Kulczyk Oil Ventures Inc.
WARSAW : KOV

Kulczyk Oil Ventures Inc.

January 10, 2011 10:49 ET

Kulczyk Oil Ventures Inc.: Ukraine M-19 Discovery Tests Gas

CALGARY, ALBERTA--(Marketwire - Jan. 10, 2011) - Kulczyk Oil Ventures Inc. ("Kulczyk Oil", "KOV" or the "Company") (WARSAW:KOV) is pleased to announce a successful gas test at the KUB-Gas M-19 well in Ukraine. KOV acquired 70% of KUB-Gas in June 2010.

HIGHLIGHTS

  • The M-19 well tested gas at a rate of approximately 5 million standard cubic feet per day ("MMscf/d") at 11 MPa (1,600 psig) through a 10 mm choke
  • The well is expected to be tied-in to the Makeevskoye field processing facilities during the second quarter with a production target of approximately 2 MMscf/d for the remainder of 2011
  • Based on average KUB-Gas production of 6.2 MMscf/d in December 2010 the new production from the successful tie-in of the M-19 well could increase overall production from KUB-Gas wells more than 30% 

M-19 Exploration Well

The M-19 well commenced drilling on August 16, 2010, only two months after the closing of the partial acquisition of KUB-Gas LLC ("KUB-Gas") by Kulczyk Oil. The well reached a total depth of 2,060 metres in mid-October, encountering several potential new gas-bearing reservoirs. The M-19 exploration well, located approximately 2 kilometres from the Makeevskoye field, was designed to evaluate 3 separate targets: (1) a Triassic target at a depth of approximately 700 metres; (2) a seismic anomaly at an approximate depth of 1,450 metres; and (3) the potential of a deeper reservoir series. The well was logged with locally available logging tools as well as western logging tools so that the Company can compare the results between the two sets of logging data over the same formations and gain a better understanding of the old logs. The M-19 well is the first well within the 4 fields operated by KUB-Gas in Ukraine to be logged with modern logging tools.

The logs indicated that, while the Triassic target was not present, the seismic anomaly was an approximately 18 metre thick sandstone unit that appeared to contain hydrocarbons. It was this sandstone unit that was produced at 5 MMscf/d of natural gas through a 10 mm choke when tested in December. In addition, several zones which appear to contain hydrocarbons were identified within the underlying Muscovian target section.

The successful testing of the newly discovered zone in the M-19 well has confirmed the effectiveness of modern seismic interpretation techniques in the identification of new exploration targets.

KUB-Gas has initiated the processes to obtain the necessary regulatory approvals for construction of a pipeline and tie-in of the M-19 well. Regular production from the M-19 well is expected to commence during the second quarter of 2011 with a production target of approximately 2 MMscf/d for the remainder of the year.

Exploration and development plans for 2011 include a continuous drilling program focused on the Makeevskoye and Olgovskoye license areas and the acquisition of 3D seismic in those areas commencing late in the first quarter.

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 gas producing assets of KUB-Gas consist of 100% interests in four licenses near to the City of Lugansk in the northeast part of Ukraine.

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 KUB-Gas and related to its four license areas (Vergunskoye, Krutogoroskoye, Makeevskoye and Olgovskoye) in Ukraine 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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