CALGARY, ALBERTA -- (Marketwire) -- 03/27/13 -- Kulczyk Oil Ventures Inc. ("Kulczyk Oil", "KOV" or the "Company") (WARSAW: KOV) an international upstream oil and gas exploration and production company, is pleased to announce that its subsidiary, KUB-Gas LLC ("KUB-Gas"), in which KOV has a 70% effective ownership interest, has paid a total dividend in the amount of USD 10 million, out of which KOV has received USD 7 million.
KUB-Gas has been successfully drilling and completing wells and developing additional production over the past several years, since shortly after KOV acquired its interest in the KUB-Gas in June 2010. Until recently, cash generated from operations has primarily been re-invested in Ukraine to continue the development of additional reserves and production and to purchase necessary technology and equipment.
In early January 2013, KOV announced that KUB-Gas had made a prepayment of USD 10 million to the European Bank for Reconstruction and Development ("EBRD") under the terms of its loan agreement with the EBRD. Subsequently, on 15 January 2013 KUB-Gas made its regularly scheduled payment to the EBRD of USD 935,897 leaving a loan balance outstanding of approximately USD 9.5 million.
The owner of KUB-Gas, Kubgas Holdings Limited ("KH"), a Cypriot holding company, paid a USD 10 million dividend to its shareholders with a subsidiary of KOV receiving its USD 7 million share.
This is the first time a dividend has been paid to the shareholders of KH. It was determined that profits generated by KUB-Gas operations are presently high enough to pay out funds to its owners without any negative impact on the current investment plan. The strong financial position of KUB-Gas is a result of its operational results over past several years. During the year ended 31 December 2012 KUB-Gas' natural gas production in Ukraine averaged 22.8 million cubic feet per day ("MMcf/d") (15.9 MMcf/d net to KOV). The price received for natural gas during 2012 averaged $11.71 per thousand cubic feet ("Mcf"). Increased sales volumes and the strong selling price for natural gas contributed to an increase in the netback from KUB-Gas natural gas and condensate sales to $8.15 per Mcf equivalent. Since the KUB-Gas acquisition in June 2010, KUB-Gas has generated $143.8 million of gross production revenue, with KOV's 70% share being $100.6 million.
Having paid the dividend, the cash flow generated to KUB-Gas from its natural gas and condensate production is sufficient to cover all the costs associated with the exploration and production activities planned for 2013 in Ukraine.
Tim Elliott, President and Chief Executive Officer, stated that:
"Receipt of the first dividend from our Ukrainian operations is a significant milestone for our company. The fact that our project can not only fund the extensive work program planned for this year, but can also return money to its shareholders is clear evidence of how well this project has worked for the benefit of KOV, our joint venture partners and KUB-Gas personnel and management. While our success is the result of hard work and perseverance it is also the product of exploration success, without which we would not been in as good a position as we are. Full credit goes to both the KOV and KUB-Gas teams and I thank everyone for their hard work and dedication.
KUB-Gas owns a 100% interest in the Olgovskoye, Makeevskoye and North Makeevskoye, Krutogorovskoye and Vergunskoye licenses in the Lugansk area of Ukraine.
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.
For further information, please refer to the Kulczyk Oil website (www.kulczykoil.com).
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 KUB-Gas and related to its five licence areas in Ukraine and to certain wells drilled or seismic activities undertaken within those licence areas 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.
CanadaSuite 1170, 700-4th Avenue S.W., Calgary, Alberta, CanadaTelephone: +1-403-264-8877Facsimile: +1-403-264-8861DubaiAl Shafar Investment Building, Suite 123, Shaikh Zayed Road,Box 37174, Dubai, United Arab EmiratesTelephone: +971-4-339-5212Facsimile: +971-4-339-5174PolandNowogrodzka 18/2900-511 Warsaw, PolandTelephone: +48 (22) 414 21 00
Kulczyk Oil Ventures Inc. - Canada
Norman W. Holton
Kulczyk Oil Ventures Inc. - Poland
Jakub J. Korczak
Vice President Investor Relations & Managing Director CEE
+48 22 414 21 00