Kulczyk Oil Ventures IncKulczyk Oil VenturesInc.
WARSAW:
KOV
OtherRecentNews
November 14, 2011
Kulczyk Oil Ventures Inc.:Ukraine - Second Successful Fracture Stimulation; Ologovskoye-8 Well Yields1MMcf/d
CALGARY, ALBERTA--(Marketwire -Nov. 14, 2011) - Kulczyk Oil Ventures Inc. (WARSAW:KOV) ("Kulczyk Oil", "KOV" orthe "Company"), an international upstream oil and gas company, is pleased toannounce the successful completion of the second reservoir stimulation inUkraine using modern hydraulic fracturing ("frac'ing") technology. The frac wasundertaken by KUB-Gas LLC ("KUB-Gas"), a partially-owned indirect subsidiary ofKOV, on the R30c zone in the Ologovskoye-8 ("O-8") well. After being frac'd, theO-8 well flowed gas at a rate of 1 million cubic feet per day ("MMcf/d") througha 7 mm choke, from a previously non-commercial zone. The O-8 well was drilled byKUB-Gas in the first quarter of 2011 to a total depth ("TD") of 2,780 metres butdid not test commercial volumes of natural gas prior to the frac'ingoperation.
HIGHLIGHTS
-- O-8 well flows gas with condensate at a rate of 1 MMcf/d from apreviously unproductive zone after fracture stimulation-- The second successful frac by KUB-Gas using modern Canadian technologyin eastern Ukraine-- Confirms the potential to significantly increase production utilizingfrac'ing technology-- Both of the frac'd wells expected to be producing by end of year
The O-8 frac was implemented in the first week ofNovember 2011 utilizing a cross-linked gel water frac fluid with 40 tonnes ofceramic proppant. The target zone for the frac'ing of the O-8 well was the R30cunit, a Middle Bashkirian silty sandstone interval with a gross thickness of 13metres which occurs at a depth of approximately 2,300 metres. The zone had anindicated permeability of less than 1 millidarcy and was not capable of flowinggas at commercial rates before the frac'ing operation. The frac was designed topenetrate beyond the immediate vicinity of the well bore in to the R30c unit bycreating fractures to liberate gas trapped in the tight formation. Thesuccessful frac of the R30c unit in the O-8 well, the second well in the fracprogram confirms the potential for enhancement of productivity utilizingfrac'ing. On 2 November 2011 the Company announced that the R30c zone in theOlgovskoye-6 ("O-6") well was frac'd successfully and flowed 2.3 MMcf/d throughan 8 mm choke. The O-8 and O-6 wells are both expected to be tied-in for regularproduction prior to the end of 2011. Based upon the positive results of thisfirst fracture stimulation program, the Company is selecting candidates andplanning for a second multi-well frac'ing program in mid-2012.
The totalcost of the two-well hydraulic fracturing program is expected to beapproximately $1.6 million ($800,000 per frac). By way of comparison, theestimated costs to drill and complete a new 2,500 metre well are approximately$2.5 million.
Jock Graham, Executive Vice President statedthat:
"The successful fracs in the O-8 and O-6 wells confirms our beliefthat modern frac technology can have a material impact on the Company byunlocking new production and reserves from zones that had previously beenconsidered to be uneconomic. The economics of frac'ing appears to be quitefavourable and, by proving that some of the zones in our license areas respondto modern frac technology, we appear to have opened the door to substantialupside, in terms of both production and reserves, from our Ukraineproject."
KUB-Gas owns a 100% interest in the Olgovskoye, Makeevskoye andNorth Makeevskoye, Krutogorovskoye and Vergunskoye licenses in the Lugansk areaof Ukraine. KOV owns an effective 70% interest in KUB-Gas with Gastek LLC owningthe remaining 30%.
About Kulczyk Oil
Kulczyk Oil is aninternational upstream oil and gas exploration company with a diversifiedportfolio of projects in Brunei, Syria and Ukraine and with a risk profileranging from exploration in Brunei and Syria to production and development inUkraine. The common shares of the Company trade on the Warsaw Stock Exchangeunder trading symbol "KOV".
In Brunei, KOV owns working interests in twoproduction sharing agreements which gives the Company the right to explore forand produce oil and natural gas from Block L and Block M. KOV owns a 40% workinginterest in Block L, a 2,220 square kilometre (550,000 acre) area coveringonshore and offshore areas in northern Brunei and a 36% working interest inBlock M, a 3,011 square kilometre (744,000 acre) area onshore in southernBrunei.
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 theCity of Lugansk in the northeast part of Ukraine. Four of the licenses are gasproducing.
In Syria, KOV holds a participating interest of 50% in theSyria Block 9 production sharing contract which provides the right to explorefor and, upon fulfillment of certain conditions, to produce oil and gas fromBlock 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 thirdparty which is subject to the approval of Syrian authorities, and which, ifapproved, would leave the Company with a remaining effective interest of 45% inSyria Block 9.
The main shareholder of the Company, Kulczyk InvestmentsS.A. owns 47.6 % of the issued common shares. Kulczyk Investments S.A. is aninternational investment house founded by Polish businessman Dr. JanKulczyk.
For further information, please refer to the Kulczyk Oil website(
www.kulczykoil.com).
Translation: This news releasehas been translated into Polish from the Englishoriginal.
Forward-looking Statements This release containsforward-looking statements made as of the date of this announcement with respectto future activities of KUB-Gas and related to its five license areas(Vergunskoye, Krutogorovskoye, Makeevskoye, North Makeevskoye and Olgovskoye) inUkraine and to certain wells drilled within those license areas that are nothistorical facts. Although the Company believes that its expectations reflectedin the forward-looking statements are reasonable as of the date hereof, anypotential results suggested by such statements involve risk and uncertaintiesand no assurance can be given that actual results will be consistent with theseforward-looking statements. Various factors that could impair or prevent theCompany from completing the expected activities on its projects include that theCompany's projects experience technical and mechanical problems, there arechanges in product prices, failure to obtain regulatory approvals, the state ofthe national or international monetary, oil and gas, financial, political andeconomic markets in the jurisdictions where the Company operates and other risksnot anticipated by the Company or disclosed in the Company's published material.Since forward-looking statements address future events and conditions, by theirvery nature, they involve inherent risks and uncertainties and actual resultsmay vary materially from those expressed in the forward-looking statement. TheCompany undertakes no obligation to revise or update any forward-lookingstatements in this announcement to reflect events or circumstances after thedate of this announcement, unless required by law.
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Telephone:+1-403-264-8877
Facsimile: +1-403-264-8861
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Telephone: +48 (22) 414 21 00
Facsimile: +48 (22) 412 48 60
CONTACT INFORMATION:
Kulczyk OilVentures Inc. - Canada
Norman W. Holton
ViceChairman
+1-403-264-8877
nholton@kulczykoil.com
or
KulczykOil Ventures Inc. - Poland
Jakub J. Korczak
Vice President InvestorRelations & Managing Director CEE
+48 22 414 21 00
jkorczak@kulczykoil.com
www.kulczykoil.com
INDUSTRY: Energy and Utilities -Oil and Gas