Kulczyk Oil to Add Ukrainian Assets to Portfolio

Kulczyk Oil has entered into certain agreements with Gastek LLC, a private Californian company and its wholly-owned subsidiary KUB-Gas Ltd ("KUB-Gas"), whereby KOVL will acquire a 70 percent indirect equity interest in KUB-Gas through Loon Ukraine. KUB-Gas is one of the largest independent natural gas producers in Ukraine.

Upon signing the Acquisition Agreements, KOVL will pay to Gastek a deposit of US $1.35 million. Completion of the acquisition is subject to a number of conditions precedent including approval of the acquisition by Ukraine's Anti-Monopoly Committee and the closing of an initial public offering by Kulczyk Oil coincident with its planned listing on the Warsaw Stock Exchange. The balance of the purchase price of US$ 45 million, less adjustments, will be paid by KOVL to Gastek shortly after those conditions precedent have been satisfied.

The principal assets of KUB-Gas consist of a 100% interest in 4 gas fields (the "Fields"). The Fields are located in Eastern Ukraine in the Dnieper-Donets Basin, a part of the Ukraine which accounts for 90% of Ukrainian oil and gas production and is well served by transport infrastructure.

RPS Energy, a division of RPS Group plc ("RPS"), a global engineering firm which specializes in the evaluation of oil and gas assets and the provision of other engineering services to the oil and gas industry, was retained by the Company to prepare an evaluation report on the Fields (the "Report"). That Report estimates the natural gas and natural gas liquids reserves in the Fields associated with the Company's 70% effective interest to be acquired by KOVL as of April 1, 2009.

The Report states that the Fields contain net proved reserves of 8.5 billion cubic feet ("BCF") of natural gas and 42,000 barrels of condensate, net proved plus probable reserves of 15 BCF and 80,700 barrels of condensate and net proved plus probable plus possible reserves of 22.2 BCF of natural gas and 122,100 barrels of condensate. The Report also indicates potential for additional resources, not defined as Prospective or Contingent Resources, which could, if developed into reserves, substantially increase the reserves contained within the Fields. A development plan, to attempt to exploit some of this additional resource potential, is being considered by Kulczyk Oil.

The Fields average production during the month of October 2009 was 6.6 million cubic feet ("MMcf") per day (4.62 MMcf/d net) of natural gas and 28 barrels per day (19.6 bpd net) of condensate. The average realized price from the KUB-Gas assets during the first six months of 2009 was US$5.96 per thousand cubic feet ("Mcf") for natural gas and US$40.92 per barrel for condensate and the average realized price during the month of September 2009 was US$5.97 per Mcf for natural gas and US$87.15 per barrel for condensate.

Kulczyk Oil CEO Tim Elliott said, "This acquisition, following quickly on the heels of our acquisition of Triton Hydrocarbons, will add proven and probable reserves with built in growth potential to our existing portfolio of high quality assets in Brunei and Syria. It is consistent with the Company's robust growth strategy and advances our objective of becoming a leading Central and Eastern European independent oil and gas exploration and production company. It is a particularly exciting development in anticipation of Kulczyk Oil's planned listing on the Warsaw Stock Exchange. I would like to thank our major shareholder, Kulczyk Investments, and in particular their office in Kiev, for their assistance during this process and for bringing the KUB-Gas opportunity to our attention.

The Ukraine has long history in the oil and gas business and has actually been producing oil and gas since the 1880s. Despite being a net importer of oil and gas the Ukraine is a significant gas producer. According to The World Fact Book, gas production in 2008 was estimated at 700 billion cubic feet (20 billion cubic meters) ranking Ukraine as the 30th largest producer of natural gas in the world and proven gas reserves were estimated at more than 38 Tcf (1.1 trillion cubic meters) as of the beginning of this year ranking Ukraine 24th in the world in terms of natural gas reserves.


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