Kulczyk Oil intensifies drilling program

KUB-Gaz, the 70% subsidiary of Kulczyk Oil (KOV PW), spudded a new M-16 well, located near its M-21 well, which is producing gas at 1.7 MMcf/d, Kulczyk announced yesterday. The company expects it will take about 90 days to drill to total depth of 3,850 m and evaluate multiple gas-bearing layers on the new well.

Roman Dmytrenko: This would mark the first time the company will have two wells drilled simultaneously – it recently disclosed plans to commence drilling on its K-7 well in late August. The company has not only intensified drilling plans, but also its news flow, which could signal an upcoming corporate action, possibly a new share placement. The latter would be in-line with the auditor’s comment attached to the review of Kulczyk’s 1Q12 financials, which suggested the company may not have sufficient internal funds to pursue its development program. Note also that convertible debentures issued by the company a year ago come due on August 11, with the price of conversion into shares set as the average KOV market price for August 6-10. Kulczyk had USD 16.5 mln in outstanding debentures as of end-1Q12 (of a USD 23.5 mln limit).