SOURCE: Siberian Energy Group Inc

May 26, 2005 10:09 ET

Siberian Energy Group Enters an Agreement With UK-Based Baltic Petroleum Limited for the Formation of a Joint Venture

To Explore and Develop Properties in the Kurgan Region of Western Siberia

NEW YORK, NY -- (MARKET WIRE) -- May 26, 2005 -- Siberian Energy Group (OTC BB: SIBN), today announced that it has entered into an agreement with UK-based Baltic Petroleum Limited ("BPL") for the formation of a joint venture company. Activities of the joint venture will include the exploration and development of Siberian Energy Group's four petroleum license blocks in the Kurgan region of Siberia covering over 635,000 acres. Baltic Petroleum paid the Company a US$100,000 deposit upon exercising the option to form a joint venture under this agreement. Baltic Petroleum is currently conducting due diligence.

The joint venture provides for the transfer by Siberian Energy Group of its ownership interest in Zauralneftegaz to the Joint Venture. Siberian Energy will obtain a 50% interest in the joint venture, with Baltic Petroleum obtaining a 50% interest. The terms of the joint venture agreement provide for Baltic Petroleum being responsible for all funding of the joint venture's operations. Completion of the purchase of the share capital of the joint venture company is conditioned upon Baltic Petroleum having provided a US$1.27 million loan facility to Zauralneftegaz, which loan facility has been provided by Baltic Petroleum.

In commenting on the relationship with Baltic Petroleum, David Zaikin, Chairman and CEO of Siberian Energy Group, stated, "We're thrilled to welcome Baltic Petroleum and its team of expert geologists and petroleum engineers to Siberian Energy's projects in Western Siberia. We believe Baltic Petroleum's entrepreneurial spirit, business expertise and experience will nicely augment Siberian Energy Group's projects and affiliated companies in the region. We're confident that this new relationship with Baltic Petroleum will lead to a long-term and mutually beneficial partnership."

ABOUT SIBERIAN ENERGY GROUP

Siberian Energy Group Inc. is an oil and gas exploration company, headquartered in New York. The Company's oil exploration licenses are located in Western Siberia, Russia, a region that currently accounts for 70% of Russia's production and 4% of world output.

Siberian Energy Group's focus is on developing its four Western Siberian licensed concessions, across over 635,000 acres, which were acquired through government auctions. In addition, Siberian Energy Group is constantly evaluating new mineral resource assets, both explored and unexplored, to further its growth.

For more information regarding Siberian Energy Group, please visit www.siberianenergy.com.

ABOUT BALTIC PETROLEUM LIMITED

UK-based Baltic Petroleum Limited is a recently formed oil & gas company that was established to enable UK and European investors to participate in energy exploration and production projects in the Russian Federation.

For more details on the agreement between the parties please view the Form 8-K filed with the U.S. Securities and Exchange Commission on May 20, 2005, at www.sec.gov.

FORWARD-LOOKING STATEMENTS

The forward-looking statements contained herein are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof. The company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date thereof. Readers should carefully review the risks described in other documents the company files from time to time with the Securities and Exchange Commission, including Annual Reports, Quarterly Reports and Current Reports on Form 8-K.

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