Kulczyk Oil Ventures Inc.
WARSAW : KOV

Kulczyk Oil Ventures Inc.

March 25, 2011 14:00 ET

Kulczyk Oil Ventures Inc.: Substantial Prospective Resource Identified on Syria Block 9 (Amended for Revision in Bashaer Resource Volumes)

CALGARY, ALBERTA--(Marketwire - March 25, 2011) - Kulczyk Oil Ventures Inc. ("Kulczyk Oil", "KOV" or the "Company") (WARSAW:KOV) is pleased to announce the amended results of an independent third party engineering evaluation of its resources in Syria by RPS Energy ("RPS"). The Company received revised resource calculations from RPS after the time of the March 21, 2011 press release. The revisions, primarily a substantial increase in the Bashaer Prospective Resource volumes, also result in non- material changes to Itheria volumes due to the probabilistic nature of the RPS calculations.

HIGHLIGHTS

  • Prospective Resources (High Estimate) of 765 million barrels of oil equivalent ("MMBOE") for the Itheria prospect and 178 MMBOE for the Bashaer prospect were identified by RPS for the 100% full field interest in Syria Block 9;
  • The net Prospective Resources (High Estimate) attributable to the 45% effective interest of KOV in Syria Block 9 are 344 MMBOE for Itheria and 80 MMBOE for Bashaer;
  • Prospective Resources (Best Estimate), net to the 45% effective interest of KOV, of 135 million barrels of oil and 101 billion cubic feet of gas for a total of 152 MMBOE at Itheria and 42 million barrels of oil and 21 billion cubic feet for a total of 46 MMBOE at Bashaer;
  • KOV plans to spud the Itheria-1 well before the end of the second quarter.

The Company currently 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, when approved, would leave the Company with a remaining effective interest of 45% in Block 9.

Geological evaluation and the interpretation of a 420 km² 3D seismic survey acquired by Kulczyk Oil over the southeastern part of Block 9 in 2010 led to the identification of the Itheria and Bashaer Prospects and an improved understanding of the subsurface.

To view the map of Block 9, please visit the following link: http://media3.marketwire.com/docs/325kula.pdf.

The Company retained RPS to evaluate the resources underlying Syria Block 9 as at December 31, 2010. The evaluation was conducted using the guidelines of the Canadian Oil and Gas Evaluation Handbook and consistent with the reporting requirements listed in National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities of the Canadian Securities Administrators.

Itheria prospect - Prospective Resource volumes for the 100% interest in Block 9 in the Itheria prospect were estimated by RPS at an un-risked Best Estimate of 300 million barrels of oil ("MMBO") and 225 billion cubic feet ("BCF") of solution gas for a total of 338 MMBOE. For the 45% interest of Kulczyk Oil, the corresponding volumes are 135 MMBO, 101 BCF and 152 MMBOE.

Bashaer prospect - Prospective Resource volumes for the 100% interest in Block 9 in the Bashaer prospect were estimated by RPS at an un-risked Best Estimate of 94 MMBO and 47 BCF of solution gas for a total of 102 MMBOE. For the 45% interest of Kulczyk Oil, the corresponding volumes are 42 MMBO, 21 BCF and 46 MMBOE.

The tables below summarize the High, Best and Low Estimates of RPS for prospective oil and solution gas resources:

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
Bashaer Oil (MMBBLS) 50 94 165
  Gas (BCF) 25 47 82
  MMBOE 54 102 178
 
PROSPECTIVE RESOURCES (45% Effective 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
Bashaer Oil (MMBBLS) 22 42 74
  Gas (BCF) 11 21 37
  MMBOE 24 46 80

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. RPS believes that there is a chance (25%) that the deeper sandstone formations may be gas/condensate bearing. In such case the total resources may actually be increased due to the high reservoir pressure in the deep formations and the higher recovery factor estimates for gas/condensate reservoirs as compared to oil reservoirs.

To view the Intra Ordovician Depth Surface figure, please visit the following link: http://media3.marketwire.com/docs/325kulb.pdf.

The planned total depth of Itheria-1 is 3,200 metres and estimated drilling time is 66 days. The well will evaluate a four-way dip closure and is expected to spud in June, 2011. The Company plans to move the drilling rig from the Itheria-1 to the second well in the 2011 program, Bashaer-1, shortly after completion of drilling operations on Itheria-1. The Bashaer-1 well has a planned total depth of 2,600 metres at a location approximately 10 kilometres northwest of Itheria-1.

"The Itheria-1 well will test a structure with potential for world-class hydrocarbon volumes as indicated in the evaluation report of RPS. We look forward to drilling Itheria-1, the first well operated by the Company in Syria" said Jock Graham, Executive Vice President of Kulczyk Oil.

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

"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 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., increased its holdings in the Company through participation in the initial public offering of the Company on the Warsaw Stock Exchange in May 2010 and the conversion of a debenture and owns almost 50% of the issued common shares. Kulczyk Investments S.A. is an international investment house founded by Polish businessman Dr. Jan Kulczyk.

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 Syria Block 9 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 reflect the current view of the Company with respect to future events, 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, failure to obtain regulatory approvals, access to the equipment necessary to complete drilling operations successfully, problems with access to the drilling locations, the state of the national or international monetary, oil and gas, financial , political and economic markets and their impact on any of 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 release, unless required by law.

Contact Information