Kulczyk Oil Commences Drilling at Ukraine Well

Kulczyk Oil announced that the O-14 well in the Olgovskoye Field commenced drilling.

O-14 Exploration Well

The O-14 well is located approximately 4 kilometers to the southeast of the O-8 well. The O-14 well will be drilled to a depth of 2,800 metres and is designed to test gas-bearing reservoirs in the Muscovian and Lower Bashkirian and to further develop the gas production capability of the Olgovskoye Field. The drilling of the O-14 well is expected to take approximately 35 days.

The well, which will target a previously untested fault block identified after interpretation of 2D seismic data by the KOV/KUB-Gas technical team, is on trend with the main Olgovskoye producing area. A successful well in this fault block has the potential to substantially increase the current reserves base of the Company in Ukraine. RPS, the Company's independent engineering consulting firm, has assigned Contingent Resources to the 70% effective interest of KOV of 3.2 billion cubic feet ("Bcf") (Low Estimate), 12.3 Bcf (Best Estimate) and 29.1 Bcf (High Estimate) of natural gas to the untested fault block.

The O-14 well is the third new well drilled in the Olgovskoye field since the Company acquired its interest in KUB-Gas in June 2010. It is part of a larger development programon the KUB-Gas assets through 2011 and 2012.