of the funds from the repayment of the above loans. 

Other loans and deferred payments (including interest), of approximately US$5 million, which were not authorised by the Board and were made by Petrosakh on the orders of Mr S Kononov, as described in the Company's announcement of 22 November 2018, have not been repaid.

The Board continues to believe that the Group's working capital position over the coming months will be constrained and will remain subject to a number of variables, including, inter alia, the continued support of the Group's banks into 2019 and the obligations of the Company's Arcticneft subsidiary. Articneft relies on annual or bi-annual tanker shipments to monetise its oil production and therefore does not generate regular operating cash inflows. Articneft's obligations, including its accumulating mineral extraction tax obligations, are normally financed by the Group at points throughout the year, which may become increasingly difficult given the current Group working capital position.

The Board believes that the Group is likely to face a total working capital deficit of up to approximately US$5 million in the coming months, unless the remaining loans and transactions made/undertaken by Petrosakh are repaid in the near term.