Kulczyk Oil Ventures - Why Look At Warsaw? | ManSiarad

5th Dec '10 by ManSiarad

59 comments 38749 reads

The overwhelming majority of the Oil and Gas companies discussed on Stockopedia are listed in the UK and, to a lesser extent, Canada. As noted by several posters, there are plenty of other markets, and other companies, which might be worth a look. This post covers one of them, Warsaw-listed Kulcyzk Oil Ventures, KOV.PW

Why on earth am I bothering about a company on the Warsaw Exchange? For historical reasons. KOV is one of two companies spun out of Loon Energy, which formerly listed, as LEY.V, on the Toronto Venture exchange. I bought a small stake in Loon because of its interests in Syria and Brunei. It also had a very small operation in Colombia. Its largest shareholder, Dr. Jan Kulczyk, a widely-diversified millionaire once said to be the richest man in Poland, prompted its division into two separate companies, KOV, which eventually listed, after a considerable delay, in Warsaw in May this year, and a new Loon Energy Corporation in Toronto, with the symbol LNE.V.

After the division, LNE.V took the Colombian interests, and Kulczyk Oil Ventures the Syria and Brunei interests. I chose not to accept a miserly offer from Dr. Kulczyk for my shares in LEY.V, leaving me with legacy holdings (way under water) in both KOV.PW and LNE.V, to wait and see what would happen. The main attraction remained the Brunei interests (though LNE.V has done okay over the last few months).

For updates on LNE.V, see the website or the S'pedia Colombia board. KOV has subsequently acquired acreage, and a small amount of production in Ukraine, to provide it with some cash flow.

You can read the latest news from KOV here. There are plans for testing of its Lempuyang-1 and Lukut-1 wells in Brunei, " following encouraging indications during the drilling and from the interpretation of wireline logs from both wells". An aero-gravity survey over Block L and a 3D seismic survey over the Belait North structure in Block M, both completed and interpretation under way. The latest presentation is here.

Here's a quick summary of the assets:

BRUNEI

Four wells drilled this year, two on each block.

Block L: (KOV: 40 per cent)

Lukut-1: Ten zones of interest identified during drilling, with up to three to be tested early next year. Aggregate…

Unlock with Email

Unlock with Google

Already have an account?
Login here

ManSiarad

6th Apr '11

Morning, Darron

yes, there was a further delay in testing.

http://www.kulczykoilventures.com/en/press_releases_2/artykuly/update_on_block_l_brunei/

another hiccup from the operator, but not material, (I think)

Testing Update – Lempuyang-1

During the last few days, the Operator of Block L, AED Oil Ltd (“AED”), recommenced work in preparation for retesting of the Lempuyang-1 well. During this process, AED continued to experience mechanical and equipment issues with the well. AED have shut in the well to assess the situation and hopes to have a resolution in the next few days.

Apropos of Nigeria, I can't find anything on the web except the Africa Intelligence links. I wonder why/ They ARE usually pretty well informed, though

7th Apr '11

Darron,

that Lempuyang-1 well in Brunei has been P &A'd, because of what appear to have been insuperable mechanical problems:

http://www.kulczykoilventures.com/en/press_releases_2/artykuly/block_l_update/

Lempuyang-1 testing has been curtailed due to mechanical issues
Further work is planned in Block L beginning with 3D seismic across the West Jerudong oilfield

Kulczyk Oil Ventures Inc. (“Kulczyk Oil”, “KOV” or “Company”) advises that the Lempuyang-1 well testing operations are now complete. Continued mechanical issues resulted in the testing programme being curtailed due to safety concerns associated with gas flow into the well that could not be properly controlled. . This is believed to be due to failure of the packer in the well and/or damage to the well casing above the packer. As a result, the Lempuyang-1 well will now be plugged and abandoned.

AED the operator, of course.

A pity - it looks as though the test could have been interesting, albeit gas, not oil:

The Lempuyang-1 well intersected reservoir-quality sands, with gas being flowed to surface from two test intervals. Some thin gas sands were interpreted at the lower reservoir test interval (3,077-3,131.5 metres measured depth (“MD”) of which 24 metres were perforated). The upper reservoir test interval (2,849-2,867.5 metres MD of which all 18 metres were perforated) flowed gas to surface before the operator was forced to cease testing due to a down hole mechanical failure. As a result, no gas flow rates could be established. The data which were obtained during the testing helps support the optimism of the joint venture partners (“JV”) as to the prospectivity of the Lempuyang prospect and surrounding acreage. Lempuyang-1 drilling and testing results will now be integrated into the existing data base and used for future assessment of the updip area within the eastern part of Block L where a contingent 3D seismic programme is currently being considered.

