Zoltav Resources: 2015 Results – Revenues Up 41%, First Operating Profit of $1.1m USD

Zoltav, the Russia and CIS-focused oil and gas exploration and production company, announces final results for the year ended 31 December 2015 – a period in which the Company generated its first operating profit.

Financial Highlights

· Revenues from production increased by 41% to US$28.1 million (2014: US$20.0 million, from 196 days of production), despite a weak ruble against the US dollar

· Zoltav delivered its first positive EBITDA of US$7.2 million (2014: US$3.3 million loss, excluding gain on acquisition)

· Operating profit reached US$1.1 million (2014: US$7.6 million loss, excluding gain on acquisition)

· Company reduced borrowings by 8% (RUB denominated) through repayment of RUB180 million (USD $2.9 million) of PJSC Sberbank debt

· Cash and cash equivalents at 31 December 2015 of US$5.9 million (31 December 2014: US$10.7 million)

Net cash provided from operating activities was USD 4.3 million (2014: cash used in operating activities USD 5.3 million)

· The Group has sufficient liquidity to fund its investment programme on the Western Fields at Bortovoy and its development plans for Koltogor at least through to the end of 2018

Operational Highlights – Bortovoy Licence

· 15.6% increase in Western Gas Plant’s daily production to 46.6 million cubic feet (1.32 million cubic metres) of gas and 587 barrels (75 tonnes) of oil per day throughout the period

· Significant operational performance enhancements enabled Zoltav to operate the Western Gas Plant at full capacity throughout the year – producing 8,853 (2014: 7,656) barrels of oil equivalent per day – with increasing economic effectiveness

· Zhdanovskoye infill well completed and put into production in December 2015 with a higher than expected production rate of 6 million cubic feet (170,000 cubic metres) of gas per day

· Gas sales price to Mezhregiongaz increased by 7.5% in RUB from 1 July 2015

· Near-term objectives include the completion of a new well on the Karpenskoye field and the hooking-up a pre-existing well on the Zhdanovskoye field in order to keep the plant at full capacity throughout 2016

· Zoltav estimates sufficient reserves from Western Fields to keep the Western Gas Plant at full capacity for at least a further decade

· Zoltav continues to assess scenarios to commercialise the highly prospective Eastern Fields of the Bortovoy Licence – underpinned by a higher gas sales price – through the construction of a second gas plant

Operational Highlights – Koltogor Licences

· Registered an additional 546 million barrels (72 million tonnes) of Russian standard C1 plus C2 oil reserves for the Koltogor E&P Licence taking the total Russian standard C1 plus C2 oil reserves for both Koltogor licences to in excess of 1 billion barrels (137 million tonnes)

· Rosnedra, the federal government body, confirmed the discovery of the West Koltogor oil field on Koltogor Exploration Licence 10 and has now issued an E&P licence covering that area through to March 2036

Corporate Highlights

· Changes to board composition implemented in order to improve efficiency and effectiveness of decision making

· Denis Golubovskiy appointed as Director of Finance in July 2015 to strengthen the finance function

· Progress made on reviewing and pursuing a number of interesting acquisition opportunities, within a strict value-accretive criteria framework

Alastair Ferguson, Executive Chairman, commented

“Our team has worked tirelessly in 2015 to generate ongoing efficiencies at the Western Gas Plant that have enabled Zoltav to deliver its first profit from operations despite a challenging environment for oil and gas companies and despite a weak ruble against the US dollar. Improvements in both factors would likely in the future have a very positive corresponding impact on Zoltav’s financial performance.

“The Western Gas Plant delivered a 16% increase in ruble revenues compared to 2014 as a direct result of Zoltav’s operational capabilities, and the gas price increase in July 2015.

“Our strategic objectives remain that of extracting the maximum value from our existing assets through efficiencies and through exploration, appraisal and development activities that will ultimately add more production; while at the same time pursuing a highly selective acquisition strategy.”

The full annual report is available to download from the investor relations section of the Company’s website at www.zoltav.com.