Kulczyk Oil Ventures Inc.
WARSAW : KOV

Kulczyk Oil Ventures Inc.

May 09, 2013 13:57 ET

KOV Announces Contingent Conversion Of Loan

CALGARY, ALBERTA--(Marketwired - May 9, 2013) - Kulczyk Oil Ventures Inc. (WARSAW:KOV) ("Kulczyk Oil" or "KOV"), an international upstream oil and gas exploration and production company, announces the contingent conversion of a loan by its major shareholder Kulczyk Invesments S.A. ("KI").

KOV had entered into an agreement with KI for the provision of up to $12.0 million in funding to the Corporation to fund the Corporation's ongoing working capital requirements (the "KI Loan") on June 22, 2012, Under the terms of the KI Loan KI agreed to provide funding by way of the KI Loan with a term ending December 31, 2012, interest was payable at a rate of 15.0% per annum, and KOV had the right to prepay the KI Loan in whole or in part at any time. On December 11, 2012, KOV and KI entered into an agreement to amend the KI Loan by extending the term of the KI Loan by one year to December 31, 2013 and making both interest and principal amounts owing under the KI Loan convertible into common shares of KOV ("Shares") under certain conditions or at the option of KI.

KOV received formal notice from KI on May 8, 2013 that they would convert the $13,369,726 outstanding (of which $12,000,000 is the principal amount of the KI Loan and $1,369,726 is the estimated accrued interest and unpaid interest thereon prior to conversion) into Shares. Based upon the volume weighted average trading price of Shares on the WSE during the five trading days immediately prior to but excluding the date of the conversion election notice, KOV would issue 31,832,681 Shares.

Tim Elliott, the President & Chief Executive Officer of KOV, stated:

"We are pleased that KI has demonstrated further its confidence in KOV and the acquisition of Winstar by electing to convert."

The conversion is conditional on the successful closing of the arrangement entered into between Kulczyk Oil, Winstar Resources Ltd. ("Winstar") and KI on April 24th, 2013 pursuant to which KOV will acquire all of the issued and outstanding common shares of Winstar pursuant to a plan of arrangement under the Business Corporation Act (Alberta) ("Transaction") as described in KOV's press release of April 25, 2013. In the event that the Transaction, expected to close in late June 2013, is unsuccessful, the conversion election notice received from KI shall be null and void and the KI Loan will continue in full force and effect.

About Kulczyk Oil

Kulczyk Oil is an international upstream oil and gas exploration and production company with a diversified portfolio of projects in Ukraine, Brunei and Syria and with a risk profile ranging from exploration in Brunei and Syria to production and development in Ukraine. The common shares of the Company trade on the Warsaw Stock Exchange under trading symbol "KOV".

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

In Brunei, KOV owns a 90% working interest in a production sharing agreement which gives the Company the right to explore for and produce oil and natural gas from Block L, a 1,123 square kilometre area covering onshore and offshore areas in northern Brunei.

In Syria, KOV holds a participating interest of 50% in the Syria Block 9 production sharing contract which provides the right to explore for and, upon the satisfaction of certain conditions, to produce oil and gas from Block 9, a 10,032 square kilometre area in northwest Syria. The Company has an agreement to assign a 5% ownership interest to a third party which is subject to the approval of Syrian authorities, and which, if approved, would leave the Company with a remaining effective interest of 45% in Syria Block 9. KOV declared force majeure, with respect to its operations in Syria, in July 2012.

KOV announced on 25 April that it had entered into an agreement to acquire Winstar Resources Ltd. ("Winstar"), a company with producing and development properties in Tunisia and an exploration block in Romania, subject to the approval of its shareholders. The transaction is expected to close near to the end of June 2013 at which time KOV, while continuing to be listed on the WSE, would list its shares for trading on the TSX.

The main shareholder of the Company is Kulczyk Investments S.A., an international investment house founded by Polish businessman Dr. Jan Kulczyk.

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

Forward-looking Statements This release may contain forward-looking statements made as of the date of this announcement with respect to future activities of KOV that either are not or may not be 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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