Kulczyk Oil Ventures Inc.
WARSAW : KOV

Kulczyk Oil Ventures Inc.

March 07, 2011 11:36 ET

Kulczyk Oil Ventures Inc.: Ukraine-Drilling of Olgovskoye-9 Well Starts

CALGARY, ALBERTA--(Marketwire - March 7, 2011) -

Kulczyk Oil Ventures Inc. (WARSAW:KOV) ("Kulczyk Oil", "KOV" or the "Company") is pleased to announce that the O-9 well in the Olgovskoye Field commenced drilling on the 5th day of March, 2011.

O-9 Development Well

The O-9 well is located approximately 1.2 kilometres to the northwest of the O-8 well. The O-9 well will be drilled to a depth of 2,600 metres and is designed to test gas-bearing reservoirs in the Lower Bashkirian and further develop the gas production capability of the Olgovskoye Field. 

The drilling of the O-9 well is expected to take approximately 35 days.

The O-9 well is the second new well drilled in the Olgovskoye field since the Company acquired its interest in KUB-Gas in June 2010. It is part of a larger development program on the KUB-Gas assets through 2011.

Olgovskoye Field

With the successful tie-in of the O-7 well in late 2010, the Olgovskoye Field now produces from 4 wells (O-3, O-4, O-5 and O-7) with each well producing from a separate horizon. Kulczyk Oil completed drilling of the Olgovskoye-8 well in early January and the well is awaiting testing and tie-in as a producing gas well. The O-8 well was drilled to a total depth ("TD") of 2,780 metres and wireline logging of the open hole identified multiple potential hydrocarbon-bearing zones. The O-8 well was cased to TD in preparation for completion as a producing gas well. A service rig is currently on the O-8 location and the completion of the well will commence shortly. Information about the O-8 well was disclosed on February 3, 2011.

Update on M-19 well

The recently drilled M-19 well in the Makeevskoye Field has been tested at 5 million cubic feet per day ("MMcf/d") of natural gas with an estimated 4 barrels per MMcf of condensate and no water. The well flowed at a stabilized flowing pressure of 1,700 psig through a 10 mm choke over a 7 hour period. Regular production of the M-19 well is expected to commence late in the second quarter of 2011 after all necessary regulatory consents have been received and the pipeline connection to the KUB-Gas production facility has been completed. The well is expected to produce between 3 and 3.5 MMcf/d (2.1 to 2.45 MMcf/d net to the 70% Kulczyk Oil interest in KUB-Gas). Current KUB-Gas production is approximately 6 MMcf/d (4.2 MMcf/d net to KOV).

Kulczyk Oil is very pleased with the results of work done on the KUB-Gas assets since the acquisition in June 2010. The work program for 2011 will principally target the comprehensive and efficient exploitation of the Olgovskoye and Makeeevskoye Fields. This will involve the drilling of new wells, the completion of new zones in existing wells, dual completions, stimulation treatments using modern and technically advanced methods commonly used elsewhere in the world and the effective implementation of a compression strategy.

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.

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 KUB-Gas and related to its five license areas (Vergunskoye, Krutogoroskoye, Makeevskoye, North Makeevskoye and Olgovskoye) in Ukraine and to the M-19 well 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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