Kulczyk Oil says that the M-19 well reached its targeted total depth of 2,060 meters and has been logged and cased to total depth in preparation for testing.

HIGHLIGHTS •M-19 Exploration Well encounters potential gas reservoirs •The M-19 exploration well reached a total depth of 2,060 meters encountering several potential gas bearing reservoirs •Testing Planned •The well has been temporarily suspended for testing operations to commence in November On August 16, 2010, two months after the closing of the acquisition by Kulczyk Oil of an effective 70% interest in KUB-GAS LLC ("KUB-Gas"), KUB-Gas started drilling the M-19 well. The M-19 exploration well is located approximately 2 kilometers from the Makeyvskoye Field, and was designed to evaluate 3 separate targets: (1) a Triassic target at a depth of approximately 700 meters; (2) a seismic anomaly at an approximate depth of 1,450 meters; and (3) the potential of deeper Muscovian reservoirs which produce in both the Olgovskoye and Makeyvskoye Fields. The well has been logged with both locally available logging tools and western logging tools.

The M-19 well is the first well to be drilled to a target identified by the Company using modern seismic interpretation tools and techniques. It is also the first well operated by KUB-Gas to ever have been logged with western logging tools. By comparing the Ukrainian and western logging data over the same formations, the Company will develop a methodology to better understand and analyze existing Ukrainian log data with a view to more effectively evaluating the potential of the area.

The preliminary log analysis on M-19 indicates that, while the primary Triassic target was not hydrocarbon bearing, the secondary seismic anomaly target is an approximately 19 metre thick sandstone unit that appears to contain hydrocarbons. In addition, several zones have been identified within the underlying Muscovian tertiary target section that may also be hydrocarbon bearing. Further log analysis is ongoing in preparation for a testing program.

Operations on the M-19 well have been temporarily suspended until a work-over rig is available to move on to the location to test the well. Testing is anticipated to take place during the month of November. In the event the M-19 well tests gas from any of the prospective zones, it will add to the Company's production and reserves and confirm the effectiveness of modern seismic interpretation techniques to identify prospective new target zones.

The drilling rig used to drill the M-19 well is now moving to the Olgovskoye Field and will commence drilling the O-8 development well with a targeted total depth of approximately 2,800 meters. The O-8 well is the first of several development wells scheduled to be drilled as part of the Olgovskoye and Makevskoye field development plans that are currently being prepared by the Company. The O-8 development well will be followed by the O-12 development well, planned to commence in either late 2010 or early 2011.

Kulczyk Oil is very pleased with the initial results of the M-19 well. The work program for 2011, which will be finalized 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 Makeyvskoye Fields. This will involve the drilling of new wells, the completion of new zones in existing wells, 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