Kulczyk Oil Ventures Inc.
WARSAW : KOV

Kulczyk Oil Ventures Inc.

March 04, 2011 02:10 ET

Kulczyk Oil Ventures Inc.: Brunei-Lempuyang Testing Update

CALGARY, ALBERTA--(Marketwire - March 4, 2011) - Kulczyk Oil Ventures Inc. (WARSAW:KOV) ("Kulczyk Oil", "KOV", or "the Company") provides the following operations update on the testing of the Lempuyang-1 well in Brunei Block L.

Highlights

  • As the well was cleaning up and gas from the Blue Zone was being flared at surface, a mechanical failure occurred and testing operations were suspended.
  • The joint venture partners in Brunei Block L plan to resume testing the Blue Zone as soon as replacement equipment can be sourced and imported in to the country, estimated by the Operator to be within the next month.

This second test was designed to evaluate the upper part of the Blue Zone which had been identified on 3D seismic as one of the primary targets of the drilling operation. The test was terminated due to a down-hole mechanical failure which resulted in the loss of pressure integrity of the downhole test equipment. The test identified gas but the mechanical failure meant that no flow rates or volumes could be determined as the well had just started to clean up.

KOV Executive Vice-President Jock Graham said "The recent testing has indicated the presence of mobile hydrocarbons in zones identified by drilling and log interpretation. Although we were unable to determine a production rate, the observed flow of hydrocarbons is encouraging for future exploration efforts on Block L".

The interval between 2,849 to 2,867 metres measured depth below rotary table ("MDRT") was perforated. Prior to the mechanical failure, which led to the suspension of testing operations, gas was entering the tubing and the annulus and was being flared at surface. The Lempuyang-1 well tests have so far identified gas in both the target intervals, being the Blue and Pink zones. Testing will resume at a future date after all required replacement testing equipment has been delivered. The operator has estimated that it will take up to 4 weeks to source the required equipment. The joint venture partners in Brunei Block L will revisit the testing plan and timetable for the Lukut-1 well test, following an internal assessment of the best way to achieve efficiency in testing and management of costs.

Kulczyk Oil Brunei Limited, an indirect wholly-owned subsidiary of Kulczyk Oil, has a 40% interest in the Lempuyang-1 and Lukut-1 wells and in Brunei Block L.

Assets of Kulczyk Oil

Kulczyk Oil is an international upstream oil and gas exploration 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 100% in the Syria Block 9 production sharing contract which provides the right to explore for and, upon fulfillment 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 agreements to assign an aggregate of 55% in ownership interests to third parties which are 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 contains forward-looking statements made as of the date of this announcement with respect to future activities of the Company related to Brunei Block L, Lempuyang-1 and Lukut-1 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. 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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