Cub Energy Comments on New Ukrainian Law Temporarily Increasing Royalties

HOUSTON, TEXAS--(Marketwired - Aug. 4, 2014) - Cub Energy Inc. ("Cub" or the "Company") (TSX VENTURE:KUB) comments on the newly enacted law concerning gas royalties in Ukraine.

On Friday, August 1, 2104, Ukraine President Petro Poroshenko signed a new law temporarily increasing royalties on natural gas production to 55% from their current level of 28% through December 31, 2014 (five months). The royalty rates will return to 28% on January 1, 2015.

Additionally, under the enacted law, the royalty rate for newly drilled wells will be discounted for two years at a discount coefficient of 0.55. In effect, newly drilled wells put on production after August 1, 2014 will have a royalty rate of 30.25%. This discount coefficient will apply to newly drilled wells for the next two years.

President Poroshenko signed the new law one day after the Ukraine parliament met in special session and passed the law on July 31, 2014. Cub, along with other private sector gas producers opposed to this royalty increase, prepared a joint letter to the Prime Minister, Arsenij Yatsenyuk, explaining the likely negative effects of such legislation on the domestic energy industry and urging him not to support it. The law that was eventually passed and signed by the President sets a lower royalty rate with less restrictive terms than initially proposed. For Cub, the royalty increase could translate into an approximate 50% reduction in netbacks for the next five months.

Mikhail Afendikov, Chairman and CEO of Cub said: "We understand the economic difficulties that Ukraine is facing and, while we are disappointed with the temporary royalty increase, we will comply. However, given that this will reduce our netbacks and resulting cash flow for the next five months, we will be re-evaluating our work programs for the remainder of 2014 to preserve our capital options."

About Cub Energy Inc.

Cub Energy Inc. (TSX VENTURE:KUB) is an upstream oil and gas company, with a proven track record of exploration and production cost efficiency in the Black Sea region. The Company's strategy is to implement western technology and capital, combined with local expertise and ownership, to increase value in its undeveloped land base, creating and further building a portfolio of producing oil and gas assets within a high pricing environment.

For further information please contact us or visit our website: www.cubenergyinc.com.

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