West Siberian today announced plans to merge with Alliance Oil and create a vertically integrated Russian oil company with a stable supply of crude oil, substantial refining capacity and important assets in distribution and marketing of petroleum products. The group will have proved and probable oil reserves of 430 million barrels, production of close to 51,000 barrels per day, refining capacity of 70,000 barrels per day, and 255 gas stations that will provide the basis for stable future earnings and improved margins.

The combined market capitalisation of the companies amounts to approximately USD 2.5 billion and combined pro forma revenues for the first nine months 2007 amounted to USD 1,398 million and combined EBITDA amounted to USD 228 million.

West Siberian Resources Ltd (OMX:WSIB-SDB) ("WSR") and shareholders OJSC Oil Company Alliance ("Alliance Oil") today signed a Memorandum of Understanding ("MoU") that creates a leading independent vertically integrated oil company, with a mix of upstream and downstream businesses that operate in key oil regions of Russia. The parties intend to enter into and execute definitive merger agreements that will see Alliance Oil become a wholly-owned subsidiary of WSR in exchange for WSR issuing to Alliance Oil shareholders 1,783,540,968 ordinary shares representing 60% of its total issued share capital post-issue. Alliance Oil's shareholders will be represented on WSR's board of directors by two directors and WSR's management team will be complemented by the senior management of Alliance Oil adding downstream experience. Maxim Barski will continue as the Managing Director of the combined company.

Alliance Oil is a leading independent Russian oil company that engages in crude oil refining and marketing of refined products focused in the Russian Far East and neighbouring export markets. Alliance Oil conducts its refining operations at its Khabarovsk refinery, which has a refining capacity of 70,000 barrels per day. In 2007 the refinery processed 23.6 million barrels of oil in total (approx. 65,000 barrels per day). Alliance Oil also engages in exploration, development and production of crude oil in Tatarstan (Russian Federation) and in Kazakhstan. Alliance Oil's combined proved and probable (2P) Society of Petroleum Engineers (SPE) reserves according to Miller and Lents at 1 July, 2007 were 123.3 million barrels and proved, probable and possible reserves amounted to 157.1 million barrels. Alliance Oil's average daily production in the fourth quarter of 2007 was 10,104 barrels of crude oil. Alliance Oil is incorporated in the Russian Federation, and is controlled by members of the Bazhaev family and Alliance Oil's management.

WSR is an independent Russian oil company incorporated in Bermuda. WSR's exploration and production assets provide a combination of current oil production with significant low-risk development and exploration potential. The company operates in three of Russia's largest oil basins: Western Siberia, Timano-Pechora and Volga-Urals. According to an evaluation conducted by DeGolyer and MacNaughton, the proved and probable SPE oil reserves amounted to 306.8 million barrels as at 31 December, 2006, while proved, probable and possible reserves amounted to 443.9 million barrels as at 31 December, 2006. In the fourth quarter 2007, WSR's average daily oil production amounted to 34,028 barrels and reached the level of 40,500 barrels per day by the end of December 2007.

Thus, the new group will have combined 2P SPE reserves of 430 million barrels of oil, combined production rate of nearly 51,000 barrels per day at the beginning of 2008 and 70,000 barrels per day of refining capacity, and will operate 255 petrol stations and 24 proprietary oil products terminals in the Russian Far East

WSR had total revenues of USD 245.9 million for the nine months ended 30 September 2007 (unaudited) and USD 245.2 million for the year ended 31 December 2006 (audited), resulting in a net profit of USD 25.05 million for the first nine months ended 30 September 2007 and USD 30.23 million for the year ended 31 December, 2006. Alliance Oil had total revenues of USD 1,151.8 million for the nine months ended 30 September 2007 (unaudited) and USD 1,677.1 million for the year ended 31 December 2006 (audited), resulting in net profit of USD 66.3 million for the first nine months ended 30 September 2007 and USD 101.63 million for the year ending 31 December 2006.