Kulczyk Oil Ventures Inc.
WARSAW : KOV

Kulczyk Oil Ventures Inc.

September 30, 2011 05:34 ET

Ukraine-KUB-Gas Production Exceeds 12 MMcf/d

CALGARY, ALBERTA--(Marketwire - Sept. 30, 2011) - Kulczyk Oil Ventures Inc. ("Kulczyk Oil", "KOV" or the "Company") (WARSAW:KOV), an international upstream oil and gas company, is pleased to report on the continued growth of gas production from its partially-owned subsidiary in Ukraine.

Highlights

  • Gas production from the assets of KUB-Gas LLC ("KUB-Gas") in which KOV has a 70% effective working interest, is now more than 12 million cubic feet per day ("MMcf/d") (8.4 MMcf/d net KOV);
  • The Olgovskoye-9 ("O-9") well has been completed as a gas producer and is currently producing at a rate of 2 MMcf/d;
  • The Olgovskoye-12 ("O-12") well drilled and cased to total depth ("TD") as a potential gas producer. Testing is underway and is expected to be completed next week;

Production

With the completion and tie-in of the O-9 well, total production attributable to KUB-Gas is now more than 12 MMcf/d (8.4 MMcf/d net to KOV). This represents an increase of 150% over the production rate at the time of its acquisition by KOV in June 2010, and a 100% increase over the average production rate for the second quarter of 2011.

Olgovskoye-9

The O-9 well reached a TD of 2,638 metres on 4 April 2011. Testing was completed in July 2011 with rates of up to 4.4 MMcf/d on a 9 mm choke with a stabilized rate of 2.9 MMcf/d (2.0 MMcf/d net to KOV) through a 7 mm choke as disclosed in the KOV press release dated 1 August 2011. The O-9 well was recently put on production after the construction of a pipeline and current production is approximately 2 MMcf/d.

Olgovskoye-12

The O-12 well is the fourth new well drilled in the Olgovskoye Field since the Company acquired its interest in KUB-Gas in June 2010. It is part of a larger development program on the KUB-Gas assets planned through 2011 and 2012. The well was spud on 3 August 2011 and reached its TD of 2,700 metres on September 8, 2011 before being wireline logged and cased to TD as a potential gas producer. Testing of potential gas zones identified from interpretation of the wireline logs is underway. Results of the O-12 testing program will be announced once the testing has been completed.

KUB-Gas owns a 100% interest in the Olgovskoye, Makeevskoye and North Makeevskoye, Krutogorovskoye and Vergunskoye licenses in the Lugansk area of Ukraine. KOV owns an effective 70% interest in KUB-Gas.

Tim Elliott, President and Chief Executive Officer of KOV commented:

"We are delighted to announce increased gas production from our Ukrainian assets. In particular the M-19 and O-9 wells have been an important success and we look forward to reporting the results of our testing program on the O-12 well soon."

Overall, the continued growth in production demonstrates our ability to grow the business organically and provide a consistent return on our investment. Our success is also a testament to the technical and operational capabilities of the KOV team. In conjunction with our partners, we have proved our ability to successfully develop complicated assets in a cost effective manner."

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 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 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 an agreement to assign a 5% in 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 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.kulczykoil.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 of KUB-Gas and related to its license areas in Ukraine and to certain wells drilled within those license areas 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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