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Karakuduk Acquisition 23 December 2004 NELSON RESOURCES LIMITED ANNOUNCES ACQUISITION OF 40% OF KARAKUDUK FIELD Nelson Resources Limited ("Nelson" or the "Company", TSX / AIM: NLG), a leading independent oil exploration and production company operating in Kazakhstan, today announces that it has entered into definitive sale and purchase agreements to acquire a 40% interest in the Karakuduk field. Nelson will pay an estimated U.S.$36.0 million, inclusive of transaction costs, from existing cash resources. The closing of the transaction remains subject to normal government and regulatory approval, and is expected to occur in January 2005. Following the previously announced agreement between Nelson and Chaparral Resources Inc. ("Chaparral"), which holds the other 60% interest in the field, Chaparral, through a wholly-owned subsidiary, exercised its right of first refusal to purchase the remaining 40% stake currently owned by the Kazakh state oil company Kazmunaigas. Upon completion of this transaction, ownership of this stake will be transferred to Nelson, increasing the Company's net interest in the Karakuduk field to 76% (with 36% held indirectly through the Company's shareholding in Chaparral, and 40% held directly). The Company is the majority shareholder of Chaparral, holding 60% of its outstanding shares. The 16,900 acre Karakuduk field has total estimated remaining proved plus probable reserves of approximately 63.0 million barrels of oil (independent reserve report, 31 December 2003), and produced 8,290 barrels of oil per day on average for the third quarter 2004. The field is located onshore in the Mangistau region of western Kazakhstan, 340 kilometres northeast of the Caspian port of Aktau, and is operated by Joint Stock Company Karakudukmunai ("KKM"), which will be owned 60% by Chaparral and 40% by Nelson. KKM was awarded a 25-year commercial development licence for the field in 1995. The Karakuduk field has direct access to export markets. The field is approximately 29km west of the main utility corridor, including the Makat-Mangishlak railroad and the Uzen-Atyrau-Samara oil and gas pipelines. KKM has a right to use the existing oil export pipeline and related utilities. It also has a contract with CJSC Kaztransoil, a 100% subsidiary of Kazmunaigas, granting the right to use the export pipeline for transportation of crude oil to local and export markets. KKM has a 29 km crude oil pipeline from the field capable of transporting up to 18,000 barrels of oil per day to the export pipeline terminal. Nick Zana, Nelson's Chief Executive Officer, commented, "The Karakuduk field offers significant potential for growth in production, and since becoming the major shareholder of Chaparral in May 2004, we have already begun to see some success from our strategy to improve performance through rapid field development. Securing the remaining 40% Kazmunaigas stake allows us to consolidate our control of this excellent field. The acquisition will impact positively on our performance, increase our reserve base and production levels, and allow us to more effectively pursue our development strategy at the field, to the benefit of all shareholders, both of Nelson and Chaparral." For further information, please contact: ---------------------------------------- Fred Hodder, CFO Tel: 020 7495 8908 Nelson Resources Limited fhodder@nelsonresources.co.uk S.A.(Al) Sehsuvaroglu, Senior Vice President Tel: +7 3272 58 25 81/2/3 Nelson Resources Limited sas@nelsonresources.com Investor Relations: Ann-marie Wilkinson / Nick Lambert Tel: 020 7861 3232 Bell Pottinger Corporate & Financial (London) Notes ----- Nelson Resources Limited is an oil production and exploration company with operations in the Republic of Kazakhstan. The Company established its presence in the Kazakhstan oil sector in 2000 and its management team, comprising both international and Kazakh executives, has extensive experience of the Kazakh operating and regulatory environment. The Company owns 50% of Kazakhoil Aktobe LLP (KOA), a 50/50 joint venture between Nelson and Kazmunaigas, the national oil company of Kazakhstan, which is developing the Alibekmola and Kozhasai fields. The Company owns a 50% participatory interest in the North Buzachi oil field located in western Kazakhstan (50% Nelson, 50% CNPC International (Buzachi) Inc.). The Company is also in the process of acquiring a 50% interest in the Arman field, with the other 50% held by Shell. The Company also holds an option to acquire a minimum 25% participatory interest in two Caspian Sea offshore blocks, Zhambai South and South Zaburunye. The Company maintains its operational office in Almaty, Kazakhstan, which oversees the field joint ventures in western Kazakhstan. Nelson and its affiliated companies employ approximately 800 people. Common shares of Nelson are listed on the Toronto Stock Exchange and London's Alternative Investment Market under the symbol NLG. Readers are cautioned that the preceding statements and information may include certain estimates, assumptions and other forward-looking information. The actual future performance, developments and/or results of the Company may differ materially from any or all of the forward-looking statements, which include current expectations, estimates and projections, in all or part attributable to general economic conditions and other risks, uncertainties and circumstances partly or totally outside the control of the Company, including oil prices, imprecision of reserve estimates, drilling risks, future production of gas and oil, rates of inflation, changes in future costs and expenses related to the activities involving the exploration, development, production and transportation of oil, hedging, financing availability and other risks related to financial activities, and environmental and geopolitical risks. Discussion of the various factors that may affect future results is contained in the Company's recent filings with Canadian securities regulatory authorities. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. The estimates of reserves and future net revenue for individual properties may not reflect the same confidence level as estimates of reserves and future net revenue for all properties, due to the effects of aggregation. Additional information on the company's reserves may be obtained from the 2004 Business Acquisition Report, available at www.sedar.com. END

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