HOUSTON, TEXAS — (Marketwired) — 07/03/13 — Cub Energy Inc. (“Cub” or the “Company”) (TSX VENTURE: KUB) announces a discovery at the Olgovskoye Production Licence. The Olgovskoye-15 (“O-15”) well tested the S5 zone in the Serpukhovian aged reservoir at a maximum flow rate of 1.5 million cubic feet per day (“MMcf/d”). The O-15 well is operated by KUB-Gas LLC (“KUB-Gas”), a partially-owned subsidiary in which Cub has a 30% ownership interest.
O-15 Well
The O-15 well was drilled as a directional well to evaluate the potential of the Bashkirian R30c and Serpukhovian S5 reservoir sands to further develop the gas production capability of the Olgovskoye Field. Well logs indicated potential gas pay in the R30c and in the deeper Serpukhovian S5 zone.
Gas was initially discovered in the S5 zone of the recently drilled Makeevskoye-16 (“M-16”) well, which is located approximately 13 kilometres to the southeast of O-15, and tested at 4.3 mmcf/d in April 2013. Potential gas pay was also encountered in the B3 and R22 zones.
Testing of S5 Zone
The S5 zone was perforated over a 6-metre interval from 3,094 metres to 3,100 metres and flow tested for 2 days. The well was tested using various choke sizes achieving a maximum stabilised natural gas flow rate of 1.5 MMcf/d through a 6–millimetre choke at a flowing tubing head pressure of 8,600 kilopascals or 1,247 pound-force per square inch (“psi”). The reservoir pressure was measured at 4,468 psi and at this point no depletion is indicated.
It is anticipated that the well will be tied in to a nearby flow line, which will take the gas to the KUB-Gas processing facility at Makeevskoye (the “Makeevskoye Facility”). First production, which is expected in August of 2013, will be constrained by facility capacity. Cub recently announced that KUB-Gas has begun an expansion of the gas processing capacity of the Makeevskoye Facility to accommodate additional production from both the Olgovskoye Licence and continued development of the gas reservoirs discovered by the M-16 well. It is planned that after the upgrade, scheduled for completion by early 2014, the Makeevskoye Facility will have a capacity of more than 65 MMcf/d. The Company expects that capital expenditures for this project will not exceed US$6 million (US$1.8 million net to Cub).
Future Development
The information obtained from the drilling and wireline logging of the O-15 well, together with the seismic data acquired previously over the Olgovskoye Licence, indicates potential for at least three additional well locations to fully develop the new S5 gas pool discovered with the drilling of the O-15 well. With the additional wells needed to develop the S5 gas pool, and some of the new drillable prospects which have been identified based on the success of both the O-15 and M-16 wells, the Company now has enough prospects for a continuous drilling program for at least two years. The M-16 test results were announced on April 9, 2013 and the tie-in of the M-16 well was announced on June 5, 2013.
About Cub Energy Inc.
Cub Energy Inc. (TSX VENTURE: KUB) is an upstream oil and gas company, with a proven track record of exploration and production cost efficiency in the Black Sea region. The Company–s strategy is to implement western technology and capital, combined with local expertise and ownership, to increase value in its undeveloped land base, creating and further building a portfolio of producing oil and gas assets within a high pricing environment.
For further information please contact us or visit our website .
Oil and Gas Equivalents
Production information is commonly reported in units of barrel of oil equivalent (“boe” or “Mboe” or “MMboe”) or in units of natural gas equivalent (“Mcfe” or (“MMcfe” or (“Bcfe”). However, boe or Mcfe may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf = 1 barrel, or a Mcfe conversion ratio of 1 barrel = 6 Mcf, is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
Reader Advisory
Except for statements of historical fact, this news release contains certain “forward-looking information” within the meaning of applicable securities law. Forward-looking information is frequently characterized by words such as “plan”, “expect”, “project”, “intend”, “believe”, “anticipate”, “estimate” and other similar words, or statements that certain events or conditions “may” or “will” occur. Cub believes that the expectations reflected in the forward-looking information are reasonable; however there can be no assurance those expectations will prove to be correct. We cannot guarantee future results, performance or achievements. Consequently, there is no representation that the actual results achieved will be the same, in whole or in part, as those set out in the forward-looking information.
Forward-looking information is based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those anticipated in the forward-looking information. Some of the risks and other factors that could cause the results to differ materially from those expressed in the forward-looking information include, but are not limited to: general economic conditions in the Ukraine and globally; industry conditions, including fluctuations in the prices of natural gas; governmental regulation of the natural gas industry, including environmental regulation; unanticipated operating events or performance which can reduce production or cause production to be shut in or delayed; failure to obtain industry partner and other third party consents and approvals, if and when required; competition for and/or inability to retain drilling rigs and other services; the availability of capital on acceptable terms; the need to obtain required approvals from regulatory authorities; stock market volatility; volatility in market prices for natural gas; liabilities inherent in natural gas operations; competition for, among other things, capital, acquisitions of reserves, undeveloped lands, skilled personnel and supplies; incorrect assessments of the value of acquisitions; geological, technical, drilling, processing and transportation problems; changes in tax laws and incentive programs relating to the natural gas industry; failure to realize the anticipated benefits of acquisitions and dispositions; and the other factors. Readers are cautioned that this list of risk factors should not be construed as exhaustive.
This cautionary statement expressly qualifies the forward-looking information contained in this news release. We undertake no duty to update any of the forward-looking information to conform such information to actual results or to changes in our expectations except as otherwise required by applicable securities legislation. Readers are cautioned not to place undue reliance on forward-looking information.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Contacts:
Cub Energy Inc.
Mikhail Afendikov
Chairman and Chief Executive Officer
(713) 677-0439
Cub Energy Inc.
Lionel C. McBee
Director of Investor Relations
(713) 677-0439