Kulczyk Oil Notes Initial Test Results at O-9 Well

- Kulczyk Oil Notes Initial Test Results at O-9 Well

Tuesday, June 28, 2011
Kulczyk Oil Ventures Inc.

Kulczyk Oil updated its activities at the Olgovskoye-9 well.

Highlights 

• a secondary target in the Lower Bashkirian reservoir section (the R37 unit) tested at a maximum rate of 1,200 thousand cubic feet per day ("Mcf/d") of gas through a 6mm choke and a stabilized rate of 762Mcf/d through a 5mm choke
• the successful testing of the R37 unit amounts to a new discovery as no reserves or resources have been previously attributed to the units within the Lower Bashkirian reservoir
• primary targets in the Middle Bashkirian section of the well are now ready for testing

R37 Reservoir Unit Discovery

The testing of the O-9 well started with a 5.5 meter thick reservoir unit in the Lower Bashkirian reservoir at a depth of approximately 2,560 meters(the R37 unit). While the R37 unit was a secondary target, it is interpreted to be present across the Olgovskoye license area. Consequently a successful test has material implications for Kulczyk Oil Ventures Inc. (the "Company" or "KOV")as no reserves or resources are currently attributed to this reservoir unit or other similar Lower Bashkirian units within the Olgovskoye license.

A 2 meter section of the R37 unit was perforated and tested over two periods of time. The first test (Test #1) flowed at a rate of 1,200 Mcf/d of gas through a 6mm choke and during Test #2 the R37 unit flowed at a stabilized rate of 762Mcf/d of gas through a 5mm choke. This is the first time that commercial rates of gas have been produced from the Lower Bashkirian reservoir section lying below the main producing horizons of the Olgovskoye field. The Company currently believes that the Lower Bashkirian reservoir section is composed of more than 7 reservoir units running across the Olgovskoye license area. While the Company believes that generally speaking the units in the Lower Bashkirian reservoir will require some form of stimulation to produce commercial rates of gas, it is notable that the R37 unit flowed commercial rates of gas without any form of stimulation and this successful test opens up a potential new resource base for the Company.

The Company's preliminary internal estimate of new Reserves for the R37 unit zone is more than 4 billion cubic feet ("Bcf"). RPS Energy plc, the Company's independent engineering consulting firm, has not assigned any Reserves or Resources to the Lower Bashkirian reservoir section of the Olgovskoye field area in past reports.

Progress of Testing Operations

The Company will now carry on testing of the primary Middle Bashkirian targets which produce elsewhere in the Olgovskoye Field. Testing will proceed shortly and is expected to be completed by the end of July.

The O-9 Well

The O-9 well is located approximately 1.2 kilometers to the northwest of the O-8 well. The O-9 well commenced drilling on March 5th and reached a total depth ("TD") of 2,638meters on April 4, 2011. The well was designed to test gas-bearing reservoirs in the Middle Bashkirian and further develop the gas production capability of the Olgovskoye Field.

The O-9 well was the second new well drilled in the Olgovskoye field since the Company acquired its interest in KUB-Gas in June 2010. It is part of a larger development program on the KUB-Gas assets through 2011. Olgovskoye-8, the first new well drilled, reached a TD of 2,780 meters in early January and encountered numerous gas zones. Testing of the O-8 will commence later in the third quarter after the testing of the O-9 well has been completed.

Dr. Trent Rehill, Vice President Geosciences of KOV stated that "the Company is very pleased with the initial test results of the O-9 well and is excited about the potential for growth in our gas reserves and production from units in the Lower Bashkirian reservoir".

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