JKX Oil & Gas Awarded New Ukrainian Exploration License

JKX Oil & Gas has been awarded, by the State Committee of Ecology and Mineral Resources of Ukraine of the Elizavetovskoye, an exploration license, onshore Ukraine. The license covers an area of 70 sq km and is immediately adjacent to the Mashivske Field, one of the largest producing gas condensate fields in Ukraine. The license is valid for a period of five years for exploration and test production, following which the Company has the priority right to apply for a twenty year production license. The license application was approved by all necessary state agencies including the Poltava regional government.

The Elizavetovskoye license is located in the Poltava region, approximately 45km from JKX's existing producing licenses, and lies in the central part of the Dneiper-Donetsk basin, the main producing area in eastern Ukraine. The license contains a seismically defined prospect which Ukrainian estimates indicate has the potential to contain up to 50 Bcf of gas in early Permian and late Carboniferous sediments at approximately 4,000 m depth. In addition, there are three existing wells within the license which were drilled in the late 1980's in association with the Mashivske field development; these wells are still producing modest levels of gas and condensate, but no reserves are currently attributed to them. Discussions are being initiated with the local subsidiary of Naftogas of Ukraine, the State oil and gas company, to effect a transfer of the wells to JKX.

Approximately 180km of 2-D seismic data have been recorded over the license. The Company's immediate plans are to purchase and reprocess all available seismic information to assess the requirement for further seismic data acquisition, and to evaluate both the production history and operating condition of the existing wells in order to determine their suitability for work-over.

JKX is continuing its discussions with the relevant Ukrainian authorities to acquire further exploration and production licenses.