Kulczyk Oil Provides Ukraine Operations Update

Kulczyk Oil Ventures provides an update on its Ukraine operations.

Highlights include:

--  O-9 well drilled, logged and cased to TD. Multiple hydrocarbon bearing
zones indicated on logs. Testing to start early May;

--  O-14 scheduled to spud at the end of April;

--  M-19 target start production in June. Internal reserve estimate of 10
billion cubic feet ("Bcf") of gas;

--  3D seismic over the Olgovoskoye and Makeevskoye fields 70% complete;

--  Gas production in 1Q 2011 averaged 6,040 thousand cubic feet ("Mcf") per
day at an average price of US$8.03 per Mcf compared to5,738 Mcfper day
in 4Q 2010 at an average price of US$ 7.93 per Mcf.

General

Since acquiring KUB-Gas in in June 2010, Kulczyk Oil has focused its efforts on the Olgovskoye and Makeevskoye field areas.

The results of these efforts have been a significant increase in Reserves (134%),Contingent Resources (434%) and resulting production capability. Going forward the Company will continue to build on this solid foundation. The current 3D seismic programme is expected to have a meaningful impact on our understanding of the Olgovskoye and Makeevskoye field areas and lead to further development opportunities.

KOV has worked with KUB-Gas personnel in Ukraine to apply the latest technology and field operating practices. The M-19 discovery is an example of the application of modern technology leading to exploration success. The company hopes to replicate this success elsewhere within the Olgovskoye and Makeevskoye field areas and the new 3D seismic will help us do so.

In addition, the Company sees significant resource potential in certain zones which appear hydrocarbon bearing but are relatively tight and therefore difficult to produce. Currently, no resources are allocated to these zones but we are starting to try different approaches to these low porosity reservoirs in an effort to obtain commercial production. The acid stimulation on 0-8 described below was such an attempt at trying something new. We will continue to evaluate potential procedures, including hydraulic fracturing operations,horizontal drilling and selective acidizing treatments to unlock additional value from the KUB-Gas properties.

KUB-Gas will be acquiring approximately 65 kilometres of 2D seismic in June 2011 on its new North Makeevskoye exploration license. Once processed and interpreted, the technical staff will start planning for the first exploratory well on the North Makeevskoye license to be drilled in early 2012.

The technical staff of KOV has now compiled all available technical data on the Vergunskoye and Krutogorovskoye fields, with the goal of continuing to apply modern and technically advanced oil field procedures.

Jock Graham, Executive Vice President, stated that: "I am extremely pleased with the progress made with the development of our Ukrainian asset base thus far. Reserves have increased significantly, substantial Contingent Resources have been allocated and production is rising. I fully expect more positive news in the future as we continue to execute our exploration and development plans on our five licenses."

Drilling Operations

The O-9 well started drilling on March 5thand was drilled to a depth of 2,638 metres. The well has been logged, cased and is currently waiting for the arrival of the service rig to start testing. The logs indicatepotentialmultiple hydrocarbonbearing zones. Testing of the well is estimated to start in early May 2011.

The Company's drilling rig is now moving to the O-14 well location. The O-14 well is important for the Company as it is being drilled within the large Savasivskaya fault compartment which is independent from the primary Olgovskoye gas accumulation. RPS Energy ("RPS"), the Company's independent engineering consulting firm has assigned Contingent Resources of 17.6 Bcf of gas (Best Estimate) and 41.5 Bcf (High Estimate) to the target area. The well is designed to be drilled to a target depth of 2,800 metres to evaluate whether the producing horizons continue from the primary Olgovskoye fault block into the Savasivskaya fault block. The 0-14 well should take approximately 45 days to drill.

Testing Operations

Logging of the O-8 well in February identified several deeper zones that were selected for testing and acidization below the primary target zone. These deeper zones have not previously produced in the Olgovskoye field. The zones, which look hydrocarbon bearing on logs, had very low permeability and acidization of the zones did not result in any significant inflow of gas. A successful completion in these zones could access a significant resource and the Company is currently evaluating whether to hydraulically fracture some or all of the zones.

The primary target in the O-8 well, which has not yet been tested, is the same zone that is currently producing at the O-7 well,2.1 kilometres to the northwest. The service rig was released to conduct some required work on O-6, an older well in the field, and will move to the O-9 location for testing prior to returning to O-8 to test the primary target.

M-19 Production Start-Up

Progress is being made on the permitting and construction of the pipeline required to tie-in the M-19 well. Anticipated startup of production is scheduled for June 2011. Subsequent to the January 10, 2011 news release on the M-19 well, where the Company announced a flow rate of 5,000 Mcf per day of gas, the Company collected pressure data on the well over a 5-day period. The data obtained indicated very little pressure drawdown and the Company's internal estimate of Reserves is approximately 10Bcf, substantially higher than the 3.5 Bcf of P1 Reserves allocated to the M-19 discovery by RPS prior to the pressure data being available.

3D Seismic

The 3D seismic program covering the Olgovskoye and Makeevskoye fields commenced in February 2011. After 70% of the program was complete, the spring thaw resulted in very muddy field conditions and the program was suspended until the surface conditions improve. The program is scheduled to recommence in early May and acquisition should be complete in June.

Source: Kulczyk Oil Ventures