Ukraine: Kulczyk Spuds Makeevskoye-21 Well

Kulczyk Oil Ventures Inc. has commenced drilling of the  Makeevskoye-21 ("M-21") well in Ukraine. The well is operated by KUB-Gas LLC ("KUB-Gas"), a partially-owned subsidiary in which KOV has a 70% effective ownership interest.

The M-21 well has a projected total depth ("TD") of 2,200 metres and is expected to take approximately 45 days to reach TD. The primary objective of the well is to evaluate the potential of the R8 zone at a depth of approximately 1,450 metres. The R8 zone was originally discovered in the M-19 well drilled in the second half of 2010. A secondary objective, a seismic anomaly in the R17 zone at a depth of approximately 1,990 metres, will also be evaluated by the well. The rig move to M-21 took more than three weeks longer than expected due to unusually warm weather in eastern Ukraine much of January which made the transportation of heavy loads impossible with existing equipment.

The M-19 well commenced production in July 2011 at an initial rate in excess of 5.5 million cubic feet per day ("MMcf/d") and was projected at that time to produce at an average of 4 MMcf/d (2.8 MMcf/d net to KOV) during the second half of 2011. Actual average production from the M-19 well during the second half of 2011 was approximately 5 MMcf/d and current production is approximately 5.2 MMcf/d (3.6 MMcf/d net to KOV).

KOV owns an effective 70% interest in KUB-Gas LLC in the Ukraine. The assets of KUB-Gas consist of 100% interests in five licenses near to the City of Lugansk in the northeast part of Ukraine. Four of the licenses are gas producing.