Shareholder Q&A 2015

  • Shareholder Q&A - January 2015

    In response to recent enquiries from shareholders, we have prepared this Q&A to clarify a number of issues arising over the last few months.

    Q. Why has Mr Sergey Kononov been appointed as the President of Urals Energy LCC?

    A. Mr Kononov, whose appointment was approved by the Board at the time as part of an interim arrangement pending appointment of a new CEO, has, the Board believe, the necessary skills and contacts to act as the President of Urals Energy LLC.

    The position of president of Urals Energy LLC is a Russian legal requirement and is closely supervised by the Board.

    Q. Why have Mr Dyachenko and Mr Ogarev not resigned from the Company as stated in the RNS dated 31 November 2014?

    A. As previously announced Mr Leonid Dyachenko and Mr Aleksey Ogarev have indicated to the Board that they intend to stand down as Directors of Urals Energy once appropriate replacements have been identified and appointed. As the search for new Directors is still ongoing Mr Dyachenko and Mr Ogarev have agreed to remain as directors until such time as suitable appointments are made.

    The Board anticipates the search for new Directors will take some time as the Board is intent on appointing the right new Directors. The Board is looking to recruit a CEO who has both suitable experience of the oil and gas industry and of running a Russian business.

    Q. Why has Mr Dyachenko replaced Mr Uzornikov as Interim CEO?

    A. Mr Dyachenko has been appointed interim CEO to allow Mr Sergey Uzornikov to concentrate on his continuing role as the Company's CFO and day-to-day operating activity as VP Finance of the managing company. Furthermore, since Mr Dyachenko has previously held the position of CEO he is well qualified to hold the interim CEO position until a suitable replacement is found.

    Q. When will a full-time CEO be found and why have the two new Board Directors from Adler not yet been appointed?

    A. The appointment of a new CEO will inevitably take time since it is necessary to identify the right candidate; agree terms and for that candidate to undergo the appropriate due diligence and checks.

    It is also important that any directors nominated by Adler are right for the role and also undergo the appropriate due diligence and suitability checks.

    Q. Has Adler Impex presented its strategy and/or intent to the Urals Board?

    A. As announced on 8 July 2014, Adler remains supportive of the Urals Board and its strategy, which continues to be to run in the best interest of all shareholders to achieve the best value for their investments.

    Q. Why has the Company settled with Mr Rovneiko, when recent judgements in court cases have been in favour of the Company on the ADRA and we won the Arbitration in London?

    A. The Board has taken into account a number of factors which have led to the decision to settle all outstanding litigation with Mr Rovneiko.

    Whilst the Board's views on the ADRA have been well documented, based on the legal advice from Russia and Cyprus the cost and management time required to remove the ADRA would have materially detracted from management's ability to implement Ural's strategy. In addition, with the ADRA in place the Company's ability to raise money (by way of debt or equity) would be non-existent. Finally, based on legal advice the Board understand that any compensation payable by Mr Rovneiko to the Company would have been minimal.

    Despite the best efforts by the Company and considerable expense it has become apparent that it will not be possible for the Company to recover any meaningful amounts from Mr Rovneiko following the successful arbitration award. In light of this, the Board believes that the management's energy is better focused on implementing the Company's strategy.

    Taking these matters together, the settlement with Mr Rovneiko will allow the Company to focus on its declared strategy of seeking to optimise its existing assets through a new development plan and pursue M & A opportunities.

    Under the settlement agreement, both parties agreed to keep the terms confidential.

  • Shareholder Q&A - February 2015

    In response to recent enquiries from shareholders, we have prepared this Q&A to clarify a number of issues arising over the last few months.

    Q. Please could you advise who is currently filling the post of VP of Production at Urals Energy LLC?

    A. Following the announcement on 12 December 2015, unfortunately Mr Vassily Dyviatov has passed away. The position has now been filled by Mr German Leppke, a petroleum engineer with experience including Lukoil and other Russian operating companies.

    Q. Has replacement equipment been sourced locally to replace those items damaged in the electrical fire on 9 January 2015?

