CALGARY, ALBERTA--(Marketwired - Apr 9, 2013) - Kulczyk Oil Ventures Inc. (WARSAW:KOV) ("Kulczyk Oil", "KOV" or the "Company"), an international upstream oil and gas exploration and production company, is very pleased to announce a new pool gas discovery on the Makeevskoye Licence in Ukraine. The Makeevskoye-16 ("M-16") exploration well has tested gas from the S5 zone at more than 4.3 million cubic feet per day ("MMcf/d"). M-16 is the deepest well drilled by the Company in Ukraine and this is the first time the Company has tested gas at commercial rates from a reservoir of Serpukhovian age, opening up new opportunities for future growth.
The M-16 well is operated by KUB-Gas LLC ("KUB-Gas"), a partially-owned subsidiary in which KOV has a 70% effective ownership interest and is the deepest well drilled to date by KUB-Gas.
- S5 zone produced gas on test at a maximum stabilized rate of 4.3 MMcf/d;
- S13 zone scheduled for fracture stimulation later this year;
- first production from the M-16 well expected in approximately 3 months;
- three additional wells are being planned to further develop both the new S5 gas pool and other zones identified as potential gas reservoirs in the M-16 well.
Makeevskoye-16 Exploration Well
Having previously never drilled deeper than 3,200 metres, the M-16 exploration well is the deepest well drilled to date by the Company reaching a total depth ("TD") of 4,300 metres. It is the first well drilled by the Company through the entire Serpukhovian aged section which is overlain by the Moscovian and Bashkirian aged sediments that host the commercial gas reservoirs found previously in the immediate area. The M-16 well, located 6.7 kilometres to the northwest of the Makeevskoye-21 gas discovery drilled in the first quarter of 2012, commenced drilling in early August and reached its TD in late November 2012 before being cased in early December. Interpretation of wireline logs and other well data indicate potential for up to seven potential gas-bearing reservoirs and up to 48 metres of net gas pay in the M-16 well. Three of the prospective zones are in the Serpukhovian. The other zones are in sediments of Bashkirian and Moscovian age and one of them, the R30C zone at 2,503 metres, is already a significant producer on the Makeevskoye Licence. Testing of the M-16 well began in March.
The M-16 well was perforated in the deepest of the prospective zones, a sandstone of Serpukhovian age called the S13, over a gross interval from 3,684 to 3,707 metres on 2 March 2013. After the well was perforated a slight gas blow too small to measure was observed at the surface and the well was left open to the flare pit. Approximately two hours after perforation the Company shut in the well and observed a small increase in pressure. After being shut in for approximately 15 hours the pressure continued to increase and burnable gas was observed at the surface though there were no measurable flow rates. Based on open hole log analysis the well behaved as expected and the Company plans to fracture stimulate the S-13 zone this year.
S5 Lower Zone
The second test, of the lower part of the S5 zone, perforated a sandstone interval from 3,364 to 3,370 metres and produced gas on test at a maximum stabilized rate of 4.3 MMcf/d through an 8 millimetre ("mm") choke at a flowing tubing head pressure ("FTHP") of 1,900 pound-force per square inch gauge ("psig"). The well was tested using various choke sizes achieving a stable rate of 2.5 MMcf/d at a FTHP of 2,800 psig through a 5 mm choke, an unstable rate of 3.3 MMcf/d at a FTHP of 2,700 psig through a 6 mm choke and a stable flow rate of 3.8 MMcf/d at a FTHP of 2,200 psig through a 7 mm choke.
The testing of the S5 zone involved a total flow period of 74 hours after which the well was shut in for 169 hours. The initial shut in bottom hole pressure was 34.071 kPa (4,940 psig) and the final measured bottom hole pressure was 33,985 kPa (4,928 psig). The pressure was still building at the end of the shut-in period and the Company believes that an extrapolation of the pressure build-up will indicate no depletion of pressure.
It is anticipated that the well will be tied into a nearby flow line which will take the gas to the Makeevskoye facility. First production is expected late in the second quarter of 2013.
The information obtained from the drilling and wireline logging of the M-16 well, together with the seismic data acquired previously over the Makeevskoye Licence, indicates potential for at least three other well locations to fully develop the new S5 gas pool discovered with the drilling of the M-16 well. Additional wells will be needed to explore some of the new drillable prospects which have been identified based on the success of the S5 zone and to fully develop some of the other zones identified as potential gas reservoirs in the M-16 well.
Jock Graham, Executive Vice President of the Company says:
"The successful test in the S5 zone, our first in the Serpukhovian section, is very exciting for KOV. We expect that development of the deep Serpukhovian reservoirs will add to both our reserves and production base over time. This new gas discovery has opened up new opportunities and targets elsewhere in our licences, providing an additional path to continued reserve and production growth."
About Kulczyk Oil
Kulczyk Oil is an international upstream oil and gas exploration and production company with a diversified portfolio of projects in Ukraine, Brunei and Syria and with a risk profile ranging from exploration in Brunei and Syria to production and development in Ukraine. The common shares of the Company trade on the Warsaw Stock Exchange under trading symbol "KOV".
In Ukraine, KOV owns an effective 70% interest in KUB-Gas LLC. The assets of KUB-Gas consist of 100% interests in five licences near to the City of Lugansk in the northeast part of Ukraine. Four of the licences are gas producing.
In Brunei, KOV owns a 90% working interest in a production sharing agreement which gives the Company the right to explore for and produce oil and natural gas from Block L, a 1,123 square kilometre area covering onshore and offshore areas in northern Brunei.
In Syria, KOV holds a participating interest of 50% in the Syria Block 9 production sharing contract which provides the right to explore for and, upon the satisfaction of certain conditions, to produce oil and gas from Block 9, a 10,032 square kilometre area in northwest Syria. The Company has an agreement to assign a 5% ownership interest to a third party which is subject to the approval of Syrian authorities, and which, if approved, would leave the Company with a remaining effective interest of 45% in Syria Block 9. KOV declared force majeure, with respect to its operations in Syria, in July 2012.
The main shareholder of the Company is Kulczyk Investments S.A., an international investment house founded by Polish businessman Dr. Jan Kulczyk.
For further information, please refer to the Kulczyk Oil website (www.kulczykoil.com).
Translation: This news release has been translated into Polish from the English original.
Forward-looking Statements: This release may contain forward-looking statements made as of the date of this announcement with respect to future activities of KUB-Gas and related to its five licence areas in Ukraine and to certain wells drilled or seismic activities undertaken within those licence areas that either are not or may not be historical facts. Although the Company believes that its expectations reflected in the forward-looking statements are reasonable as of the date hereof, any potential results suggested by such statements involve risk and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Various factors that could impair or prevent the Company from completing the expected activities on its projects include that the Company's projects experience technical and mechanical problems, there are changes in product prices, failure to obtain regulatory approvals, the state of the national or international monetary, oil and gas, financial, political and economic markets in the jurisdictions where the Company operates and other risks not anticipated by the Company or disclosed in the Company's published material. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties and actual results may vary materially from those expressed in the forward-looking statement. The Company undertakes no obligation to revise or update any forward-looking statements in this announcement to reflect events or circumstances after the date of this announcement, unless required by law.
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