Kulczyk Oil Ventures Inc. is continuing its active program in Ukraine and provided update information with respect to its activities in the Makeevskoye, North Makeevskoye and Olgovskoye Licence areas, each of which are operated by KUB-Gas LLC ("KUB-Gas"), a subsidiary in which KOV has a 70 percent effective ownership interest.
The Makeevskoye-21 ("M-21") well was drilled to a total depth ("TD") of 7,251 feet (2,210 meters) in the first quarter of 2012. Two potential hydrocarbon-bearing zones were identified and the well was cased to TD to enable future testing. The first zone, the R8 zone which correlates with the gas producing zone in the M-19 well, has been perforated and flowed natural gas at a test rate of 3 million cubic feet per day ("MMcf/d") (2.1 MMcf/d net to the 70% interest of KOV) on an 8 millimeter choke. The well is expected to be tied-in for commercial production late in 3Q 2012. As a result of the successful testing of the M-21 well and the consistently high production rate from the Makeevskoye-19 ("M-19") well, the drilling program for 2012 is being revised to bring forward the timing for the drilling of the Makeevskoye-20 ("M-20") well.
North Makeevskoye Exploration Well
The North Makeevskoye-1 ("NM-1") exploration well, which commenced drilling on May 5, 2012, has been drilled to its planned TD of 8,202 feet (2,500 meters), wireline logged and cased to TD. Evaluation of both the wireline logs and information obtained during the drilling of the well indicates potential for hydrocarbon accumulation in 4 reservoir units in Bashkirian and Serpukovian aged sediments. Two reservoir units are within a 230 feet (70 meter) thick limestone interval and another appears to be within a 98 feet (30 meter) thick sandstone. Production testing of the NM-1 well is expected to take place early in 3Q 2012. The drilling rig will start moving to the M-20 location shortly and the M-20 well is expected to spud in mid-July.
North Makeevskoye Seismic
During the second quarter of 2011, KUB-Gas acquired 44 miles (71 kilometers) of new 2D seismic data over the North Makeevskoye Licence. Interpretation of this new data in combination with approximately 171 miles (275 kilometers) of pre-existing 2D seismic data resulted in NM-1 being defined as the first drilling location on this new license. In the first quarter of this year 87 square miles (225 square kilometers) of new 3D seismic data was acquired over the majority of the North Makeevskoye Licence, including the NM-1 well location. Processing of the recently acquired 3D seismic data is currently underway and interpretation is expected to be completed in 3Q 2012.
The Olgovskoye-14 ("O-14") well was drilled to a TD of 9,186 feet (2,800 meters) in June and July of 2011 and cased to TD pending further evaluation. Potential hydrocarbon-bearing zones were identified from wireline logging and drilling information. Recent testing of the well indicated low permeability in the reservoir target zones and the well is currently suspended as a potential candidate for fracture stimulation later in 2012. In its initial frac program in the fourth quarter of 2011, KUB-Gas successfully completed the fracture stimulation of two wells, Olgovskoye-6 ("O-6") and Olgovskoye-8 ("O-8"). After being fracked the O-6 well flowed gas at a rate of 2.3 MMcf/d and the O-8 well flowed gas at a rate of 1.0 MMcf/d, both from previously non-commercial zones.
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