Geotech Holding Company

Geotech Holding Company is a large group of hi-tech service companies rendering a full cycle of services to oil and gas companies:

• Exploration planning
• Prospecting seismology
• Scout drilling, exploration drilling and production drilling
• Geophysical surveys
• Well workovers
• Transportation services

Some of Geotech clients:

• Federal Subsoil Use Agency
• OOO LUKOIL–Komi
• OAO Sibneft-Noyabrskneftegaz
• OAO TNK-Nizhnevartovsk, OAO TNK-BP Technology and other

Driven by the lasting oil price increase trend, the international oil industry services sector has now gone on spree. After almost two decades of insufficient investments following the oil price collapse in 1986, drill rigs and teams of geophysicists have become a deficit. This resulted in a steep rise in the cost of their services in the international market.

Russia, on the one hand, is one of the least geologically explored areas, while on the other hand it is the world´s largest producer and exporter of oil and gas. It is obvious that the country is extremely interested in at least retaining its current output of oil and gas. The only way to do so is to discover and develop new fields.

Experts estimate that the capacity of the Russian market of services in the oil industry in monetary terms will double from US$12 bn in 2006 to US$24 bn in 2011, while seismic surveys, scout and exploration drilling are expected to become the most rapidly expanding and highly profitable elements of the market.

In 2006, 47% of services rendered to oil & gas companies in Russia were controlled by extracting companies. In the next 5 years the percentage is estimated to go down to 30%, while the bulk of geological surveying will be outsourced to dedicated companies. The reason underpinning the trend is the high cost of maintaining in-house service divisions by extracting companies.

The current situation in the market offers a favorable background for successful development of this investment project.

Timan-Pechora oil and gas province is the largest and one of the oldest oil and gas production areas in European Russia. In the near future this region will room a new pipeline to connect it with West Europe. Intaneft, our oil subsidiary, is the leader in scout drilling, and the other two, Naryan-Marseismorazvedka and Severogeofizika, take the lead in seismic services in Komi republic and Nenets Autonomous District which all form part of Timan-Pechora province.

Western Siberia today is Russia´s flagship in oil and gas extraction. The market of geological exploration services is most competitive in this area; however, the demand is much more extensive than the available market. Agan Burenie, our drilling service company, is one of the largest in exploration drilling in this area.

Eastern Siberia is a new challenging gas and oil extraction region and its value is going to rise at the background of resource depletion in the region. At the moment, the region witnesses intensive exploration and development of the infrastructure, and there is a plan to construct a new gas pipeline, therefore, prospecting seismology services are in great demand. Sibneftegeofizika is the leader in field seismology in Eastern Siberia.

The foundation of the holding company is already made. Further on the company is planning to continue its development through expanding the presence of subsidiary companies and acquisition of new assets. As at October 2007, Geotech integrated the following entities:

1. OOO Geotech Management, a limited liability company
2. OAO Severgeofizika, an open joint-stock company
3. OAO Naryan-Marseismorazvedka, an open joint-stock company
4. OAO Sibneftegeofizika, an open joint-stock company
5. ZAO Intaneft, a closed joint-stock company
6. OOO Agan-Burenie, a limited liability company
7. OOO Severspectekhnika, a limited liability company
8. OOO Geonis, a limited liability company

The overall production figures, including the operations integrated in the Holding company, as at August 2007 look as follows:

• Exploration drilling: in excess of 42 thousand meters
• Production drilling: in excess of 32 thousand meters
• 2D seismic prospecting: in excess of 5.5 thousand running meters
• 3D seismic prospecting: in excess of 1.7 thousand km²