Kulczyk Oil successfully tests new M-21 well

Kulczyk Oil (KOV PW) provided an operating update from KUB-Gaz, its 70%-owned Ukrainian subsidiary, yesterday. New M-21 well yielded 3 MMcf/d during a test of one of the two hydrocarbon-bearing zones. The well will be tied-in for commercial production in 3Q12. Following successful testing of the well and consistent production at M-19, the company decided to bring forward drilling time for a new well at the same field (M-20, to be spudded in mid-July). The company also reported well NM-1 has been drilled at targeted 2,500 m depth and four potential hydrocarbon-bearing zones were explored there. The testing of the NM-1 well will be commenced in 3Q12.

Roman Dmytrenko: The results were encouraging for Kulczyk Oil shares, which grew 8.6% yesterday following the news. If tested yield at M-21 is proved in commercial mode, and if other wells show stable output at the level of early April, the company may reach 3.9 kboepd gas and condensate output in 3Q12, or 1.7x above the level of 1Q12. So far, we are looking forward to see the 2Q12 operating update, commercial output at M-21 well and results of NM-1 well testing.