Kulczyk Oil Ventures Inc.
WARSAW : KOV

Kulczyk Oil Ventures Inc.

August 27, 2010 03:00 ET

KOV Commits to Phase 2 Exploration Program in Brunei Block L

CALGARY, ALBERTA--(Marketwire - Aug. 27, 2010) - Kulczyk Oil Ventures Inc. (WARSAW:KOV) ("Kulczyk Oil" or "KOV") is pleased to announce that Kulczyk Oil and its joint venture partners in Block L in Brunei Darussalam ("Block L JV") have elected to proceed with the Phase 2 exploration program under the terms of the Block L production sharing agreement ("Block L PSA"). 

The Phase 2 exploration program is for a term of two years commencing August 28, 2010 and the minimum work obligations are:

  1. acquire and process not less than 500 kilometres of onshore 2D seismic data and 500 kilometres of offshore 2D seismic data;
  2. acquire and process not less than 150 square kilometres of offshore 3D seismic data; and
  3. drill at least two onshore exploration wells, each to a minimum depth of 2,000 metres.

The Block L JV is obligated to expend a minimum of $16 million during Phase 2.

Under the terms of the Block L PSA, the Block L JV was granted the right to explore for and, in the event of hydrocarbon discovery and subject to the approval of PetroleumBRUNEI, produce oil and natural gas from Block L. As a part of the Phase 1 exploration commitments the Block L JV has: (i) interpreted more than 1,500 kilometres of 2D seismic data; (ii) acquired 350 square kilometres of 3D seismic data; (iii) drilled the first exploration well at Lukut-1 (currently awaiting testing); (iv) acquired an aerial gravity/magnetic survey; and, (v) commissioned a geological study of the area. The second exploration well on Block L, being drilled as a part of the Phase 1 exploration program, is currently drilling at Lempuyang-1.

"The decision to move forward with Phase 2 reflects our optimism about the potential of Block L. It is a large block within a prolific petroleum system with virtually no exploration work undertaken for decades prior to the award of the block in 2006. Opportunities like this are not common and we are excited about the potential of the area." said Jock Graham, Executive Vice President of Kulczyk Oil.

The partners in Brunei Block L are Kulczyk Oil Brunei Limited (40%), AED South East Asia Limited (50%), and QAF Brunei Sdn Bhd (10%). Kulczyk Oil Brunei Limited is a wholly-owned subsidiary of Kulczyk Oil.

Assets of Kulczyk Oil

Kulczyk Oil is an international upstream oil and gas exploration company with a diversified portfolio of projects in Brunei, Syria and Ukraine and with a risk profile ranging from exploration in Brunei and Syria to production and development in Ukraine.

In Brunei, KOV owns working interests in two production sharing agreements which gives the Company the right to explore for and produce oil and natural gas from Block L and Block M. KOV owns a 40% working interest in Block L, a 2,220 square kilometre (550,000 acre) area covering onshore and offshore areas in northern Brunei and a 36% working interest in Block M, a 3,011 square kilometre (744,000 acre) area onshore in southern Brunei.

In Ukraine, KOV owns an effective 70% interest in KUB-Gas LLC. The gas producing assets of KUB-Gas consist of 100% interests in four licenses near to the City of Lugansk in the northeast part of Ukraine.

In Syria, KOV holds a direct 75% interest in a production sharing agreement that gives it the right to explore for and produce oil and natural gas from Block 9, a 10,032 square kilometre area in northwest Syria.

The main shareholder of the Company, Kulczyk Investments S.A., increased its holdings in the Company through participation in the initial public offering of the Company on the Warsaw Stock Exchange in May 2010 and the conversion of a debenture and owns almost 50% of the issued common shares. Kulczyk Investments S.A. is an international investment house founded by Polish businessman Dr. Jan Kulczyk.

For further information, please refer to the Kulczyk Oil website (www.kulczykoilventures.com).

Translation: This news release has been translated into Polish from the English original.

Forward-looking Statements This release contains forward-looking statements made as of the date of this announcement with respect to future activities on Brunei Block L and general exploration activities in Brunei and other statements that are not historical facts. Although the Company believes that its expectations reflected in the forward-looking statements are reasonable as of the date hereof, any potential results suggested by such statements involve risk and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Various factors that could impair or prevent the Company from completing the expected activities on its projects include that the Company's projects experience technical and mechanical problems, there are changes in product prices, failure to obtain regulatory approvals, the state of the national or international monetary, oil and gas, financial, political and economic markets in the jurisdictions where the Company operates and other risks not anticipated by the Company or disclosed in the Company's published material. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties and actual results may vary materially from those expressed in the forward-looking statement. The Company undertakes no obligation to revise or update any forward-looking statements in this announcement to reflect events or circumstances after the date of this announcement, unless required by law.

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