Kulczyk Oil Ventures Inc.

Kulczyk Oil Ventures Inc.

October 19, 2010 10:49 ET

Kulczyk Oil Ventures Inc.: Ukraine M-19 Well Operations Update

CALGARY, ALBERTA--(Marketwire - Oct. 19, 2010) - Kulczyk Oil Ventures Inc. (WARSAW:KOV) ("Kulczyk Oil", "KOV" or the "Company") is pleased to announce that the M-19 well reached its targeted total depth of 2,060 metres and has been logged and cased to total depth in preparation for testing.


  • M-19 Exploration Well encounters potential gas reservoirs
    • The M-19 exploration well reached a total depth of 2,060 metres encountering several potential gas bearing reservoirs
  • Testing Planned
    • The well has been temporarily suspended for testing operations to commence in November

On August 16, 2010, two months after the closing of the acquisition by Kulczyk Oil of an effective 70% interest in KUB-GAS LLC ("KUB-Gas"), KUB-Gas started drilling the M-19 well. The M-19 exploration well is located approximately 2 kilometres from the Makeyvskoye Field, and 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 deeper Muscovian reservoirs which produce in both the Olgovskoye and Makeyvskoye Fields. The well has been logged with both locally available logging tools and western logging tools.

The M-19 well is the first well to be drilled to a target identified by the Company using modern seismic interpretation tools and techniques. It is also the first well operated by KUB-Gas to ever have been logged with western logging tools. By comparing the Ukrainian and western logging data over the same formations, the Company will develop a methodology to better understand and analyze existing Ukrainian log data with a view to more effectively evaluating the potential of the area.

The preliminary log analysis on M-19 indicates that, while the primary Triassic target was not hydrocarbon bearing, the secondary seismic anomaly target is an approximately 19 metre thick sandstone unit that appears to contain hydrocarbons. In addition, several zones have been identified within the underlying Muscovian tertiary target section that may also be hydrocarbon bearing. Further log analysis is ongoing in preparation for a testing programme.

Operations on the M-19 well have been temporarily suspended until a work-over rig is available to move on to the location to test the well. Testing is anticipated to take place during the month of November. In the event the M-19 well tests gas from any of the prospective zones, it will add to the Company's production and reserves and confirm the effectiveness of modern seismic interpretation techniques to identify prospective new target zones.

The drilling rig used to drill the M-19 well is now moving to the Olgovskoye Field and will commence drilling the O-8 development well with a targeted total depth of approximately 2,800 metres. The O-8 well is the first of several development wells scheduled to be drilled as part of the Olgovskoye and Makevskoye field development plans that are currently being prepared by the Company. The O-8 development well will be followed by the O-12 development well, planned to commence in either late 2010 or early 2011. 

Kulczyk Oil is very pleased with the initial results of the M-19 well. The work program for 2011, which will be finalized by KUB-Gas with the assistance of KOV personnel over the next few months, will principally target the comprehensive and efficient exploitation of the Olgovskoye and Makeyvskoye Fields. This will involve the drilling of new wells, the completion of new zones in existing wells, 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 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 direct 75% interest in a production sharing agreement that gives it the right to explore for and produce oil and natural gas from Block 9, a 10,032 square kilometre area in northwest Syria. An agreement was announced on September 6, 2010 which will reduce the direct interest of KOV to 45% subject to fulfilment of certain conditions.

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, Makeyevskoye 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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