Kroes Energy Spuds New Development Well

Kroes Energy has begun drilling development well No. 303 in the Lelyaki oilfield, Ukraine and is currently at 300 meters toward a total drilled depth of approximately 2,000 meters. The well is designed to produce from the main P1 - P2 sands and will be deviated at 75 degrees from vertical through the producing horizon in order to extend the producing interval by four-fold.

Fred Callaway, President of Kroes, stated "the drilling of this well confirms the aggressive approach the Joint Venture is now taking to field development. This will be the fourth well drilled in 2005 and we expect a similar four-well program in 2006."

Meanwhile, Kroes also announced that development well No. 301 has now been placed on production in the deeper K1 zone. As announced in September, the well produced 183 barrels per day (bpd) on test (82 bpd net to Kroes). Stabilized production rates will be reported in a few weeks. Excluding the results of this well, the Company's net production in the Lelyaki oilfield is averaging 265 bpd.

Kroes has a 45% interest in the Kashtan Petroleum Joint Venture that has the license to operate the Lelyaki oilfield.