Kulczyk Closes US$45MM Acquisition Of Majority Interest In Ukrainian Gas Producer

Acquired 70% WI in Ukrainian gas producer, gaining 8.5 Bcf proved.

Kulczyk Oil Ventures Ltd., a subsidiary of privately held Kulczyk Oil Ventures Inc., Calgary, has closed its acquisition of a 70% indirect equity interest in KUB-Gas, a subsidiary of privately owned, California-based Gastek LLC, for US$45 million.

One of the largest gas producers in Ukraine, KUB-Gas owns four gas fields in Dnieper-Donets Basin, which is responsible for 90% of the country's oil and gas production.

The assets contain net proved reserves of 8.5 billion cubic feet of gas and 42,000 barrels of condensate; net proved plus probable reserves of 15 billion cubic feet and 80,700 barrels of condensate; and net proved plus probable plus possible reserves of 22.2 billion cubic feet and 122,100 barrels of condensate.

Production in the first five months of 2010 averaged 5.9 million cubic feet of gas per day.

Through sister company Loon Ukraine Holdings Ltd., Kulczyk Oil Ventures Ltd. paid an initial $1.35 million to Gastek, with the balance due after the acquisition was completed.

BenshCo was advisor to KUB-Gas.

Kulczyk president and chief executive Tim Elliott says, "The company's goal is to double both the reserves base and the production rates from the existing fields within two years through a capital expenditure program which will be partially funded from the cash flows that KUB-Gas is currently generating."