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Brunei-KOV Acquires Rig for 2013 Drilling Campaign
By: Marketwired .
Jan. 3, 2013 06:29 AM
CALGARY, ALBERTA -- (Marketwire) -- 01/03/13 -- Kulczyk Oil Ventures Inc. (WARSAW:KOV) ("Kulczyk Oil", "KOV" or the "Company"), an international upstream oil and gas exploration and production company, is pleased to announce that its indirect wholly-owned subsidiary, AED South East Asia Limited ("AED SEA"), has signed a binding letter of intent with PT Energi Tata Persada ("PT Energi"), a drilling company based in Jakarta, Indonesia, for the ETP-03 drilling rig. The rig, currently stacked in Sulawesi, Indonesia, is expected to spud the first exploration well of the two well 2013 drilling program on Block L late in March 2013. The ETP-03, a 2,000 horsepower drilling rig with top drive, is expected to commence mobilization to Brunei in early February. All other material contracts to enable the drilling of the two well drilling program have been awarded. The award of the contract for provision of drilling services to PT Energi has been approved by Brunei National Petroleum Company Sendirian Berhad ("PetroleumBRUNEI").
The first two exploration wells drilled by AED SEA, Kulczyk Oil Brunei and their joint venture partner under the Phase 1 work obligation of the Block L PSA were drilled in 2010. The wells both encountered hydrocarbons with the Lempuyang-1 well flowing gas to surface before being suspended due to downhole operational problems associated with high pressure. Wireline logs of the Lukut-1 well indicated potential gas zones which have not been tested.
In June 2012, KOV announced the completion of field operations for its acquisition of 192 km2 of 3D seismic acquired in two areas. The first area is updip from and east of the Lukut-1 well in an area that is now collectively called the Triple Junction structure and the second is northeast of the Lukut-1 well in an area overlying the Jerudong Anticline which contains the legacy Jerudong Oil Field. Seismic interpretation of the data is at an advanced stage and the two locations to be drilled by ETP-03 have been identified.
The first exploration well to be drilled in the 2013 drilling program will be a 2,900 metre well to evaluate the Lukut Updip Prospect, from a location approximately 4 kilometres updip from and to the east of the Lukut-1 well. The Lukut Updip Prospect is a geologically constrained 2-way fault bounded structural closure.
RPS Energy Consultants Ltd. ("RPS"), an independent third-party engineering firm, in a report dated 12 November and effective as of 31 July 2012 (the "RPS Report"), estimated un-risked gross Prospective Resources of 127 million barrels of oil equivalent ("MMboe") (High Estimate), 30 MMboe (Best Estimate) and approximately 6 MMboe (Low Estimate) for the Lukut Updip Prospect.
Upon completion of the Lukut Updip well, it is expected that the ETP-03 drilling rig will move 12 kilometres southwest to drill an exploration well on the Luba Prospect. The Luba exploration well is expected to be directionally drilled to a measured depth of approximately 3,500 metres to evaluate the potential of fault trap in the greater Triple Junction area with a potential closure of approximately 15 km2 (1.5 kilometres by 10 kilometres). The main target of the well is a potential seismic direct hydrocarbon indicator ("DHI") or "flat spot" at a depth of approximately 2,550 metres.
RPS also evaluated the Luba Prospect in the RPS Report and estimated that it may contain gross un-risked Prospective Resources of approximately 86 MMboe (High Estimate), 36 MMboe (Best Estimate) and 12 MMboe (Low Estimate).
KOV, through two indirect subsidiaries, owns a 90% working interest in the Block L Production Sharing Agreement ("Block L PSA") which gives the Company the right to explore for and produce oil and natural gas from Block L, a 1,123 square kilometre area covering certain onshore and offshore areas in northern Brunei. AED SEA has a 50% working interest in, and is the operator of, the Block L PSA. Another indirect wholly-owned subsidiary, Kulczyk Oil Brunei Limited ("Kulczyk Oil Brunei"), has a 40% working interest in the Block L PSA.
Exploration wells are risky and there is no certainty that any portion of the Prospective Resources will be discovered and, if discovered, there is no certainty that it will be commercially viable to produce any portion of the Prospective Resources.
