Kulczyk Oil and its joint venture partners in Block M in Brunei Darussalam have elected to enter in to the Phase 2 exploration program under the terms of the Block M production sharing agreement (Block M PSA).

The Phase 2 exploration program is for a term of one year commencing August 28, 2011. The minimum work obligations under the terms of the Block M PSA are:

acquire and process not less than 80 kilometers of onshore 2D seismic data and 500 kilometers of offshore 2D seismic data; and drill at least three onshore exploration wells, each to a minimum depth of 1,150 meters. The Block M PSA allows for the replacement of two shallow wells with one well to at least 2300 meters. The Phase 2 seismic obligation was converted into a 136 km2 3D program which was completed in December of 2010. The remaining obligation in Phase 1 consists of drilling 1 well to a depth of 1,150 meters.

Under the terms of the Block M PSA, the Block M JV was granted the right to explore for and, in the event of hydrocarbon discovery and subject to the approval of Petroleum BRUNEI, produce oil and natural gas from Block M. To date, the Block M JV has: (i) acquired 254 km2 of 3D seismic data and drilled and cased the Mawar-1 and Markisa-1 wells.

"The decision to move forward with Phase 2 reflects our continued optimism about the potential of Block M and the onshore area of Brunei," said Jock Graham, Executive Vice President of Kulczyk Oil.

The partners in Brunei Block M are KOV Borneo Limited (36%), Tap Energy (Borneo) Pty Ltd (39%), China Sino Oil Co. Ltd. (21% and Jana Corporation Sdn Bhd (4%). KOV Borneo Limited is a wholly-owned subsidiary of Kulczyk Oil.

Tags: Kulczyk Oil Ventures