Kulczyk Oil Highlights Testing Ops at Ukraine Well

Kulczyk Oil has published in Canada, through SEDAR system, the news release concerning gas tested from second zone at Olgovskoye-9 well in Ukraine and O-8 well update.

The O-9 well is located approximately 1.2 kilometers to the northwest of the O-8 well. O-9 well commenced drilling on March 5th, 2011 and reached a total depth ("TD") of 2,638 meters on April 4th, 2011. The well was primarily designed to test gas-bearing reservoirs in the Middle Bashkirian and further develop the gas production capability of the Olgovskoye Field.

The testing of the O-9 well began in June when a 5.5 meter thick reservoir unit in the Lower Bashkirian at a depth of approximately 2,560 meters (the R37 unit) was perforated. A two-meter section of the R37 unit was perforated and tested over two periods of time. The first test flowed gas at a rate of 1.2 MMcf/d (840 Mcf/d net to KOV) through a 6 mm choke. The second test flowed gas at a stabilized rate of 762 Mcf/d (533 Mcf/d net to KOV) through a 5 mm choke. This new discovery of gas in the Lower Bashkirian was disclosed in the KOV news release dated June 28, 2011 (current report No 35/2011).

The testing of the Middle Bashkirian sandstones, which are the primary target of the O-9 well, commenced on July 22nd, 2011 when two 3 meter zones of one of the potential gas zones in the Middle Bashkirian were perforated from measured depths of 2,304 to 2,307 meters and from 2,309 to 2,312 meters, respectively. These perforated intervals flowed gas at rates ranging between 1.7 MMcf/d (on a 5 mm choke) to 4.4 MMcf/d (on a 9 mm choke) i.e. between 1.19 to 3.08 MMcf/d net to KOV. with a stabilized flow rate of 2.9 MMcf/d on a 7 mm choke (2.03 MMcf/d net to KOV). The tested zone, which is only one of several potential gas producing zones seen in the Middle Bashkirian section in the O-9 well, is expected to commence commercial production at a gross rate of approximately 1.5 MMcf/d (1.1 Mmcf/d net to KOV) prior to the end of the third quarter.

Initially, this well will produce only from the tested Middle Bashkirian zone and gas reserves indicated by the testing of the Lower Bashkirian gas zone described in the June 28, 2011 news release will be available to produce at a later date. O-9 was the second new well drilled in the Olgovskoye field since the Company acquired its interest in KUB-Gas in June 2010 and it is part of a larger development program on the KUB-Gas assets which will continue through 2011 and 2012.

The service rig is now being moved to the Olgovskoye-8 well which was the first new well drilled on KUB-Gas Ukraine licenses since the acquisition by KOV in June 2010. The O-8 well reached a TD of 2,780 meters in early January and encountered multiple potential gas zones. Testing of the O-8 well will commence in a few weeks once the service rig move is completed.