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CALGARY, ALBERTA -- (Marketwire) -- 03/21/13 -- 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 report that its financial and operating results for the year ended 31 December 2012 show substantial growth when compared to the prior year. All of the Company's production is in Ukraine. All of the dollar amounts below are in US dollars.
Financial
-- Gross revenue from hydrocarbon sales for 2012, net to the 70% effective interest of KOV, increased more than 2.5 times to $69.7 million (2011: $24.7 million);-- Ukraine assets generated oil and gas revenue, after royalties and net to the Company's 70% interest, of $56.1 million in 2012 up 183% from the $19.8 million received in 2011;-- "Field cash flow" (net oil and gas revenues after royalties less operating costs), was $67.9 million for the 100% interest and $47.5 million net to KOV's 70% share, an increase of 125% over the $21.1 million in net field cash flow in 2011;-- "Corporate cash flow", which is KOV's share of field cash flow less KOV's general and administrative costs of $9.5 million, was $38.0 million for 2012, an increase of more than 5.5 times when compared to the comparable figure of $5.8 million for 2011 ;-- Funds from operations, as reported on the Company's "Consolidated Statement of Cash Flows", were $33.3 million in 2012 compared to $5.6 million in 2011;-- Q4 2012 represented the eleventh consecutive quarter of increased oil and gas revenue, 6% higher than Q3 2012 and more than 91% higher than Q4 2011;-- Netback for natural gas after royalty and production expenses increased substantially to $8.04 per thousand cubic feet ("Mcf") in 2012 compared to $6.23 per Mcf in 2011. For condensate, the netback of $61.38 per barrel in 2012 increased significantly when compared to $45.51 per barrel received in 2011.Operational
-- Natural gas production for 2012, net to the 70% interest of KOV in the Ukraine producing assets, averaged 15.1 million cubic feet per day ("MMcf/d") and was more than double the average production for 2011 of 6.0 MMcf/d;-- Condensate production for 2012, net to KOV, averaged 139 barrels per day ("bbl/d") as compared to 55 bbl/d for 2011;-- Combined average of 15.9 million cubic feet per day of gas equivalent ("MMcfe/d"), an increase of 150% year-on-year when compared to the 2011;-- In 2012, six wells have been tied-in for commercial production, including four wells on the Olgovskoye Licence (O-12, O-6, O-8, O-18) and two wells on the Makeevskoye Licence (M-21; M-20);-- During 2012, two exploration licences, Olgovskoye and Makeevskoye were converted from 5-year exploration licenses to 20-year production licenses;-- In Brunei Block L, the completion of a new 3D seismic survey, led to the identification of two drilling targets, with planning and preparation underway for an April 2013 spud of the first well, Lukut Updip-1.2013 Outlook
KOV intends to drill up to eight new wells in 2013 (six in Ukraine and two in Brunei) and will, recomplete or workover up to six wells and construct pipelines to tie-in wells in Ukraine as needed. Management forecasts that the Company will exit the 2013 year with a production rate higher than the 2012 year-end exit rate as a result of these projects and from bringing on-stream production resulting from the 2012 capital program.
