Kulczyk Oil Ventures Inc.
WARSAW : KOV

Kulczyk Oil Ventures Inc.

August 27, 2012 17:34 ET

Kulczyk Oil Ventures Inc.: Brunei Block M- Update

CALGARY, ALBERTA--(Marketwire - Aug. 27, 2012) - Kulczyk Oil Ventures Inc. ("Kulczyk Oil", "KOV" or the "Company") (WARSAW:KOV), an international upstream oil and gas exploration and production company, advises that Brunei National Petroleum Company Sendirian Berhad ("PetroleumBRUNEI"), a private limited company wholly-owned by the Government of Brunei, has refused to grant an extension to the term of the Phase 2 exploration period of the Block M production sharing agreement (the "Block M PSA"), which term expired on 27 August 2012.

KOV Borneo Limited ("KOV Borneo"), an indirect wholly-owned subsidiary of KOV, and its partners requested an extension when the drilling contractor selected in the August 2011 tender process to drill the three commitment wells unexpectedly withdrew its bid in November 2011 and efforts in November and December 2011 to secure a rig from other qualified bidders were unsuccessful. This required a re-tendering process, which commenced in January 2012 and was successfully concluded in mid-February 2012. However, by that date, there was insufficient time remaining to plan and execute the drilling program required under the Block M PSA prior to the expiry of Phase 2.

KOV Borneo is not the operator of Block M and does not officially represent the joint venture. However the Company does confirm that the joint venture partners in Block M have been involved in discussions with PetroleumBRUNEI and KOV Borneo will endeavour to continue discussions with PetroleumBRUNEI until a satisfactory outcome is achieved. KOV Borneo has also requested meetings to speak directly to the Chairman of PetroleumBRUNEI and to the Minister of Energy.

The interest holders under the Block M PSA are KOV Borneo (36%), New Sino Oil Company Pty Ltd (Operator; 39%), China Sino Oil Company Limited (21%) and Jana Corporation Sdn Bhd (4%).

KOV, through its indirectly wholly-owned subsidiary AED South East Asia Limited ("AED SEA"), operates Block L, a 1,123 square kilometre block located to the north of Block M. Through AED SEA (50%) and Kulczyk Oil Brunei Limited (40%), KOV holds a 90% interest in the production sharing agreement for Block L (the "Block L PSA") with QAF Brunei Sdn Bhd (10%) holding the remaining interest. The Block L PSA was entered into on 27 August 2006, the same day as the Block M PSA. In January 2012, PetroleumBRUNEI granted an extension to Phase 2 under the Block L PSA until 27 August 2013 to provide enough time to complete the seismic acquisition and drilling program. Seismic acquisition was completed in the second quarter of 2012 and KOV is planning to drill two wells on Block L in the first half of 2013.

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 contains forward-looking statements made as of the date of this announcement with respect to future activities of the Company and related to its production sharing agreements for Block L and Block M in Brunei 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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