Chaparral Resources, Inc. Announces Third Quarter Results: Growth in Net Income and Production.

WHITE PLAINS, N.Y. -- Chaparral Resources, Inc. (OTCBB:CHAR) today announced its financial results for the third quarter 2004. The Company reported a net income of $3.56 million, or 9 cents per share, for the quarter ended September 30, 2004, compared to a net income of $2.07 million, or 5 cents per share, for the quarter ended September 30, 2003. The $1.49 million increase in Chaparral's net income is primarily a result of higher crude prices. Lower sales volumes meant that revenues were slightly lower, but this was more than offset by lower volume related transportation costs and depletion charge.

Revenues were $22.08 million for the third quarter of 2004 compared with $23.31 million for the third quarter of 2003. The $1.23 million decrease in revenue is the result of lower volumes sold partially offset by higher crude prices achieved. During the third quarter of 2004, Chaparral sold approximately 674,000 barrels of crude oil, recognizing $22.08 million in revenue, or $32.74 per barrel. For the comparable quarter of 2003, the Company sold approximately 1,098,000 barrels of crude oil, recognizing $23.31 million in revenue, or $21.23 per barrel. The unusually high volumes sold during the third quarter of 2003 included approximately 200,000 barrels of crude as a result of delayed delivery pertaining to the second quarter of 2003, which therefore did not represent production during that quarter.

Chaparral's operations for the nine months ended September 30, 2004 resulted in a net profit of $5.49 million compared to a net income of $1.01 million for the nine months ended September 30, 2003. The $4.48 million increase primarily relates to (i) higher sales revenue as a result of higher volumes sold and higher prices achieved, and (ii) improved operational results from the Karakuduk Field, partially offset by (i) recognition in 2003 of a $1.02 million gain as a result of the adoption of FASB 143, (ii) higher costs associated with increased debt obligations, (iii) higher operational costs associated with increased sales, and (iv) higher income tax provision.

During the nine months ended September 30, 2004, the Company sold approximately 2,029,000 barrels of crude oil, recognizing revenue of $55.16 million, or $27.19 per barrel. Comparably, we sold approximately 1,917,000 barrels of crude oil, recognizing $39.59 million in revenue, or $20.65 per barrel, for the nine months ended September 30, 2003. During this period, transportation costs were $9.69 million or $4.78 per barrel, and operating costs associated with sales were $5.66 million, or $2.79 per barrel. Comparatively, transportation costs for the nine months ended September 30, 2003 were $7.92 million or $4.13 per barrel, and operating costs associated with sales were $4.2 million, or $2.19 per barrel. The increase in transportation cost per barrel during 2004 is the result of higher tariffs imposed on the Company, greater volumes sold to the export market during 2004, and a 160,000 barrel sale to the local market in 2003 that carried no transportation cost. The increase in operating cost per barrel is mainly due to higher work-over maintenance costs during the nine months ended September 30, 2004.

The Company is presently engaged in the development of the Karakuduk field, which requires substantial cash expenditures. For the nine months ended September 30, 2004, Chaparral invested approximately $22.08 million in field development, compared with $15.36 million for the nine months ended September 30, 2003. The increase of $7.72 million is due to additional capital activities during 2004 including the ongoing drilling program, a pressure maintenance program and construction of water injection facilities. The Company anticipates full year 2004 capital expenditures of approximately $31 million, and expects to finance this expenditure through cash flows from the sale of crude oil and external financing, as necessary.

Production during the third quarter totaled approximately 762,000 barrels, which is equivalent to 8,290 barrels of oil per day (bopd). This represents an increase in production performance during 2004, from an average of 7,760 bopd for the first quarter and 7,956 bopd for the second quarter.

Drilling activity at Karakuduk continued throughout the third quarter with KKM drilling 13,362m (4.5 wells) compared with 14,747m (4.9 wells) in the second quarter. Field infrastructure development continued on gathering lines, access roads, facilities upgrades and improvements to the field camp.

During October, production at Karakuduk increased slightly to 8,630 bopd. The Company optimized the performance of the sucker rod pumps at the field and increased the producing well stock to 57. Of this total, 47 were online as of November 1st and production had reached 9,000 bopd. There are now two workover rigs at the field, KKM having mobilized a 100 ton workover rig. This rig will be used to complete at least four capital recompletions at the field to further boost production. It will also prepare the wells for the upcoming hydraulic fracturing program that a world class contractor is due to perform starting mid November.

Under the current development plan, drilling and infrastructure development will continue throughout the remainder of the year. It is now expected that 18 wells in total will be drilled at the field in 2004, two more than originally planned. Construction of a gas pipeline from the field to the heating station, located at the midway point kilometer 15 of the field export pipeline, has commenced. When completed in December, this line will significantly reduce KKM's operating costs as the current diesel-fired oil heaters will be converted to run on produced gas.

Management expects that KKM's production will reach a level of 9,500 bopd by the end of 2004.

Simon K. Gill, Chief Executive Officer of Chaparral, commented, "Chaparral's cash flow position has improved over the quarter due to higher production and higher prices. This has improved the Company's working capital situation and puts it in a stronger financial position which will help it to meet its ambitious 2005 expansion plans."

Chaparral Resources, Inc. is an international oil and gas exploration and production company. The Company's only operating asset is its participation in the development of the Karakuduk field through KKM, of which Chaparral is the operator. The Company has a 60% ownership interest in KKM with the other 40% ownership interest being held by Joint Stock Company KazMunayGaz, the national petroleum company of Kazakhstan. Nelson Resources Limited, an independent oil company listed on the Toronto Stock Exchange and the Alternative Investment Market of the London Stock Exchange, holds a majority interest in Chaparral and operates several other producing oil fields in Kazakhstan. More information is available on the Company's web site, www.chaparralresources.com.

Information Regarding Forward-Looking Statements: Except for historical information contained herein, the statements in this Press Release are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause the Company's actual results in future periods to differ materially from forecasted results. These risks and uncertainties include, among other things, volatility of oil prices, product demand, market competition, risks inherent in the Company's international operations, imprecision of reserve estimates and Chaparral's ability to replace and expand oil and gas reserves. These and other risks are described in the Company's Annual Report on Form 10-K and other filings with the Securities and Exchange Commission.

FINANCIAL HIGHLIGHTS
                 (in thousands, except per share data)

                              Quarter Ended         Nine Months Ended
                               September 30,           September 30,
                       -----------------------------------------------
                             2004        2003        2004       2003
                       -----------------------------------------------

Revenue                    $22,078     $23,308     $55,158    $39,594
Cost and expenses          (11,104)    (15,487)    (33,801)   (30,420)
Other income/(expense)      (4,293)     (3,271)     (9,717)    (6,020)
Income tax expense          (3,122)     (2,479)     (6,147)    (3,160)
Cumulative effect of
 change in
   accounting principle          -           -           -      1,018
                       -----------------------------------------------
Net income available to
 common stockholders        $3,559      $2,071      $5,493     $1,012
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Basic earnings per share:
 Net income per share        $0.09       $0.05       $0.14      $0.03
 Weighted average
  number of shares
   outstanding (basic)  38,209,502  38,209,502  38,209,502 38,209,502
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Diluted earnings per share:
 Net income per share        $0.09       $0.05       $0.14      $0.03
 Weighted average
  number of shares
   outstanding
    (diluted)           38,209,502  38,408,726  38,209,502 38,408,726
                       ===============================================