Kulczyk Oil Ventures Inc.
WARSAW : KOV

Kulczyk Oil Ventures Inc.

July 22, 2011 07:35 ET

KOV Spuds Itheria-1 Exploration Well in Block 9, Syria

CALGARY, ALBERTA--(Marketwire - July 22, 2011) - Kulczyk Oil Ventures Inc. ("Kulczyk Oil" or "KOV") (WARSAW:KOV), an international, upstream exploration and production company, is pleased to announce the spud of Itheria-1, the first exploration well being drilled by KOV and its joint venture partners on Block 9, Syria.

The planned total depth of the well is 3,256 metres and it is expected to take 80 days to drill, on a dry hole basis. The well will test a large structure with four-way dip closure defined by 3D seismic in an area approximately 200 kilometres due east of the City of Latakia. Primary targets are sandstones of Ordivician age.

Itheria-1 is being operated by Loon Latakia Limited ("Loon Latakia"), an indirect wholly-owned subsidiary of Kulczyk Oil. Loon Latakia holds a participating interest of 50% in the 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 (2.48 million acre) area in northwest Syria. Loon Latakia 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 Loon Latakia with a remaining effective interest of 45% in Block 9.

Pursuant to a farmout agreement announced by KOV on 6 September 2010, MENA Hydrocarbons (Syria) Ltd., an indirect wholly-owned subsidiary of MENA Hydrocarbons Inc. ("MENA") will fund 60% of the costs for the drilling of Itheria-1. Accordingly, the costs of drilling Itheria-1 will be shared as follows: MENA: 60%, Triton Petroleum Pte Ltd.: 20% and Kulczyk Oil: 20%.

RPS Energy ("RPS") prepared an independent third party engineering evaluation dated March 21, 2011, estimating as at December 31, 2010, the oil and gas Prospective Resources of both the Itheria prospect, and the Bashaer prospect which is scheduled to be drilled after the Itheria-1 drilling operations have ended. The Prospective Resource estimates for the Itheria prospect are summarized in the tables below and were previously disclosed by KOV via press release on March 23, 2011. A copy of this press release may be found under KOV's profile on SEDAR at www.sedar.com or on KOV's website at www.kulczykoil.com.

PROSPECTIVE RESOURCES (100% Interest)
Prospect Resource Category Low Estimate Best Estimate High Estimate
Itheria Oil (MMBBLS) 80 300 677
Gas (BCF) 57 225 530
MMBOE 90 338 765
PROSPECTIVE RESOURCES (45% Effective KOV Interest)
Prospect Resource Category Low Estimate Best Estimate High Estimate
Itheria Oil (MMBBLS) 36 135 305
Gas (BCF) 25 101 239
MMBOE 40 152 344

The RPS evaluation was conducted using the guidelines of the Canadian Oil and Gas Evaluation Handbook and is consistent with the reporting requirements listed in National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities of the Canadian Securities Administrators.

There is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources. The basis for the estimates was the interpreted 3D seismic survey and available well and field data from the area and, consequently, there is a wide range of uncertainty in the estimated volumes.

Cautionary Statement

"BOEs may be misleading, particularly if used in isolation. The BOE conversion ratio of 6 Mcf of gas being equivalent to one barrel of oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead."

Defined Terms

"MMbbls" means millions of barrels.

"BCF" means billion cubic feet.

"BOE" means barrels of oil equivalent.

"Prospective Resources" are those quantities 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. Prospective Resources are further subdivided in accordance with the level of certainty associated with recoverable estimates assuming their discovery and development and may be sub-classified based on project maturity.

"Low Estimate" is considered to be a conservative estimate of the quantity that will actually be recovered. It is likely that the actual remaining quantities recovered will exceed the low estimate. If probabilistic methods are used, there should be at least a 90 percent probability (P90) that the quantities recovered will equal or exceed the low estimate.

"Best Estimate" is considered to be the best estimate of the quantity that will actually be recovered. It is likely that the actual remaining quantities recovered will be greater or less than the best estimate. If probabilistic methods are used, there should be a 50 percent probability (P50) that the quantities recovered will equal or exceed the best estimate.

"High Estimate" is considered to be an optimistic estimate of the quantity that will actually be recovered. It is unlikely that the actual remaining quantities recovered will exceed the high estimate. If probabilistic methods are used, there should be at least a 10 percent probability (P10) that the quantities recovered will equal or exceed the high estimate.

Assets of Kulczyk Oil

Kulczyk Oil is an international upstream oil and gas exploration and production 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 assets of KUB-Gas consist of 100% interests in five licenses near to the City of Lugansk in the northeast part of Ukraine. Four of the licenses are gas producing.

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 (2.48 million acre) 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.

The main shareholder of the Company, Kulczyk Investments S.A. 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.kulczykoil.com)

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 on Syria Block 9, estimates of Prospective Resources, the drilling of the Itheria-1 well and the Bashaer prospect, and general exploration activities in Syria 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 draft 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.

Canada
Suite 1170, 700-4th Avenue S.W.,
Calgary, Alberta
Tel: +1-403-264-8877
Fax: +1-403-264-8861
United Arab Emirates
Al Shafar Investment Building,
Suite 123, ShaikhZayed Road,
P.O. Box 37174, Dubai
Tel: +971-4-339-5212
Fax: +971 4 339 5174
Poland
ul. Nowogrodzka 18/29
00-511 Warszawa
Tel: +48 (22) 414 21 00
Fax: +48 (22) 412 4860

Contact Information

  • Kulczyk Oil Ventures Inc. - Canada
    Norman W. Holton
    Vice Chairman
    +1403 264-8877
    nholton@kulczykoil.com

    Kulczyk Oil Ventures Inc. - Poland
    Jakub J. Korczak
    Vice President Investor Relations
    & Managing Director CEE
    +48 22 414 21 00
    jkorczak@kulczykoil.com