The board of Directors of Urals Energy Public Company Limited provided an update on its drilling operations at the South Dagi licence area on Sakhalin Island. The company's initial South Dagi development programme consists of the drilling of four new wells (Well 1, Well 2, Well 3 and Well 5), which are being drilled using the rig purchased by the Company in 2017 from Jereh Group. The company's target for the South Dagi development programme is to achieve aggregate production in excess of 1,000 bbls/day, which will help in offsetting the decline in production at Petrosak and thus sustain production at the company's refinery on Sakhalin Island. The Jereh rig has experienced a number of problems with its mobilisation and operational set up which, together with adverse weather conditions earlier this year, have delayed completion of the first new well at South Dagi (Well 1). The board anticipates that Well 1 will now be completed by the end of July 2018. The board has decided to start a work-over programme of existing wells at South Dagi using a smaller capacity workover rig. The Company has completed and tested a workover of an existing well located on the South Dagi licence area (Well 7). Well 7 flowed liquids to the surface which have been delivered to the Company's refinery for separation of oil and water. During well tests, the daily oil volumes achieved from Well 7 were approximately 225 bbls/day. A separator is to be set up in the licence area, so that oil/water separation can be carried out at the field. Well 7 was drilled to a depth of approximately 1,250 metres. Its perforation interval is 1,170 to 1,190 metres, with a pay zone thickness of eight metres. The well is formed from sand stone (of the Dagi formation type). The smaller capacity workover rig has been moved to the second workover well (Well 4), which is likely to be a gas well, which will be used to provide power for operations. The company will review the results of the initial South Dagi development programme and then make a decision on further development operations in the field.