Drilling Commenced at Kulczyk's Ukraine Well

Kulczyk Oil Ventures Inc. announced that the North Makeevskoye-1 ("NM-1") exploration well has commenced drilling. The NM-1 well, which is operated by KUB-Gas LLC ("KUB-Gas"), a subsidiary in which KOV has a 70 percent effective ownership interest, is the first well to be drilled on the North Makeevskoye Exploration License in Ukraine.

North Makeevskoye Exploration Well

The North Makeevskoye-1 ("NM-1") exploration well is expected to take approximately 40 days to reach a planned total depth ("TD") of 2,500 meters. Some drill stem tests ("DSTs") may be undertaken and, if initiated, additional time may be needed before TD is reached. The NM-1 well will target a prospect with multiple reservoir units in Bashkirian, Muscovian and Serpukovian aged sediments and will be drilled with the KUB-Gas owned K-200 drilling rig. The NM-1 well is located approximately 6 miles (10 kilometers) to the northeast of the Olgovskoye Field. RPS Energy, the Company's independent engineering firm, in their 2011 year-end report dated March 20, 2012, allocated Low, Mid and High Case Prospective Resources to the NM-1 prospect, net to KOV, of 7.78 Bcf, 30.23 Bcf and 75.04 Bcf respectively.

North Makeevskoye License

In January 2011, KOV announced that KUB-Gas was awarded the North Makeevskoye exploration license area in Ukraine. The North Makeevskoye Exploration License is located immediately northeast of KUB-Gas' Makeevskoye and Olgovskoye licences, near the City of Lugansk in eastern Ukraine. The Company believes the license to be geologically similar to the productive areas which lie along the primary South-Eastern Dnieper-Donets Basin gas/condensate structural trend - such as the adjacent KUB-Gas Makeevskoye and Olgovskoye Licenses. The award of the 19,050 hectare (47,073 acre) North Makeevskoye License to KUB-Gas increased the Company's total holdings to five license areas and increased KUB-Gas' total area under license by more than 110 percent to 36,315 hectares (89,736 acres). The North Makeevskoye Exploration License has a five year term effective from December 29, 2010.

Jock Graham, Executive Vice President of KOV, commented: "We are excited about the potential of the North Makeevskoye License, which we consider to be highly prospective. There are several large undrilled structures on the license, one of which will be targeted by the NM-1 exploration well. Wells such as NM-1 have the potential to add significant value to the Company and help provide the basis for future reserves and revenue growth."

During the second quarter of 2011, KUB-Gas acquired 44 miles (71 kilometers) of new 2D seismic data over the North Makeevskoye License. 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 2012, 87 square miles (225 square kilometers) of new 3D seismic data was acquired over the majority of the North Makeevskoye License. Processing of the seismic data is currently underway and interpretation of the processed data may define additional drilling locations by August 2012.