CALGARY, ALBERTA — (Marketwire) — 10/25/11 — Kulczyk Oil Ventures Inc. (“Kulczyk Oil”, “KOV” or the “Company”) (WARSAW: KOV), is pleased to announce that KUB-Gas LLC (“KUB-Gas”), a partially-owned indirect subsidiary of KOV, will initiate a reservoir stimulation program using hydraulic fracturing technology (“frac–ing”) in late October.
The initial program will focus on the O-6 and O-8 wells located in the Olgovskoye field and will consist of a cross-linked gel water frac using 30 tonnes of sand proppant for each well. Wireline logs acquired after the drilling of each of these wells identified potential gas-bearing zones which did not flow gas at commercial rates when tested conventionally. The target zone in each of the wells is a Middle Bashkirian silty sandstone interval at a depth of approximately 2,300 metres which has indicated permeability of less than 1 millidarcy. Computer modeling suggests a created frac length of up to 144 metres.
Due to a lack of locally available services necessary for this type of operation, KOV spent the last year putting together a combination of service providers to implement the frac–ing operation. All necessary equipment is now on location and the frac–ing program is scheduled to start during the last week of October with the first well to be stimulated being the O-6 well.
The Company believes that this will be the first frac–ing program in the region using modern frac techniques developed in Canada. A successful operation could have a material impact on the Company if the program demonstrates that gas can be produced from previously non-commercial horizons. The Company believes that frac–ing may enhance production rates from currently producing zones and enable KUB-Gas to obtain production from zones that will not produce conventionally.
Jock Graham, Executive Vice President stated that:
“Frac–ing is used to both increase production from conventionally productive formations and to enable formations that are not productive, to flow hydrocarbons at commercial rates. It is a commonly used procedure in North America on both conventional and unconventional reservoirs and now more recently on shale. To our knowledge this is the first frac of its kind in this part of Ukraine and we are excited about using technology developed in Canada to attempt to unlock the potential of some of the tight gas reservoirs underlying the KUB-Gas licenses. The fracs starting later this week are part of our program of using the latest echnologies and production methods to enhance productivity, and while there is no assurance of success we will analyse all of the data to determine what lessons can be learned to insure future success.”
The O-6 well was drilled in 2008 to a total depth (“TD”) of 2,530 metres. The O-8 well reached a TD of 2,780 metres in early January 2010. Recently completed testing of the O-8 well indicated that that R30c zone did not have sufficient permeability for commercial production and it was then determined that the O-8 well would be one of the first candidates in the fracture stimulation program.
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 with Gastek LLC owning the remaining 30%.
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 47.6 % 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 ()
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 (Vergunskoye, Krutogorovskoye, Makeevskoye, North Makeevskoye and Olgovskoye) 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.
Contacts:
Kulczyk Oil Ventures Inc. – Canada
Norman W. Holton
Vice Chairman
+1-403-264-8877
Kulczyk Oil Ventures Inc. – Poland
Jakub J. Korczak
Vice President Investor Relations & Managing Director CEE
+48 22 414 21 00