Kulczyk Oil Ventures Inc.

Kulczyk Oil Ventures Inc.

September 13, 2009 17:00 ET

Kulczyk Oil Expanding Brunei Holdings Acquiring Triton Hydrocarbons

CALGARY, ALBERTA--(Marketwire - Sept. 13, 2009) - Kulczyk Oil Ventures Inc. ("Kulczyk Oil" or the "Company") is pleased to announce that it has made an offer to shareholders of Triton Hydrocarbons Pty Ltd ("Triton"), a private Australian company, to acquire all of their Triton shares in exchange for newly issued common shares of Kulczyk Oil and has received acceptances from Triton shareholders holding more than 75% of the shares. The acceptances allow the Company to acquire the remaining shares of Triton through an extension of the offer and compulsory acquisition rights provided for in Triton's constitution. The principal asset of Triton is its 36% interest in Brunei Block M, an onshore area of approximately 3,000 square kilometres (744,000 acres). The block lies immediately to the south of Kulczyk Oil's existing Block L. Closing of the acquisition, expected in mid September, will expand the interests of Kulczyk Oil in the Sultanate of Brunei Darussalam ("Brunei") to cover most of onshore Brunei.

Triton also owns 35% of the issued shares of Mauritania International Petroleum Inc. ("MIPI"). MIPI holds a 100% interest in four contiguous exploration blocks offshore the Islamic Republic of Mauritania. In addition, and on completion of the acquisition of Triton, Triton will continue to own 50% of the issued shares of Triton Petroleum Pte Ltd ("Triton Singapore"). While the sole asset of Triton Singapore will be a 20% beneficial interest in a production sharing agreement covering Block 9 in Syria to be assigned by the Company, Triton Singapore will also be led by the current management of Triton, who are pursuing development opportunities in southern Iraq.

In consideration for the transaction, the former shareholders of Triton will receive an aggregate of 75,065,941 common shares of Kulczyk Oil, subject to rounding adjustments (being 5.491 common shares of Kulczyk Oil for each common share of Triton) and 50% of the common shares of Triton Singapore. At closing, Kulczyk Oil will issue a US$10,010,000 convertible debenture to certain investment funds of Tiedemann Investment Group ("TIG") in exchange for the US$10,010,000 in convertible notes which it held in Triton.

Once the acquisition of Triton by Kulczyk Oil has been completed, the Brunei National Petroleum Company Sendirian Berhad, under the terms of the Block M Production Sharing Agreement, has the right to acquire Kulczyk Oil's interest in Block M at a price equal to the arm's length fair market value thereof.

Cornerstone Investor

The major shareholder of Kulczyk Oil continues to be Kulczyk Investments S.A. ("KI"). At closing of the Triton acquisition and issuance of Company shares to Triton shareholders, KI will own 92,511,988 common shares, which will represent approximately 46.1% of the total number of shares issued and outstanding after the Triton acquisition. KI is a company that takes its name from Dr. Jan Kulczyk, a Polish entrepreneur and international businessman. To assist the Company with the Triton acquisition, KI purchased one-third of the previously outstanding Triton convertible notes at a face value of $5,005,000, and converted them at the closing of the transaction into Triton shares, which were then exchanged for common shares of Kulczyk Oil, on the same basis as the other Triton shareholders. At closing, the total number of Kulczyk Oil shares issued and outstanding will be 200,491,546, with the former Triton ordinary shareholders owning approximately 33.8% of the total shares issued and outstanding.

In addition, KI has separately agreed to provide Kulczyk Oil with a US$8 million debt facility, to fund ongoing operations. Monies advanced pursuant to the debt facility will be converted into Kulczyk Oil shares at the time of Kulczyk Oil's listing and initial public offering ("IPO") on the Warsaw Stock Exchange and the conversion price shall be the same as the initial public offering price.


Brunei is the third largest oil producer in Southeast Asia, and a significant producer of liquefied natural gas ("LNG"). It is situated in south-eastern Asia, bordering the South China Sea and Malaysia. The country is a Constitutional Sultanate which has been ruled by the same royal family for over six centuries. Brunei benefits from extensive petroleum and natural gas fields, the source of one of the highest per capita GDPs, estimated at $53,100 USD for 2008 in Asia. Crude oil and LNG are the main exports of Brunei. (Source: The World Fact Book)

To view a map of Brunei, please visit the following link: http://media3.marketwire.com/docs/913kulczyk1.jpg.

Block M

Triton holds a 36% interest in a Production Sharing Agreement ("Block M PSA") which gives it the right to explore for and produce oil and gas from Block M, an area of approximately 3,000 square kilometres (744,000 acres) in the southern region of Brunei immediately south of and bordering Block L. Block M contains the undeveloped Belait oil and gas field that was originally discovered by Royal Dutch Shell in 1914 on the Belait Anticline, a major structural feature which crosses Block M and continues into Block L to the north. Since 1912, 18 wells, many of which tested oil or gas, have been drilled on the Belait Anticline. (Source: "The Geology and Hydrocarbon Resources of Negara Brunei Darussalam, 1996 Revision" published by Brunei Shell Petroleum)

Netherland, Sewell & Associates, Inc. ("NSAI"), an international third party engineering evaluation company, performed a comprehensive review of all available technical data as a basis for an evaluation of the potential of Brunei Block M, and have provided a Competent Persons Report (the "Brunei Block M CPR") to the Company, with an effective date of August 31, 2009 which includes their calculation of both Contingent and Prospective Resources for the identified prospects. The Brunei Block M CPR indicates potential Contingent Resources in the Best Estimate category net to the 36% interest, of 24.1 million barrels of oil and 161.6 billion cubic feet of natural gas and Prospective Resources in the Best Estimate category net to the 36% interest, of 0.18 million barrels of oil and 39 billion cubic feet of natural gas.

