Kulczyk Oil Ventures Inc.
WARSAW : KOV

Kulczyk Oil Ventures Inc.

November 09, 2010 10:31 ET

Kulczyk Oil Ventures Inc.: Ukraine- Olgovskoye-7 Well Starts Production

CALGARY, ALBERTA--(Marketwire - Nov. 9, 2010) - Kulczyk Oil Ventures Inc. ("Kulczyk Oil", "KOV" or the "Company") (WARSAW:KOV) is pleased to announce the start up of production from the O-7 well in the Olgovskoye Field.

HIGHLIGHTS

  • O-7 Development Well
    • The O-7 well has commenced production;
    • The well was flowed during the testing phase at rates of up to 2.4 MMscf/d with more than 50 barrels per day ("bpd") of condensate with the production rate restricted by flowing through a 5 mm choke;
    • The well will be produced conservatively, at a rate of approximately 1.5 MMscf/d with expected condensate production of approximately 30 bpd.
  • Production Increase
    • The successful tie-in of the O-7 well will increase production from the Olgovskoye Field by more than 70%, from an average of 1.78 MMscf/d in September to a rate of more than 3.0 MMscf/d with approximately 60bpd of condensate.
  • Thick Gas Pay
    • Wireline logging and evaluation identified more than 150 metres of gas pay across 38 reservoir zones

Olgovskoye Field

Prior to the successful tie-in of the O-7 well, the Olgovskoye Field produced from 3 wells (O-3, O-4 and O-5) with each well producing from a separate horizon. The O-3 well produces from a Lower Muscovian horizon, the O-4 well produces from the Middle Bashkirian sands and the O-5 well produces from an Upper Muscovian horizon. These 3 wells produced at a combined average rate for the month of September of more than 1.7 MMscf/d of gas.

The O-7 development well was drilled to a depth of 2,520 metres during the last quarter of 2009. Subsequent wireline logging and evaluation of well data identified more than 150 metres of gas pay across 38 reservoir zones. A Lower Bashkirian target zone was perforated and tested in late September 2010 at an initial rate of 2.3 MMscf/d of gas with some condensate at a flowing tubing pressure of 1,040 psi. Over the past few weeks the O-7 well has been flow tested at rates of up to 2.4 MMscf/d with 53 bpd of condensate with the gas and condensate flowing through a 5 mm choke. The choke size has now been reduced to 4 mm and the well will be produced at a rate of approximately 1.5 MMscf/d. The successful completion and tie-in of this well to the production facilities has increased production from the Olgovskoye Field by more than 70% to more than 3.0 MMscf/d of gas. The new gas reservoir being produced in this well is expected to increase the volume of hydrocarbon reserves allocated to the Olgovskoye Field.

The Olgovskoye-8 well, to be drilled at a location 2.1 kilometres to the southeast of O-7, will commence drilling shortly.

Kulczyk Oil is very pleased with the results of work done on the KUB-Gas assets since the acquisition in June. The work program for 2011, which will be finalizing 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 Makeyevskoye 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 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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