CALGARY, ALBERTA — (Marketwire) — 03/29/12 — Kulczyk Oil Ventures Inc. (WARSAW: KOV) (“Kulczyk Oil”, “KOV” or the “Company”), an international upstream oil and gas company, announces resource estimates for Brunei Block L, Brunei Block M and Syria Block 9 as evaluated by independent reserve engineers RPS Energy Consultants Ltd. (“RPS”).
Highlights
Brunei Block L
The Company, through two indirect wholly-owned subsidiaries, owns a 90% working interest in a production sharing agreement that provides them the right to explore for and, if the parties to the agreement establish that the discovery is capable of commercial exploitation and PetroleumBRUNEI approves the development plan, produce oil and gas from Block L, a 1,123 km2 exploration and development block covering certain onshore and offshore areas of Brunei.
Contingent resources of 60,000 barrels of oil net to KOV were identified for one prospect area on Block L in the RPS report.
Prospective resources were identified in 14 prospects on Block L based upon interpretation of 3D and 2D seismic and on geological evaluation. The prospective oil and gas resources are summarized in the table below.
Note – Totals reported in MMboe have been determined probabilistically and do not sum arithmetically and are based on any hydrocarbons discovered having a 50/50 chance of being oil or gas and on a boe ratio of six thousand cubic feet (“Mcf”) of gas being equal to one barrel of oil.
Brunei Block M
The Company, through an indirect wholly-owned subsidiary, owns a 36% working interest in a production sharing agreement that provides it the right to explore for and, if the parties to the agreement establish that the discovery is capable of commercial exploitation and PetroleumBRUNEI approves the development plan, produce oil and gas from Block M, a 1,505 km2 exploration and development block covering an onshore area of Brunei.
Two prospects in Block M were considered to have contingent resources based upon interpretation of 3D and 2D seismic, on geological evaluation and well information. Contingent resources of 110,000 barrels of oil net to KOV were identified by RPS for one prospect area on Block M while 2 Bcf of natural gas net to KOV were identified for the second prospect.
Prospective resources were identified in 11 prospects on Block M based upon interpretation of 3D and 2D seismic and on geological evaluation. The prospective oil and gas resources are summarized in the table below.
Note – Totals reported in MMboe have been determined probabilistically and do not sum arithmetically and are based on any hydrocarbons discovered having a 50/50 chance of being oil or gas and on a boe ratio of six Mcf of gas being equal to one barrel of oil.
Syria Block 9
Loon Latakia Limited, an indirect wholly-owned subsidiary of KOV, holds a 50% participating interest in a production sharing contract which gives it the right to explore for and, if the parties to the agreement establish that a discovery is sufficient for commercial exploitation and the Syrian authorities approve the development plan, produce oil and gas from Block 9, a 10,032 km2 block in northwest Syria. KOV is the operator of Syria Block 9. An unrelated company holds the right to be assigned a 5% interest in Block 9 subject to the approval of Syrian authorities and, as a result, the Company has an economic interest in Block 9 of 45%.
The first exploration well on Block 9, at Itheria-1, commenced drilling on 22 July 2011. The well was planned to be drilled to 3,256 metres and was designed to test a large structure with four-way closure defined by 3D seismic. The Company announced on 17 October 2011 that the drilling program was suspended at a depth of 2,072 metres. The well had three primary objectives, two in sandstones of Ordovician age and a third in deeper Cambrian carbonates. The Ordovician Affendi sandstone was penetrated at a depth of 1,470 metres and did not have sufficient porosity and permeability to be a potential reservoir. Two other potential reservoirs, the Ordovician Khanasser sandstone and the Middle Cambrian Burj carbonate are expected to occur below the suspended depth. The RPS evaluation of prospective resources took into account the well information and resulted in an approximate 23% decrease in the MMboe prospective resources for Syria Block 9 when compared to the evaluation of the same property by RPS prior to the drilling of the well. The prospective resources allocated by RPS to the Bashaer prospect have not changed from the prior report.
Note – Totals reported in MMboe have been determined probabilistically and do not sum arithmetically and are based on any hydrocarbons discovered having a 50/50 chance of being oil or gas and on a boe ratio of six Mcf of gas being equal to one barrel of oil.
KOV also advises that it will file its Statement of Reserves Data and Other Oil and Gas Information (Form 51-101F1) and the RPS Report on Reserves Data (Form 51-101F2) with regulatory authorities in Canada as required under National Instrument 51-101 and that it will also file its Annual Information Form for the year ended 31 December 2011.
Oil and Gas Equivalents
Production information is commonly reported in units of oil equivalent (“boe” or “Mboe” or “MMboe”) or in units of natural gas equivalent (“Mcfe” or “MMcfe” or “Bcfe”). However, BOEs or Mcfe–s may be misleading, particularly if used in isolation. The boe conversion ratio of 6 Mcf = 1 barrel, or the 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.
Defined Terms
“Contingent Resources” are those quantities of petroleum that are estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not yet considered mature enough for commercial development because of one or more contingencies. Contingencies may include factors such as economic, legal, environmental, political, and regulatory matters, or a lack of markets. Contingent Resources are further categorized into Low Estimate (1C), Best Estimate (2C) and High Estimate (3C) according to the level of certainty associated with the estimates and may be sub-classified based on economic viability.
“Prospective Resources” are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective Resources have both an associated chance of discovery and a chance of development. Prospective Resources are further subdivided in accordance with the level of certainty associated with recoverable estimates assuming their discovery and development and may be sub-classified based on project maturity.
“Low Estimate (1C)” is considered to be a conservative estimate of the quantity that will actually be recovered. It is likely that the actual remaining quantities recovered will exceed the low estimate. If probabilistic methods are used, there should be at least a 90 percent probability (P90) that the quantities recovered will equal or exceed the low estimate.
“Best Estimate (2C)” is considered to be the best estimate of the quantity that will actually be recovered. It is likely that the actual remaining quantities recovered will be greater or less than the best estimate. If probabilistic methods are used, there should be a 50 percent probability (P50) that the quantities recovered will equal or exceed the best estimate.
“High Estimate (3C)” is considered to be an optimistic estimate of the quantity that will actually be recovered. It is unlikely that the actual remaining quantities recovered will exceed the high estimate. If probabilistic methods are used, there should be at least a 10 percent probability (P10) that the quantities recovered will equal or exceed the high estimate.
About Kulczyk Oil
Kulczyk Oil is an international upstream oil and gas exploration and production 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. The common shares of the Company trade on the Warsaw Stock Exchange under trading symbol “KOV”.
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 90% working interest in Block L, a 1,123 square kilometre area covering onshore and offshore areas in northern Brunei and a 36% working interest in Block M, a 1,505 square kilometre 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 licences near to the City of Lugansk in the northeast part of Ukraine. Four of the licences 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 the satisfaction of certain conditions, to produce oil and gas from Block 9, a 10,032 square kilometre area in northwest Syria. The Company has an agreement to assign a 5% 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 approximately 44% of the issued common shares. Kulczyk Investments S.A. is an international investment house founded by Polish businessman Dr. Jan Kulczyk.
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 the Company in Brunei and Syria that either are not or may not be 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
403-264-8877
Kulczyk Oil Ventures Inc. – Poland
Jakub J. Korczak
Vice President Investor Relations & Managing Director CEE
+48 22 414 21 00