"Contingent Resources" are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies.

"Prospective Resources" are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of discovery and a chance of development.

"Best Estimate" is a term used to describe an uncertainty category for resource estimates referring to the best estimate of the quantity that will actually be recovered. It is equally likely that the actual remaining quantities recovered will be greater or less than the "best estimate". The best estimate of the Contingent and Prospective Resources is prepared independent of the risks associated with achieving commercial production.

Although the Belait Gas and Belait Oil Reservoirs have discovery wells that were production tested, they are classified as Contingent Resources. These resources are contingent upon acquisition of additional technical data that support the commerciality of the project and finalization of development plans, marketing terms and regulatory and government approvals.

Prospective Resources have significant additional risks relative to Contingent Resources. Four prospects on Block M were categorized as Prospective Resources because of the lack of discovery wells and production tests. There is no certainty that any portion of the Prospective Resources will be discovered. Furthermore, if discovered, there is no certainty that it will be commercially viable to produce any portion of the Prospective Resources.

A total of 118 km2 of 3D seismic and 60 kilometres of 2D seismic were shot during the second and third quarters of 2009. Two wells are expected to be drilled on Block M during 2010 to be followed by a third well to be drilled prior to August 2011.

Block L

Kulczyk Oil, through a wholly-owned subsidiary, owns a 40% interest in a Production Sharing Agreement ("Block L PSA") which gives it the right to explore for and produce oil and gas from Block L, a 2,200 square kilometre (550,000 acre) exploration and development area covering onshore and offshore areas in the northeastern portion of Brunei. The offshore component is in relatively shallow waters and includes a seven kilometre wide strip along the northwest coast, and essentially all of Brunei Bay to the east. The giant Seria oil field, which exceeded 1 billion barrels of cumulative oil production in 1991 (Source: Brunei Shell Petroleum Website), is located approximately 12 kilometres to the southwest of Block L adjacent to the western boundary of Block M. A significant gas discovery at Bubut, announced by Brunei Shell Petroleum, lies less than one kilometre from the edge of Block L in the shallow offshore region. (Map: PetroleumBRUNEI website)

To view a map of the Brunei Darussalam Petroleum Acreage, please visit the following link: http://media3.marketwire.com/docs/913kulczyk2.jpg.

A 350 square kilometre 3D seismic acquisition program, shot to evaluate the potential of the southwest portion of the block near the Seria field and immediately north of the Belait anticline, was completed on May 8, 2009. The initial results from the processing of the field data indicate that excellent quality data has been obtained. Interpretation of these data is ongoing as processed information is received over the next few weeks. Under the terms of the PSA, the Company and its partners are committed to the drilling of a minimum of two exploration wells on Block L. A decision on drilling locations is expected during October with drilling expected to commence in the first quarter of 2010. The last well drilled in Block L was in 1986 (Jerudong-11).

Principal Assets of Kulczyk Oil

- Following the completion of the acquisition of Triton, the principal assets of Kulczyk Oil will consist of a 40% working interest in Brunei Block L, a 36% working interest in Brunei Block M and an 80% interest in Syria Block 9. The Company expects to participate in the drilling of a minimum of 4 wells in Brunei in 2010 and plans to shoot a large 3D seismic survey in Syria prior to June of next year.

Kulczyk Oil is an international upstream oil and gas exploration and production company with principal interests in Brunei and Syria. Kulczyk Oil is reviewing new growth opportunities within Central and Eastern Europe as well as in other prolific hydrocarbon basins. The difficult current market environment is creating unique investment opportunities internationally, which until recently were overvalued or inaccessible. Kulczyk Investments S.A., an international investment house founded by Polish businessman Dr. Jan Kulczyk, is the principal shareholder of the Company.

Translation: This news release is officially released in English and, in the event of any conflict between the content or interpretation of the official news release and any translation, the English version shall prevail.

Forward-Looking Statements: Some of the statements contained in this release may be forward-looking statements. Forward-looking statements include statements concerning closing of the Triton transaction and the benefits that may be derived from it, estimates of recoverable hydrocarbons, drilling plans, seismic plans, statements relating to the continued advancement of the Company's projects, statements as to an initial public offering of the Company's shares and other statements which are not historical facts. Although the Company believes that its assumptions reflected in the forward-looking statements are reasonable, such as closing conditions outlined in the pre-acquisition agreement with Triton being satisfied, no exercise of the right to acquire Block M, capital being obtained and economic viability remaining the same for the Company's plans in Brunei and for an initial public offering of its shares, the potential results suggested by such statements involve inherent risk and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Various factors, which could cause actual results to differ from these forward-looking statements, include the failure to obtain sufficient financing, potential that the Company's projects will experience technical and mechanical problems, geological conditions in the reservoir which may negatively impact anticipated levels of oil and gas production and changes in the economics of the projects or any initial public offering, and other risks not anticipated by the Company or disclosed in the Company's published material, all of which may alter the Company's intended plans or timing of activities in Brunei. These statements speak only as of the date of this press release and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, other than as required by law. The forward-looking statements contained in this release are expressly qualified by this cautionary statement.

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