Caspian Sunrise plc (AIM:CASP) Operational and impact of Russian sanctions update

The Board of Caspian Sunrise PLC (“Caspian Sunrise” or the “Company”) is pleased to report the spudding of Deep Well 802 and to provide its assessment of the ongoing impact of Russian sanctions.

Deep Well 802

Deep Well 802 is the second deep well to be drilled on the Yelemes Deep structure and the sixth deep well in total to be drilled at the BNG Contact Area. It is also the final deep well the Group is obliged to drill to fulfil the BNG work programme commitments.

The well has an Total Depth of 5,200 meters targeting oil in the easier to drill Sandstone rather Carboniferous rock, with an initial target at 4,300 meters, and with drilling expected to take 4 months. By using our own rig, with the casing already acquired and by drilling through the easier sandstone, the cash costs are expected to be significantly lower than for previous deep wells.

The well is being drilled close the site of a Soviet era blowout and our advisers have provided us with the highest estimate of success for any of our BNG deep wells drilled to date.

Assessment of the ongoing impact of Russian sanctions

We are now into the fourth month of Russian sanctions and we have received several requests to set out in greater detail how these sanctions have affected us to date and our expectations for the future.

Our oil is Kazakh oil, not Russian oil, even though at present they are both termed Urals Oil. It is only an accident of geography that the current delivery mechanism takes it through Russia. We sell in Kazakhstan to international oil traders, who can then sell anywhere in the world. We expect the Kazakh government shortly to rename the oil produced in Kazakhstan to differentiate it from oil produced in Russia.

To date there we have had no problems in accessing the Russian pipeline network to deliver our international oil and we do not believe there will be any issues in this respect no matter how long sanctions continue. Whatever happens, we do not see these pipelines being closed.

Our oil enters the Kazakh pipeline network close to BNG and typically emerges at a Russian port on the Baltic Sea. An alternative destination would be a Russian port in the north of that country. From these ports, the oil is transferred to large tankers for delivery anywhere in the world.

The main impact to date has been the discount at which our oil, termed Urals Oil trades in the market. Recently the discount to Brent has been $30-35 per barrel, which represents a significant loss in revenue.

What we believe will happen is that this discount is likely to reduce as the natural market arbitrage take effect.

We expect the buyers who have not signed up to boycott Russian oil including China, India and other large Asian economies to take advantage of the current discount for Urals Oil and switch their buying to this cheaper oil and reduce the oil they buy from other more expensive sources.

In summary, we do not expect the current large discounts to continue at current levels going forward. Renaming Kazakh produced oil will also help differentiate it from Russian oil.

Caspian Sunrise PLC

Clive Carver

Executive Chairman +7 727 375 0202

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