Crude oil production averaged 237 barrels per day compared to 209 barrels per day for the first quarter of 2005. New production from three wells put on steam during 2005 was partly offset by the shut-in of two other wells for mechanical repairs.
In Ukraine, a meeting of the Kashtan joint venture was recently held and a work program for the drilling of two more wells and production facilities was proposed, along with the declaration of a dividend that would net Kroes some $175,000. These issues are subject to the final approval of the participants in the next few weeks. The well No. 303 was completed in May and the initial production rate from the K1 zone was 100 barrels per day (45 b/d net to Kroes). The main P1/P2 zone also is oil bearing and will be available for production in the future.
In western Canada, the Company's first shallow gas prospect has been successfully re-completed in the Viking zone and is awaiting a service rig to re-complete the Glauconitic zone then put the well on production. The Company has agreed to participate in two additional prospects and is presently evaluating another two prospects.
The $2 million financing by way of Short Form Offering Document that was announced early in May is proceeding with the agent, Octagon Capital Corporation. The offering is expected to close in June 2006.
Kroes Energy is a junior oil and gas producer and explorer participating in the Lelyaki Oilfield redevelopment project in Ukraine, one of Eastern Europe's fastest growing economies. It also has a Joint Venture agreement in central Alberta.
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