Kulczyk Oil Ventures Inc.: Major Nigerian Acquisition Opportunity

CALGARY, ALBERTA--(Marketwire - May 6, 2011) -

Highlights

• KOV has an opportunity to join a substantial and experienced majority Nigerian consortium which will, subject to the satisfaction of certain conditions, purchase a 45% participating interest in block OML 42 in Nigeria from major international oil companies.
• Consortium includes the local Community as a partner.
• Substantial oil reserves and existing oil production
• Substantial natural gas reserves.
• KOV would be Technical Partner to the consortium
• KOV has the opportunity to acquire an effective 9% interest in OML 42 by participating for a 20% interest in the consortium.

Detail

Kulczyk Oil Ventures Inc. (WARSAW:KOV) ("KOV" or the "Company") is pleased to announce that on 6 May 2011 it joined the Neconde Energy Limited ("Neconde") consortium. On April 29, 2011, Neconde entered into an Agreement for Assignment (the "AFA") and various ancillary agreements with the Shell Petroleum Development Company of Nigeria Ltd ("SPDC"), Total E&P (Nigeria) Ltd ("TEPNG") and Nigerian Agip Oil Company Ltd (NAOC") (together the "Vendors") pursuant to which Neconde will acquire a 45% participating interest (the "Asset") in Oil Mining Licence 42 ("OML 42"), a large block containing previously-discovered oil fields in the Niger Delta area of Nigeria. The remaining 55% participating interest in OML 42 is held by the Nigerian National Petroleum Company ("NNPC").

Completion under the AFA is subject to a number of conditions, including but not limited to:

(a) certain regulatory and Ministerial approvals in respect of the transaction being obtained;

(b) approval of the NNPC under the Joint Operating Agreement for OML 42;

(c) entry by Neconde and NNPC into a new joint operating agreement in respect of OML 42.

Neconde's shares are held by a consortium of companies (the "Neconde Consortium"), which includes wholly-owned subsidiaries of each of Kulczyk Oil Ventures Inc and Kulczyk Investments S.A. ("KI"), the major shareholder of KOV. KOV would be the Neconde Consortium's 'Technical Partner' and through its indirect wholly-owned special purpose vehicle, would hold 20% of Neconde's ordinary issued equity, thereby giving the Company an effective indirect 9% interest in OML 42.

KOV would enter into a Technical Services Agreement with Neconde through which, as required by Neconde, it will provide Neconde with certain technical services related to the day-to-day exploration, development and production of OML 42. KOV and KI will be jointly entitled to appoint both the Chief Executive Officer and Chief Financial Officer of Neconde

OML 42

OML 42 is a 814 square kilometre lease awarded in 1962. License expiry is currently 2019. Initial production commenced in 1969 at the Egwa Field, one of five productive fields within the license area, with a peak production of over 100,000 barrels of oil equivalent per day ("boe/d") in 1974, with total production from all fields on the license peaking at approximately 250,000 boe/d. Production, which was primarily oil, continued until the first part of 2005 when the producing fields were shut-in due to security issues in the Niger Delta area. Production from OML 42 during the 2004 calendar year (the last full year of production prior to shut-in) was more than 50,000 barrels of oil per day ("bopd") and more than 80 million cubic feet per day ("MMcf/d") of natural gas.

RPS Energy, an independent engineering consulting firm, reviewed the information made available to Neconde at the time of the transaction in an attempt to estimate the remaining potential on OML 42. Utilising historic production data from the producing fields and taking into account certain portions of the Nigerian National Standard (NNS) reserve submissions, RPS estimates that the remaining recoverable oil resource potential on OML 42 net to Neconde's 45% interest are as follows:

KOV believes that these estimates are conservative as they do not include substantial quantities of gas and associated liquids demonstrated in the existing fields, nor do they include the substantial inventory of undrilled prospects and leads that have been mapped on the license.

Neconde intends to engage RPS to undertake a comprehensive review and analysis of OML 42 for the purposes of producing a Competent Persons Report, fully compliant with Society of Petroleum Engineers (SPE), Petroleum Resources Management System (PRMS), or other similar internationally recognized standards upon final approval of the transaction by the Nigerian authorities.

OML 42 is currently producing approximately 20,000 bopd from one of the 5 historically-productive fields which has recently been re-activated.

Financing

KI will provide the Company with bridge financing in respect of the Company's share of Neconde's acquisition costs of OML 42. The bridge financing will bear interest at a rate of 10% per annum. Until such time as the Company raises the funds to repay KI's bridge financing, KOV will hold its shares in Neconde on trust for KI.

Once, and to the extent that, the Company raises those funds to repay KI, the trust over the Company's shares in Neconde will be extinguished. Only at that point would KOV hold a full legal and beneficial interest in Neconde (to the extent it has repaid KI for the bridge financing).

To the extent that, by 31 October 2011, the Company has not raised funds to repay KI for its bridge financing, the trust arrangement will be terminated and KI will become fully entitled (legally and beneficially) to the corresponding proportion of the Company's shares in Neconde.

Neconde Consortium

The Neconde Consortium is majority Nigerian owned. It includes a significant carried interest held by VP Global, an entity representing the local community from the area in which OML 42 is located and as described in more detail below. In addition to KOV, the Neconde Consortium is made up of the following entities:

1. NestOil Limited – one of the leading indigenous oil and gas groups in Nigeria promoting participation in the domestic upstream sector

2. Aries Energy & Petroleum Company Limited – an affiliate of the Yinka Folawiyo Group, a diversified Nigerian conglomerate with commercial activities in oil and gas exploration & production, petroleum product import, power generation, real estate and investments in telecommunications and banking. An associated company, Yinka Folawiyo Petroleum, is currently developing the Aje oil and gas field in the offshore area of Nigeria in partnership with a consortium consisting of Chevron, Vitol, Pan Petroleum and Providence Resources

3. VP Global Limited – which represents the local host community interests, was formed by oil and gas professionals previously involved in the development of OML 42. Dividends from VP Global will accrue to community stakeholders and will be used to finance the construction of sustainable development and basic amenities with an oversight committee ensuring the objectives for socio-economic development established by the local host community are being met or exceeded

4. Kulczyk Investments S.A. – a Luxembourg based company which is the major shareholder of KOV. KI has a strong record of building value through the creation and development of emerging market opportunities. To date KI has invested more than $4 billion and its portfolio consists of infrastructure, power generation and commodity trading assets together with a diverse range of oil and gas assets including KOV

Completion of the AFA is subject to a number of conditions including obtaining relevant consents from the Federal Government of Nigeria among others. The transaction is expected to close within 20 weeks.

Cautionary Note – BOE

The term BOE 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.

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 70% 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 25% 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 StatementsThis release contains forward-looking statements made as of the date of this announcement with respect to the opportunity to invest in Neconde and the acquisition and future activities of the Company in Nigeria or related to OML 42 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 and that the Company will be able to participate in the opportunity, 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 participating in the Nigerian opportunity and completing the expected activities on this project including whether the Company can raise the required funds for the Company's share of Neconde's acquisition costs to the maximum available or at all either at closing of the acquisition or through a repayment of the bridge financing from KI. The ability to raise the required funds will be dependent on the state of the national or international monetary, oil and gas, financial , political and economic markets in the jurisdictions where the Company operates or anticipates operating and other risks associated with the Company's operations identified in the Annual Information Form of the Company dated March 29, 2011. Various factors could also affect the closing and the timing of closing of the acquisition by Neconde including the regulatory approvals and whether the Company will realize the benefits expected upon completion of the acquisition and participation in Neconde. 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. The forward-looking statements contained herein are expressly qualified by this cautionary statement.