The Ukraine Reserves of Kulczyk Oil have increased substantially based upon a Reserves update prepared by independent engineering firm RPS Energy. The update evaluated the Reserves associated with the 70% interest of KOV in KUB-Gas Limited ("KUB-Gas").

HIGHLIGHTS •Proven Reserves (1P) increased by 221% from 1.8 million barrels of oil equivalent ("MMBOE") to 5.6 MMBOE; •Proven + Probable Reserves (2P) increased by 141% from 3.0 MMBOE to 7.3 MMBOE; •Proven + Probable + Possible Reserves (3P) increased by 100% from 4.4 MMBOE to 8.9 MMBOE; and •Future growth in Reserves will come from the application of production procedures such as dual completions and compression of gas, from accessing additional gas Reserves by stimulating gas-bearing horizons and from newly drilled wells. Reserve Report RPS Energy, a division of RPS Group was asked by the Company to review and update the Reserves evaluations for the Olgovskoye, Makevskoye, Vurgunskoye and Krutogorovskoye fields in Ukraine (the "Fields") which were the subject of an earlier report prepared for the Company by RPS Energy in September 2009 based on information as of April 2009. The update, driven primarily by another 18 months of production data and a revised drilling and work-over program has also considered new subsurface modeling of the gas reservoirs resulting from a comprehensive review of all geological and geophysical data by the KOV technical team.

Natural gas, quantified in billions of cubic feet ("BCF") represents between 95% and 96% of Reserves in each category with the balance of Reserves composed of condensate.

Remaining Upside The RPS update of Reserves does not take in to account the application of any new field operating practices commonly used elsewhere in the world to improve overall well productivity, such as dual completions and compression of gas, which the Company intends to apply to the Fields. In addition the RPS update specifically acknowledges that there are additional gas resources located in conventional but relatively tight reservoirs which should produce commercially after fracturing, but which will not be categorized as Reserves until the Company demonstrates that this will work on the Fields. Lastly, no additional Reserves have been attributed to the area surrounding the M-19 well, drilled and cased in October, which the Company intends to test in December.

Since the acquisition by Kulczyk Oil of an effective 70% interest in KUB-Gas in June, production has been increased, the O-7 well has been successfully completed, the M-19 well has been drilled and awaits testing and the installation of small wellhead compressors has been shown to increase productivity.

Jakub Korczak, Vice President Investor Relations and Managing Director CEE, indicated that "The Company is very pleased with the results of work done on the KUB-Gas assets over the past few months. The technical experts of KOV and KUB-Gas have done a good job of modeling the subsurface based on available geological and geophysical information which puts us in a favourable position for additional growth in our Reserves in the future."

The work program for 2011, which will be finalizing by KUB-Gas with the assistance of KOV personnel over the next few months, will principally target the comprehensive and efficient exploitation of the Olgovskoye and Makeyevskoye Fields. This will involve the drilling of new wells, the completion of new zones in existing wells, dual completions, stimulation treatments using modern and technically advanced methods commonly used elsewhere in the world and the effective implementation of a compression strategy.

Tags: Kulczyk Oil Ventures