Daily analyst comments

On July 7, 2008, Far Eastern Energy Company (RTS: DVEC) held a press conference attended by the company's general director Ivan Blagodyr and Maksim Zavalko, his deputy in charge of corporate governance. The following important statements were made:

• Far Eastern Energy Company will re-evaluate its retail energy companies. The company has taken over ownership of the companies that were not sold during the UES of Russia reform. Far Eastern Energy Company received shares in Mosenergosbyt, the St. Petersburg Energy Retail Co., Altaienergosbyt, Saratovenergo and the Tambov electricity sales company. The exact dates for re-evaluation and expected sales of the companies are not yet known.
• Far Eastern Energy Company is to be listed on stock exchanges in November or December. The company is to be listed on the B quotations lists of the MICEX and RTS. An over-the-counter trade in the company's shares may begin in August, once the Federal Service for Financial Markets registers a report on the results of a share issue by the company. The launch of a GDR program for the company's shares is set for December and the distribution of the GDRs for January.
• In 3Q 2008, the Far Eastern Energy Company BoD is to consider the details of a corporate policy, which should then be agreed with the agencies concerned and minority shareholders of the company's subsidiaries.
• State regulation of the electricity sector in Russia's Far East is to be retained at least until 2015. In the meantime, Far Eastern Energy Company units expect losses in 2008, which they blame on the imperfect tariff regulation. The losses are being linked with growth of fuel oil prices, which outpaced expectations.

Re-evaluation and expected sales of the company-owned energy retail companies give an opportunity to gain on the forthcoming buyout offers. However, it will be possible to formulate investment ideas only after the starting bids of the auctions are fixed and the potential pool of investors is finalized.

Formation of a draft corporate policy for the electricity company and its placement on quotation lists may fuel investor interest in its shares.

Cancellation of the state regulation of tariffs in Russia's Far East could lead to the wide-scale re-evaluation of most of the companies operating in the region. In an interview published on July 7, 2008, Mr. Chubais, when asked about the planned merger of the Primorye and Siberian power grids, stated that the project would be brought to fruition by 2010. He added that a project that will allow for electricity transmissions between the two power grids has already been endorsed. This serves as an indirect sign that state regulation of electricity tariffs in Russia's Far East could be repealed earlier than in 2015.