Kulczyk Oil Ventures Inc.
WARSAW : KOV

Kulczyk Oil Ventures Inc.

August 13, 2012 17:55 ET

KOV Announces Conversion of Debentures

CALGARY, ALBERTA--(Marketwire - Aug. 13, 2012) - Kulczyk Oil Ventures Inc. ("Kulczyk Oil" or "KOV") (WARSAW:KOV), an international upstream oil and gas exploration and production company, is pleased to announce that holders of an aggregate of $23,500,000 principal amount of its unsecured convertible debentures (the "Debentures") have elected to convert their respective Debentures into common shares in the capital of KOV ("Common Shares"). Unless otherwise indicated, all references in this press release to "$" are to United States dollars.

The Debentures were issued on August 11, 2011 in connection with the finalization by KOV of arrangements with Kulczyk Investments S.A. ("KI"), the major shareholder of KOV, and Radwan Investments GmBH ("Radwan") for up to an aggregate of $23,500,000 in funding to KOV. KI is an international investment house founded by Polish businessman Dr. Jan Kulczyk, the former Chairman of the board of directors of KOV. Dariusz Mioduski, the current Chairman of the board of directors of KOV, is the Chief Executive Officer of KI. The sole shareholder of Radwan is Radwan Privatstiftung, an Austrian private foundation, and the children of a senior officer of KI are among the class of beneficiaries who may benefit from the assets of the foundation.

Debentures for up to a principal amount of $21,150,000 and up to a principal amount of $2,350,000, each of which matured on August 11, 2012 (the "Maturity Date"), were issued by KOV to KI and Radwan, respectively. They are convertible at a price of $0.43 per Common Share (equivalent to PLN1.40 per Common Share at the mid-exchange rate of the National Bank of Poland on August 10, 2012), being the volume weighted average price of the Common Shares on the Warsaw Stock Exchange during the five trading days prior to, and excluding, the Maturity Date. The terms of the Debentures obligate KOV to issue, within five business days of the Maturity Date, the Common Shares pursuant to the conversion together with an additional 2,838,010 Common Shares (the "Kicker Shares") to KI and Radwan in accordance with a formula based on the applicable conversion price of the Debentures and the amount of debt incurred by KOV under the funding arrangement. Subsequent to the conversion of the Debentures, all amounts owing by KOV to KI and Radwan under the Debentures will be satisfied in full.

In connection with the conversion of the Debentures, KOV will issue an aggregate of 60,499,029 Common Shares to KI and Radwan. This total includes the Common Shares issuable upon the conversion of all amounts attributable to the principal and accrued but unpaid interest payable pursuant to the terms of the Debentures, as well as the Kicker Shares. The total number of Common Shares outstanding subsequent to this conversion and the issuance of the Kicker Shares will be 481,756,729.

As a result of the conversion and the issuance of the Kicker Shares, KI will hold 240,807,193 Common Shares, representing, in aggregate, approximately 49.99% of the issued and outstanding Common Shares and Radwan will hold 26,628,360 Common Shares, representing, in aggregate, approximately 5.53% of the issued and outstanding Common Shares. Collectively, KI and Radwan will hold 267,435,553 Common Shares, which will represent, in the aggregate, approximately 55.52% of the issued and outstanding Common Shares upon the completion of the conversion of the Debentures and the issuance of the Kicker Shares. Pursuant to Canadian regulations, KI and Radwan may be considered to be acting jointly. For further details regarding the securities holdings of KI and Radwan in KOV, please see the Early Warning Report of KI, which will be available under KOV's profile on SEDAR at www.sedar.com.

For further details regarding the Debentures, please see KOV's press release dated August 12, 2011 and Material Change Report dated August 18, 2011, available under KOV's profile on SEDAR at www.sedar.com.

About Kulczyk Oil

Kulczyk Oil is an international upstream oil and gas exploration 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 Kulczyk Oil 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 working interests in two production sharing agreements which give the Company the right to explore for and produce oil and natural gas from Block L and Block M. KOV owns a 90% working interest in Block L, a 1,123 square kilometre area covering onshore and offshore areas in northern Brunei and a 36% working interest in Block M, a 1,505 square kilometre area onshore in southern 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 fulfilment 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.

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 related to the conversion of the Debentures, including the number of Common Shares issuable to KI and Radwan and the satisfaction in full of all amounts owing by KOV to KI and Radwan under the Debentures, 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. 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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Telephone: +1-403-264-8877
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Telephone: +971-4-339-5212
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Nowogrodzka 18/29
00-511 Warsaw, Poland
Telephone: +48 (22) 414 21 00
Facsimile: +48 (22) 412 48 60

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