Activities.

The principal directions of "Rosneft-Purneftegas" activities are as follows:

- extraction of oil, gas and other raw materials and their sales on the territory of Russia and abroad;

- creation of technological and supplying infrastructures in the oil industry complex on the territory of Russian Federation and abroad, taking part in the organization and functioning of oil industry and adjoining industries.

The number of employees by January 1, 1997, - 14 666.

The professional consultants:

Depositary - Specialized registrar "Pur-A" company (Gubkinsky town)

Financial audit - "Price Waterhouse" (Moscow).

Audit of oil and gas reserves - Oilfield Production Consultants LTD (OPC LTD).

The tendencies of "Rosneft-Purneftegas" oil extraction differ from the general tendencies in Russia. The decrease of production in Russian oil industry started in 1988, while "Rosneft-Purneftegas" company's production output was stable up to 1991; later the rates of its decreasing were lower than the average rates in Tiumen Region. In 1996 "Purneft" produced 8.1 million tons - 1,4% higher comparing with the level of 1995.

But the company still is not planning the rise of production output. The optimum output of "Rosneft-Purneftegas" is estimated at 6.5 million tons/year.

The large part of the extracted oil "Rosneft-Purneftegas" supplies to the Russian market; in 1996 it was 69.7% of total output - slightly less than in 1995.

Privatization.

As in the majority of Russian oil companies, the privatization of joint-stock company "Rosneft-Purneftegas" was carried out according to the first variant of privileges. Its stock (4 454 641 thousand roubles) was divided into 3 340 981 ordinary and 1 113 660 preference shares with nominal cost of 1000 roubles each. The issue was registered by the Committee of Finances of YaNAD administration (№ 90-1п-31 of February 9, 1994).

As a result of cheque auction (April 19, 1995) the shares were divided with the coefficient 25; the number of shares increased and their nominal cost diminished to 40 roubles each.

The largest shareholders, controlling over 10% each, are "Rosneft" company and CS First Boston.

Among the big Russian privatized companies "Rosneft-Rurneftegas" has one of the largest shares of foreign holders - by February 25, 1997, the foreign companies possessed 48.05% of all preference shares. The main shareholder is "Rosneft" company, which has the controlling interest (50.7%). The body of company's employees has 9.4% of stock - it is a third of its share in 1993.

"Rosneft-Purneftegas" is diversifying its activities and carries out an active investment policy, holding shares in other enterprises. This direction of company's activities brings it considerable profit.

Apart from these, two joint ventures are organized on the basis of "Rosnrft-Purgas": - "Geoilbent" together with the US company Oil & Gas Co, intended to put into operation the idle oil wells and to introduce the new method of strata hydraulic ripping in the North-Gubkinsky and Prieklonovsky fields;

- "Fur River" company together with "Royal Catch Shell", intended for the development of Komsomolsky oil-and-condensate field.

The shares of "Rosneft-Purneftegas" were presented for sale in the first half of 1994 and immediately became very popular.

The high liquidity and dynamism of "Rosneft-Purneftegas" shares' market of makes these securities attractive for the speculative operations.

According to the market valuation of the ordinary shares of "Rosneft-Purneftegas", they are comparable with the securities of the other oil-extracting companies. By April 11, 1997, the ordinary shares of "Rosneft-Purneftegas" had one of the highest indices P/E.

Though the results of the years work are not yet known to all of the market operators, the high market valuation of these securities is by no means accidental, as it is backed by a number of positive factors.

First, the campaign of the securities' presentation on the Russian and international markets was a success due to its perfect organization.

Second, it was supported by "CS First Boston" company, which is a large shareholder of "Rosneft-Purneftegas" and at the same time a prominent market operator.

Third, the enterprise showed good production activity and oil quality indices.