Kulczyk Oil reported that the Olgovskoye-12 ("O-12") well in Ukraine was tied-in for commercial production on January 1, 2012 and is currently producing at a rate of more than 4.6 million cubic feet per day ("MMcf/d") of natural gas. The well is operated by KUB-Gas LLC ("KUB-Gas"), a partially-owned subsidiary in which KOV has a 70% effective ownership interest. Total KUB-Gas production from its Ukraine properties has averaged approximately 16.5 MMcf/d (KOV net 11.6 MMcf/d) since January 1st and more than 17 MMcf/d (KOV net 11.9 MMcf/d) since January 4th. Condensate production since the start of the year has averaged more than 200 barrels per day ("bbls/d") (KOV net 140 bbls/d).
The O-12 well reached a total depth ("TD") of 2,700 meters in early September 2011 and was cased to TD as a potential gas producer. A 10 meter zone in the Middle Bashkirian was perforated and production tested at a maximum rate of 8.1 MMcf/d on a 10 mm choke as disclosed in a news release dated October 4, 2011. KUB-Gas plans to produce the well at a restricted initial rate as good production practice dictates that wells should be produced at lower than their maximum potential rates to avoid damage to the reservoir.
Average gross production during the month of December 2011 from the KUB-Gas properties was 12.1 MMcf/d of natural gas (8.5 MMcf/d net to KOV) and 130 barrels per day of condensate. Since the start of the year production from the KUB-Gas properties has increased by 40%. The tie-in during the first quarter of 2012 of the O-6 and O-8 wells, which were fracture stimulated in the fourth quarter of 2011, will further increase the production capability of the KUB-Gas licenses.
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