Kulczyk Oil Ventures spuds first Ukraine exploration well

Source: Kulczyk Oil Ventures Inc

Kulczyk Oil Ventures (KOV) announces that the M-19 well has commenced drilling in Ukraine. M-19 is the first well to be drilled by KUB-Gas LLC (KUB-Gas) since the acquisition by KOV of an effective 70% interest in KUB-Gas in June 2010. 

The M-19 well is being drilled in the Makeevskoye license area owned 100% by KUB-Gas. The well, with an initial target depth of 2,100 metres, will evaluate three distinct gas zones identified on 2D seismic, two of which are structurally and stratigraphically independent from the producing Makeevskoye field 1.2 kilometres to the northeast. 

"We are pleased to be starting the drilling of our first well in Ukraine only a few months after closing our acquisition. The timely implementation of this first step in our plan to increase the production and reserves of KUB-Gas was made possible by the diligence and teamwork of the technical and operational teams of both KUB-Gas and Kulczyk Oil.," said Tim Elliott, the President and Chief Executive Officer of Kulczyk Oil. 

On June 11, 2010, Kulczyk Oil completed the acquisition of an effective 70% interest in both KUB-Gas and a 1,000 horsepower drilling rig built in Canada in 2007 which is being used to drill the M-19 well. 

KUB-Gas, a wholly-owned subsidiary of Loon Ukraine Holding Limited ("Loon Ukraine") which is owned 70% by the Company and 30% by Gastek LLC, a private California company, is one of the largest private producers of natural gas in Ukraine and it sells approximately 75% of its production to wholesalers and 25% to industrial consumers. The gas producing assets of KUB-Gas consist of 100% interests in four licenses near to the City of Lugansk in the northeast part of Ukraine. The gas is produced from reservoirs within the Dneiper-Donets sedimentary basin, an area that accounts for approximately 90% of Ukraine's natural gas production and which has a well-developed transport infrastructure for the movement of produced gas. In addition to the four licenses: Vergunskoye, Olgovskoye, Makeevskoye and Krutorogovskoye, KUB-Gas also owns two service rigs and four gas processing installations and will operate the drilling rig on behalf of Loon Ukraine. 

During the first five months of 2010 the average gas production from the licenses owned by KUB-Gas was 5.9 million cubic feet per day (MMcfd) (166 thousand metres3 per day) and the average selling price was US$6.76 per thousand cubic feet (Mcf) (US$239.90 per thousand metres3).

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