Kulczyk Oil Ventures Inc.
WARSAW : KOV

Kulczyk Oil Ventures Inc.

April 10, 2012 09:07 ET

Kulczyk Oil Ventures Inc.: Ukraine- Makeevskoye Converted To 20-Year Production License

CALGARY, ALBERTA--(Marketwire - April 10, 2012) - Kulczyk Oil Ventures Inc. (WARSAW:KOV) ("Kulczyk Oil", "KOV" or the "Company"), an international upstream oil and gas company, is pleased to report that the Ukrainian Ministry of Fuel and Energy has formally acknowledged and approved the conversion of the Makeevskoye License from a five-year exploration license to a 20-year production license. Under the terms of the exploration license the Makeevskoye License was not allowed to produce more than 10% of hydrocarbon volumes in place. Under the terms of the new license, the aggregate production from the Makeevskoye field is no longer limited. The Makeevskoye License is operated by KUB-Gas LLC ("KUB-Gas"), a partially-owned subsidiary in which KOV has a 70% effective ownership interest.

Tim Elliott, President and Chief Executive Officer, stated that:

"The conversion of the Makeevskoye license into a 20-year production license is a significant milestone. With production no longer capped we expect to continue production from the M-19 well at the recent high rates which have seen KOV net production surpass 15 MMcf/d for the first time. The conversion of the Makeevskoye license and the recent conversion of the Olgovskoye license will allow for the full development of the fields within these license areas."

Makeevskoye License

The Makeevskoye-19 ("M-19") exploration well, the first KUB-Gas well to use modern logging tools, was drilled in the second half of 2010 to a total depth ("TD") of 2,060 metres and commenced production in July 2011 at an initial rate in excess of 5.5 million cubic feet per day ("MMcf/d"). The M-19 has averaged approximately 7.5 MMcf/d (5.2 MMcf/d net to KOV) with minimal pressure drawdown. A 3D seismic program covering approximately 180 km2 over the Olgovskoye and Makeevskoye license areas finished field operations in June 2011 and processing and interpretation of the acquired data have defined a number of potential locations for further development on both licenses. Most notably, the new seismic data illustrated a potential areal extent of approximately 6 km2 for the new gas zone discovered by the M-19 well and defined two new locations. The first location, at Makeevskoye-21 ("M-21"), an 830 metre step out from M-19, has been drilled and cased to a total depth of 2,210 metres. Wireline logging of the open hole prior to casing indicated two target zones with up to 16 metres of potential gas pay. The primary target in the Muscovian, which correlates to the producing zone in the M-19 well, appears to have 6 metres of gas pay while a second potential gas zone in the Bashkirian, which appears to have up to 10 metres of potential gas pay, has not previously been tested in the area. Production testing of the M-21 well is expected to commence in the second quarter of 2012. A second location, at Makeevskoye-16 ("M-16"), to further develop gas production from a separate prospect on the Makeevskoye License, is expect to commence drilling in late June.

Current gross production from the four KUB-Gas producing licenses is approximately 21.5 MMcf/d (15 MMcf/d net to KOV). Of the gross amount approximately 7.5 MMcf/d or 35% is produced from Makeevskoye and 11.6 MMcf/d or 62% is produced from Olgovskoye.

About Kulczyk Oil

Kulczyk Oil is an international upstream oil and gas exploration and production 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. The common shares of the Company trade on the Warsaw Stock Exchange under trading symbol "KOV".

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 90% working interest in Block L, a 1,110 square kilometre (275,000 acre) area covering onshore and offshore areas in northern Brunei and a 36% working interest in Block M, a 1,505 square kilometre (372,000 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 50% in the Syria Block 9 production sharing contract which provides the right to explore for and, upon the satisfaction 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 an agreement to assign a 5% ownership interest to a third party which is 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 approximately 44 % 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 in Ukraine and to certain wells drilled or seismic activities undertaken within those license areas that either are not or may not be 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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