Oil and Gas Equivalents
Production information is commonly reported in units of barrel of oil equivalent ("boe" or "Mboe" or "MMboe") or in units of natural gas equivalent ("Mcfe" or ("MMcfe" or ("Bcfe"). However, boe's or Mcfe's may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf = 1 barrel, or a Mcfe conversion ratio of 1 barrel = 6 Mcf, is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
"Prospective Resources" are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective Resources have both an associated chance of discovery and a chance of development. Prospective Resources are further subdivided in accordance with the level of certainty associated with recoverable estimates assuming their discovery and development and may be sub-classified based on project maturity.
"Low Estimate" is considered to be a conservative estimate of the quantity that will actually be recovered. It is likely that the actual remaining quantities recovered will exceed the low estimate. If probabilistic methods are used, there should be at least a 90 percent probability (P90) that the quantities recovered will equal or exceed the low estimate.
"Best Estimate" is considered to be the best estimate of the quantity that will actually be recovered. It is likely that the actual remaining quantities recovered will be greater or less than the best estimate. If probabilistic methods are used, there should be a 50 percent probability (P50) that the quantities recovered will equal or exceed the best estimate.
"High Estimate" is considered to be an optimistic estimate of the quantity that will actually be recovered. It is unlikely that the actual remaining quantities recovered will exceed the high estimate. If probabilistic methods are used, there should be at least a 10 percent probability (P10) that the quantities recovered will equal or exceed the high estimate.
About Kulczyk Oil
Kulczyk Oil is an international upstream oil and gas exploration and production company with a diversified portfolio of projects in Ukraine, Brunei and Syria and with a risk profile ranging from exploration in Brunei and Syria to production and development in Ukraine. The common shares of the Company trade on the Warsaw Stock Exchange under trading symbol "KOV".
In Ukraine, KOV owns an effective 70% interest in KUB-Gas LLC. The assets of KUB-Gas consist of 100% interests in five licences near to the City of Lugansk in the northeast part of Ukraine. Four of the licences are gas producing.
In Brunei, KOV owns a 90% working interest in a production sharing agreement which gives the Company the right to explore for and produce oil and natural gas from Block L, a 1,123 square kilometre area covering onshore and offshore areas in northern Brunei.
In Syria, KOV holds a participating interest of 50% in the Syria Block 9 production sharing contract which provides the right to explore for and, upon the satisfaction of certain conditions, to produce oil and gas from Block 9, a 10,032 square kilometre area in northwest Syria. The Company has an agreement to assign a 5% ownership interest to a third party which is subject to the approval of Syrian authorities, and which, if approved, would leave the Company with a remaining effective interest of 45% in Syria Block 9. KOV declared force majeure, with respect to its operations in Syria, in July 2012.
The main shareholder of the Company is Kulczyk Investments S.A., an international investment house founded by Polish businessman Dr. Jan Kulczyk.
Translation: This news release has been translated into Polish from the English original.
Forward-looking Statements: This release may contain forward-looking statements made as of the date of this announcement with respect to future activities of KOV and related to the drilling of Brunei Block L and to certain other activities undertaken within Brunei Block L that either are not or may not be historical facts. Although the Company believes that its expectations reflected in the forward-looking statements are reasonable as of the date hereof, any potential results suggested by such statements involve risk and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Various factors that could impair or prevent the Company from completing the expected activities on its projects include that the Company's projects experience technical and mechanical problems, there are changes in product prices, failure to obtain regulatory approvals, the state of the national or international monetary, oil and gas, financial, political and economic markets in the jurisdictions where the Company operates and other risks not anticipated by the Company or disclosed in the Company's published material. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties and actual results may vary materially from those expressed in the forward-looking statement. The Company undertakes no obligation to revise or update any forward-looking statements in this announcement to reflect events or circumstances after the date of this announcement, unless required by law.
Canada Suite 1170, 700-4th Avenue S.W., Calgary, Alberta, Canada Telephone: +1-403-264-8877 Facsimile: +1-403-264-8861 Dubai Al Shafar Investment Building, Suite 123, Shaikh Zayed Road, Box 37174, Dubai, United Arab Emirates Telephone: +971-4-339-5212 Facsimile: +971-4-339-5174 Poland Nowogrodzka 18/29 00-511 Warsaw, Poland Telephone: +48 (22) 414 21 00
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