Mikhail Afendikov, Chairman and Chief Executive, commented:
"We are excited about the acquisition of these licences and believe they add significant quality acreage to our existing portfolio. These three blocks give us a large increase in drilling prospects, excellent resource exposure and further consolidates our holdings in this key area of Ukrainian gas production. This transaction is in line with our stated strategy of growing the Company though the acquisition of large undeveloped license areas contiguous with our current production. We thereby mitigate exploration risk, and develop our assets with the combination of seismic, western technology, modern completion practices and local expertise."
Notes to Editors on Acquisition Asset Details
Oskolonovskaya - 100% working interest
The Licence size is approximately 145.3 square kilometres and expires on January 13, 2016. Five well prospects identified by 373 kilometres of 2D seismic that has been shot on the license. Management has an internal evaluation of 9.6 bscf of best estimate contingent resources and 8.5 bscf of best estimate prospective resources in place. The licence is near a well-developed road and close to major oil and gas pipelines serving nearby fields.
Kryakovskaya - 100% working interest
The licence size is approximately 85.7 square kilometers and expires on January 13, 2016. Eight well prospects identified by 366 kilometres of 2D seismic that has been shot on the licence. Management has an internal evaluation of 37.6 bscf of best estimate contingent resources in place.
East Vergunskaya - 100% working interest
The licence size is approximately 41.9 square kilometers, expires on January 13, 2016 and is contiguous with Cub's 30% interest in the Vergunskaya licence. Eight well prospects identified by 129 kilometres of 2D seismic that has been shot on the licence. Management has an internal evaluation of 36.5 bscf of best estimate contingent resources in place.
Notes to Editors on Recently Drilled K-7 Well:
On 1 February 2013 Cub announced the discovery of commercial volumes of natural gas in the Krutogorovskoye-7 ("K-7") exploration well in Ukraine. The K-7 well is operated by KUB-Gas, in which Cub has a 30% ownership interest.
The K-7 well commenced drilling in September 2012 and was cased to a total depth ("TD") of 3,206 metres in early November 2012. Wireline logging of the well indicated up to 5 potential gas zones in the Bashkirian and Serpukhovian sands between depths of approximately 2,390 metres and 2,760 metres. A 10 metre section of the Bashkirian B12 zone, from a depth of 2,395 to 2,398 metres and from 2,400 to 2,407 metres, was selected for testing.
The well was flow tested for a period of 14 hours using various choke sizes and achieved a maximum rate of 5.914 MMcf/d through a 9 mm choke. Average production through the 9 mm choke was 5.896 MMcf/d at an average flowing pressure of 14,435 kPa.
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.
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