Ad-hoc Report - Petrom acquires exploration projects in Russia

In compliance with Law nr. 297/2004 and Regulation no. 1/2006 of CNVM

Date of report : September 25, 2006
Name of issuer : PETROM S.A.
Headquarters : Bucharest, Calea Dorobantilor nr. 239 sector 1
Telephone/fax number : 021 4060101/021 4060436
Sole registration number at the Trade Register Office: 1590082
Fiscal attribute : R
Trade Register Number: J 40/8302/1997
Share capital: 5,664,410,833.5 RON
Regulated market on which the issued shares are traded : Bucharest Stock Exchange

Significant event to be reported:

Petrom acquires exploration projects in Russia

Petrom, the largest oil and gas producer in South Eastern Europe, a 51% subsidiary of OMV AG, has signed an agreement for the acquisition of a 74.9% majority stake of Ring Oil Holding & Trading Ltd., a company based in Cyprus with Russian and international owners having many years of experience in Russia and in the CIS States in the exploration and production of oil as well as the trading of petroleum products and the drilling of wells. The company holds 100% of six Russian companies, which in turn hold a prospective exploration portfolio in that country. The Russian companies' management is located in Moscow and together have 60 employees, including on-site. The relevant contracts were signed on September 25, 2006, and the purchase price remains confidential. The closing of the transaction is subject to the approval of the Russian competition authorities. It is expected that this approval will be granted in the fourth quarter of 2006.
The acquisition of eight exploration licenses and of one exploration and production licence in this area of Russia, which is rich in oil, fits well with Petrom’s strategy to establish Russia and the Caspian region as core region for E&P. This entry into Russia and the envisaged close cooperation with the partners who have significant expertise regarding exploration projects offer a solid platform for expansion in one of the world’s richest countries in oil and gas.
The steering committee of the company, the Board of Directors, will consist of four members nominated by Petrom and two members nominated by the minority shareholder.
The acquired portfolio consists of eight exploration licenses in the area of Saratov, located approx. 1,000 km southeast of Moscow, and of one exploration and production license in the area of Komi, located approx. 1,200 km northeast of Moscow. The C1-reserves (proved reserves according to Russian standards) amount to 13 mn barrels. Additionally, Petrom and OMV experts anticipate substantial potential for oil discoveries in the exploration blocks.
By 2011, Petrom plans to acquire approx. 20,000 km of 2D- and approx. 3,000 km² of 3D-Seismic. By 2013, it is planned to have completed about 40 exploration wells. Petrom's and OMV's special technologies in exploring oil and in optimising recovery from oil deposits will ensure the maximum possible usage of the licenses. In addition to acquiring these licenses, it is intended to carry out further acquisitions of production assets and to participate in licence rounds in Russia. These activities should result in an accelerated establishment of a noteworthy exploration and production portfolio.
Overall, the new projects are characterised by their attractive geographical position, which permit year-round activity. Moreover, the projects are located in the proximity of existing infrastructure, such as oil pipelines with free capacities and easy access to transport routes for exploration activities.