The Directors are pleased to announce that the reserves report prepared by independent auditors on the Company's Ukraine proven and probable reserves has now been issued in final form.

The Company engaged independent reserve auditors Ryder Scott Company, L.P. (“Ryder Scott”) to estimate the remaining recoverable reserves of its Ukraine licence areas.  The Ukraine licence areas consist of two groups of reservoirs: the Middle Carboniferous (“B reservoirs”) and the Lower Carboniferous (“T reservoirs”).

The final report has now been issued by Ryder Scott and includes both the B reservoir and the T reservoir.

Details of the final Ryder Scott report are summarised as follows:

As announced by the Company on 1 July 2005, the scope initially provided to Ryder Scott included only the B reservoirs and excluded the T reservoirs.  Subsequently, the reporting scope of Ryder Scott was extended to include the T reservoirs.

The inclusion of the T reservoirs in the scope has had no effect on the proven and probable reserves, as Ryder Scott has classified the T reservoirs as possible reserves rather than proven or probable reserves.  This is due to limited well-test and production data on which to base a reserves estimate. Wells to date have concentrated on the shallower B reservoirs. Future drilling, stimulation and well test operations will seek to move these reserves into proved and probable as part of an integrated development plan.

The total proven and probable reserves differ marginally from the previously reported total of 174MMboe due to Ryder Scott more accurately modelling the development plan around the currently producing wells.

Commenting on the results of the Ukraine reserves report, Rex Gaisford, Chief Executive Officer said:

“The results of the independent reserves report confirms the quality and magnitude of the reserves within Regal's Ukraine licence areas.  The Company remains focussed on carrying out the full field development and production of its Ukraine assets. The fact that the auditors at the present time were unable to increase the proven and probable reserves with additions from the T reservoirs is a function of the relative immaturity of the field appraisal and development so far carried out during the previous Exploration and Pilot Production licence phase.  It in no way diminishes the Company's expectations and enthusiasm for the ultimate size and importance of this asset which it intends to develop aggressively to the benefit of the Company, the government and the people of the Ukraine.”

For further information, please contact:

Regal Tel: 020 7408 9500
Roger Phillips, Finance Director 
 
Buchanan Communications Tel: 020 7466 5000
Bobby Morse / Ben Willey 

Definitions:

• Bcf  -  Billions of cubic feet
• MMbbls  -  Millions of barrels
• MMboe -  Millions of barrels oil equivalent