    A. The Company has managed to source a replacement for the entire control system for the refinery from local supplies manufactured by Siemens. Under the contract, Urals expects to complete the installation by the end of May 2015. In the meantime, the refinery continues to be operated manually.

    Q. When does the Board anticipate announcing preliminary results?

    A. The Board is in the process of preparing the results for the year ended 31 December 2014 and will release them when they are ready.

  • Shareholder Q&A - March 2015

    In response to recent enquiries from shareholders, we have prepared this Q&A to clarify a number of issues arising over the last few months.

    Q: Further to the RNS provided on 30 January 2015, has the refinery been brought back into operation yet via the manual regime?

    A: Yes the refinery has been brought back into operation in accordance with the timescale set out in the announcement on 30 January 2015. A further update was provided to the market on the 18 March 2015.

    Q: Are you aware of there being an institutional or large holder selling currently?

    A: We are not aware of any institutional seller of Urals' shares at the current time.

    Q: Are you able to provide a rough estimate as to when analysis of well 112 could be likely?

    A: As announced on 18 March 2015, we will provide updates on the progress of the operations as they become available. Unfortunately, market rules prohibit us from providing any such updates other than through the RNS system.

    Q: What measures have been put in place to prevent the largest shareholder (Adler Impex via Mr Kononov) from having access to privileged information?

    Can you confirm that all minority shareholders with be treated equally and not ignored to the preference of Adler?

    A: Mr Kononov, who represents Alder AG is subject to confidentiality provisions under his current contract and also to the Company's rules on share dealing. At the same time, the UK's insider dealing regime applies to all those trading shares in the Company

    Q: Further to the litigation update provided with January's Q&A, I trust that the court order was issued in February - has the $500k been paid across from KNGF yet?

    A: As announced 10 March 2015, KNGF has made a second appeal to be heard of the 9th of April 2015. Further announcements will be made at the appropriate time.

    Q: Since the majority of shares in Komineftegeofizika  belongs to Urals Energy N.V. ( Can the company confirm how many of the present directors of Urals Energy plc have positions or interest in Urals Energy N.V. And if any, how this conflict of interests will be resolved.

    A: No current directors of Urals Plc are directors or shareholders in Urals Energy N.V. As such, the Company is not aware of any such conflicts interest.

    Q: Will the Directors show support for the Company with on-market purchases of the stock?

    A: The directors are subject to rules on share dealing and under these rules they are in a closed period which prevents share dealing until the accounts for 2014 have been released together with any other unpublished price sensitive information.

  • Shareholder Q&A - April 2015

    In response to recent enquiries from shareholders, we have prepared this Q&A to clarify a number of issues arising over the last few months.

    Q: What measures are in place to prevent the theft of products from the Petrosakh refinery whilst working under the manual regime?

    A: There has been no need for additional measure to those that are already in place.

    Q: How many potential candidates has the Company has approached to fill in the Board of Directors positions, including that of the CEO? If none, then what specifically is the company doing to find new Directors?

    A: The Board has had a number of meetings with potential candidates and head hunters and will update the market in due course.

    Q: Have any company funds or accounts been transferred (or are planned to be transferred) to Transnational Bank?

    A: Urals has been neither a depositor with, nor borrower from, Transnational bank.

    Q: Why did the Board not adopt a takeover code after the Fire East coup attempt and why not adopt one now?

    A: It is not up to the Board to 'adopt' a takeover code since these are the subject of national and international regulations. Urals could adopt new articles equivalent to the requirements under the UK Takeover Code but this would be a lengthy process and would involve shareholder approval.

    Q: There is a perception among some minority shareholders that the position of Mr. Kononov as the President of UE LLC opens a door for a hostile takeover by the largest shareholder via possible funding arrangements with Transnational Bank. What is the company's strategy to address these concerns, which we believe have a negative impact on the share price?

    A: We appreciate that may be a perception among some shareholders, but as previously stated in the Q&A issued in relation to the announcement dated 29 October 2014, Adler Impex is supportive of Urals' strategy and ambition to improve the production levels of its existing assets, grow the asset base and increase the market value of the Company's shares. Urals holds no reason to believe this position has changed.


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