JKX's Ukraine Well Exceeds Expectations

JKX Oil & Gas reports that initial test results of its first new well (M202) on the Molchanovskoye Field in Poltava, Ukraine have significantly exceeded expectations.

Well M202 was drilled to a depth of 2,620 meters and completed in both the Tournasian sands and Tournasian carbonates. During initial testing, the well flowed at a stabilized average daily rate of 11 million cubic feet of gas and 800 barrels of condensate through a 30/64 inch choke, with a wellhead flowing pressure of 2,600psi. The well has been tied back to the production facilities at the Company's main producing field at Ignatovskoye via an existing 8-kilometer flowline. Test production is being sold to existing customers. Well M202 has been funded as part of JKX's 2003 development program for Poltava, utilizing existing cash resources.

It is expected for the remainder of 2003 that production from Well M202 will enable an increase in total gas production at Poltava to 35 million cubic feet per day, the current nominal capacity of the gas processing facilities. There will be an associated rise in oil/condensate production to in excess of 2,200 barrels per day. Total field production at Poltava including test production from M202 is currently 8,200 barrels of oil equivalent per day.

Well M202 has now been placed on long term test, the results of which will provide the basis for the potential full field development of Molchanovskoye. The development plan will address the requirements for further drilling on Molchanovskoye in the latter part of 2003, increase in capacity of the production facilities at Poltava and new flowlines.

JKX's Ukrainian subsidiary, Poltava Petroleum Company, holds four production licenses and one exploration license at Poltava. The Ignatovskoye Field has been the primary focus of development activity at Poltava to date. Drilling on PPC's second production license over the Molchanovskoye Field is the next phase in the full development of all PPC license areas.