Kulczyk Oil Ventures Inc.

Kulczyk Oil Ventures Inc.

September 06, 2010 02:30 ET

MENA Hydrocarbons Joins Kulczyk Oil to Explore Syria Block 9

CALGARY, ALBERTA--(Marketwire - Sept. 6, 2010) - Kulczyk Oil Ventures Inc. (WARSAW:KOV) ("Kulczyk Oil", "KOV" or "Company") is pleased to announce that MENA Hydrocarbons (Syria) Ltd., a wholly-owned subsidiary of MENA Hydrocarbons Inc. ("MENA"), has agreed to participate with Kulczyk Oil in the exploration of Syria Block 9.

Under the terms of an agreement with Loon Latakia Limited ("Loon Latakia"), a wholly-owned subsidiary of Kulczyk Oil, MENA will:

  1. acquire a 30% interest in Block 9 by repaying to Kulczyk Oil 30% of approximately $10.4 million in costs incurred to date;
  2. fund 60% of the costs for the drilling of the first exploration well on Block 9; and
  3. assume liability for 30% of the $6,758,241 bank guarantee currently backed solely by Kulczyk Oil.

Tim Elliott, Chief Executive Officer of Kulczyk Oil, commented that "we are very pleased that a management and technical team with extensive experience in the region has recognized the potential of Syria Block 9 and agreed to move forward in partnership with us."

MENA is a private international company focused on building a resource portfolio in the Middle East and North Africa. MENA has a proven management and technical team with substantial experience in the Middle East. It currently operates a development concession in Egypt.

The Contract for the Exploration, Development and Production of Petroleum ("PSC") which gave Loon Latakia the right to explore for and produce oil and gas from Block 9, a 10,032 square kilometre area in northwestern Syria, became effective November 29, 2007. Under the terms of the PSC, Kulczyk Oil reprocessed and interpreted approximately 1,800 kilometres of previously existing 2D seismic data. The interpretation indicated a number of potential drilling targets in the southeast corner of Block 9 and the Company also acquired 420 square kilometres of new 3D seismic data in that area, commencing field operations in February and completed data acquisition in May, 2010. The processing and interpretation of this new 3D data is expected to be completed in the fourth quarter of 2010. The location and target depth for the first exploration well will be defined and the estimated costs to drill the well will be determined after evaluation of the recently acquired 3D seismic data and the first exploration well on Block 9 is expected to be drilled in the first half of 2011.

Kulczyk Oil has previously agreed to transfer a 20% beneficial interest in Block 9 to Triton Petroleum Pty Ltd and a 5% beneficial interest to an unrelated party. Accordingly, the direct interest of Loon Latakia in Block 9 is 75% before giving effect to the MENA agreement and 45% after giving effect to the MENA agreement. Any assignment of interest to either Triton Petroleum or MENA is subject to the approval of General Petroleum Corporation ("GPC"), the national oil company of the Syrian Arab Republic.

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.

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.

For further information, please refer to the Kulczyk Oil website (www.kulczykoilventures.com).

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 on Syria Block 9 and other statements 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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