HOUSTON, TEXAS--(Marketwire - Jan. 7, 2013) - Cub Energy Inc. ("Cub" or the "Company") (TSX VENTURE:KUB), a Ukraine-focused upstream oil and gas company, announces 2012 exit rate of 1,531 barrels of oil equivalent ("Boe/d"); an increase in production volumes of 107% from 31 December 2011. Additionally, the Company announces that its board of directors has approved a 2013 capital expenditure ("CAPEX") budget of $26.7 million allocated to oil and gas activities on both its 100% owned western Ukraine assets and its joint venture eastern Ukraine assets operated by KUB-Gas LLC ("KUB-Gas"), a subsidiary in which Cub has a 30% ownership interest.
- 2012 exit rate of 1,531 Boe/d with an additional 35 Boe/d currently shut in;
- Successfully drilled five wells, with a sixth currently drilling; a total of six wells were tied in for commercial production; took delivery of new snubbing unit and performed two dual completions of current producing wells;
- Acquired and interpreted 73 kilometres of 2D seismic on western Ukraine assets;
- Completion of Rusko-Komarovske ("RK") facilities upgrade and addition of compression facilities increase production from the RK-2 and RK-6 legacy wells by 162%, from .42 million cubic feet per day ("MMcf/d") to 1.1 MMcf/d;
2012 Production Exit Rate
The Company achieved exit production of 1,531 Boe/d an increase of 107% from the 2011 exit rate of 739 Boe/d. Cub estimates it has an additional 35 Boe/d of production that is currently shut in for well workovers.
Additionally, completion operations are underway at the Krutogorovskoye-7 ("K-7") and Makeevskoye-16 ("M-16") wells that had both reached their respective planned total depths in 2012. The Company expects testing results of the K-7 and M-16 wells in the first quarter of 2013.
In east Ukraine, 2012 production increases were the result of the successful execution of a multifaceted programme of exploration and development drilling, numerous well tie-ins and dual completion workovers of current producing wells.
In west Ukraine, Cub saw increased production from a combination of the RK-6 well workover and the addition of incremental compression capacity, which has increased Cub's production volumes from the two legacy wells, RK-2 and RK-6 to 1.1 MMcf/d. An increase of 112% prior to the compressor being tied in mid-December 2012.
2013 CAPEX Budget
The Company has allocated $6.2 million of the 2013 CAPEX budget to the drilling and completing of 3 net wells on its western Ukraine assets; $2.1 million for 3D seismic on the 100% owned and operated RK and Stanivske fields; to its joint-operated eastern Ukraine assets, $7.5 million to drilling and completion activities for 6 gross wells and $8.9 million for other oil and gas activities including completions, recompletions and seismic; and $1.8 million in general and administrative expenses.
As part of the 2013 drilling programme, in eastern Ukraine, Cub expects to drill four wells on the Olgovskoye field and two wells on the Makeevskoye field with one additional well possible. In west Ukraine, the Company expects to drill two wells on the RK field and one well on the Stanivske field.
In addition to its 2013 drilling programme, the Company expects to perform five dual completion operations in the first half of the year with up to five additional later in the year; fracture stimulations on five current producing wells; construct additional facilities for Makeevskoye wells to more effectively handle the increasing production volumes; and add an additional twenty-five kilometres of new pipeline.
Mikhail Afendikov, Chairman and Chief Executive of Cub Energy, commented:
"I am very pleased with the progress Cub made in 2012. We have more than doubled our production volumes when compared to 2011 year-end. With our programme for 2013 fully financed and in place, we are excited about our prospects for the year ahead.
We expect similar year-over-year production growth in 2013 by bringing new wells on-stream, dual completions of existing wells and focusing on our low-risk development of proven and underexploited assets."
About Cub Energy Inc.
Cub Energy Inc. (TSX VENTURE:KUB) is a Ukraine-focused upstream oil and gas company with 110,000 net acres, in nine exploration and production licences, in the two major producing basins within Ukraine. The Company's strategy is to use western technology and capital, combined with local expertise to create value in its undeveloped land base, building a portfolio of high margin producing oil and gas assets. The Company has offices in Houston, Toronto and Kyiv and trades in Toronto under the stock symbol KUB.
For further information please contact us or visit our website: www.cubenergyinc.com.
Except for statements of historical fact, this news release contains certain "forward-looking information" within the meaning of applicable securities law. Forward-looking information is frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. CUB believes that the expectations reflected in the forward-looking information are reasonable; however there can be no assurance those expectations will prove to be correct. We cannot guarantee future results, performance or achievements. Consequently, there is no representation that the actual results achieved will be the same, in whole or in part, as those set out in the forward-looking information.
Forward-looking information is based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those anticipated in the forward-looking information. Some of the risks and other factors that could cause the results to differ materially from those expressed in the forward-looking information include, but are not limited to: general economic conditions in the Ukraine and globally; industry conditions, including fluctuations in the prices of natural gas; governmental regulation of the natural gas industry, including environmental regulation; unanticipated operating events or performance which can reduce production or cause production to be shut in or delayed; failure to obtain industry partner and other third party consents and approvals, if and when required; competition for and/or inability to retain drilling rigs and other services; the availability of capital on acceptable terms; the need to obtain required approvals from regulatory authorities; stock market volatility; volatility in market prices for natural gas; liabilities inherent in natural gas operations; competition for, among other things, capital, acquisitions of reserves, undeveloped lands, skilled personnel and supplies; incorrect assessments of the value of acquisitions; geological, technical, drilling, processing and transportation problems; changes in tax laws and incentive programs relating to the natural gas industry; failure to realize the anticipated benefits of acquisitions and dispositions; and the other factors. Readers are cautioned that this list of risk factors should not be construed as exhaustive.
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