Nothing further that I can find on Nigeria

19th Apr '11

An update on Ukrainian operations

http://www.energy-pedia.com/article.aspx?articleid=145079

Highlights

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.

3rd May '11

News from Syria - Triton, who hold a 20 per cent stake in Block 9, of which KOV are operators, have been bought by Aussie-registered Agri Energy

http://www.energy-pedia.com/article.aspx?articleid=145214

Emerging Australian oil and gas explorer Agri Energy has exercised its Option to acquire Triton Petroleum. Triton is the holder of a 20% beneficial interest in Syria Block 9, a 10,032 km2 petroleum exploration licence in north-western Syria. Triton and its partners plan to drill two high-impact exploration wells in the block commencing mid-year.

Rather optimistic, I would have thought, given current events in Syria !

kfahoo

5th May '11

http://www.gfmag.com/latestnews/latest-news-old.html?newsid=1.0170436E7

Thanks, kfahoo

you beat me to it.

A couple of points.

1. If this news does actually prove to be true - and it sounds fairly convincing - then it's obvously a good move to have the local Ijaw community involved. That should reduce political/security risk somewhat.

2. It'll be interesting to see how Kulcyzk manage to raise the cash for their part of the US $ 800 million.

Can anyone shed any further light on Nestoil?

Their website

http://www.nestoilgroup.com/

says this:

Nestoil Plc was incorporated in Nigeria in 1991 for the provision of Engineering, Procurement and Construction (EPC) services to the energy and oil & gas industry. Since then, Nestoil has grown to become the leading indigenous EPC provider for major IOCs (International Oil Companies) in Sub-Saharan Africa like National Petroleum Company (NNPC) Shell, Exxon Mobil, Chevron, Total, etc.

Employing highly dedicated, skilled and goal-driven professionals and using unique and innovative technology, Nestoil Plc delivers excellent, first class and cost effective solutions to industry problems. At Nestoil, our policy is to use the best resources, with stringent supervision that assures safe working conditions and excellent quality.

We are also committed to the optimization of local content in all aspects of our business and the growth of our workforce and host communities.

Directors:

http://www.nestoilgroup.com/directors.php

Now to wait for the formal announcement

And a US $ 40 million loan approved by the EBRD for KOV's Ukrainian subsidiary

http://www.marketwire.com/press-release/kulczyk-oil-ventures-inc-ebrd-approves-usd-40-million-loan-for-kub-gas-llc-warsaw-kov-1510375.htm

7th May '11

KOV have confirmed the Nigeria deal with Shell

http://news.tradingcharts.com/futures/5/6/158229165.html

Some detail given about the fields in Licence OML 42, where production has been suspended for several years because of insecurity in the Niger Delta. With the local community, the Ijaws, involved in the consortium, one assumes there's a reasonable chance the security situation will improve markedly.

The structuring of the deal is interesting. While KOV have a stake, so does their majority shareholder, Dr. Jan Kulczyk, through his Kulcyzk Investments vehicle, (KI), and he's funding the KOV stake:

Financing

KI will provide the Company with bridge financing in respect of the Company's share of Neconde's acquisition costs of OML 42. The bridge financing will bear interest at a rate of 10% per annum. Until such time as the Company raises the funds to repay KI's bridge financing, KOV will hold its shares in Neconde on trust for KI.

Once, and to the extent that, the Company raises those funds to repay KI, the trust over the Company's shares in Neconde will be extinguished. Only at that point would KOV hold a full legal and beneficial interest in Neconde (to the extent it has repaid KI for the bridge financing).

To the extent that, by 31 October 2011, the Company has not raised funds to repay KI for its bridge financing, the trust arrangement will be terminated and KI will become fully entitled (legally and beneficially) to the corresponding proportion of the Company's shares in Neconde.

Kulczyk also holds his stake in Aurelian AUL.L, through KI - one does wonder what his long term strategy may be !

The Warsaw market doesn't seem too impressed - KOV opened at 1.92 zloties, rose to 1.94 , but closed at 1.85, its low for the day.

8th May '11

official confirm was after stock closed so the market had no chance to react

emptyend

9th May '11

Upstream comment:

The price paid by the Neconde Energy consortium, consisting of Kulczyk Oil and Nigeria's Nest Oil, Aries and VP Global, was not disclosed – with reports of the value of the deal ranging from $600 million to $800 million

11th May '11

http://demo.e-pap.pl/espi?plik=dane/20110511/20110511_085114_0000173034.xml&xsl=depesza3.xsl&id=hyxq68qa41#start

Kulczyk Oil Ventures Inc. (“KOV” or the “Company”)
announces that on May 10, 2011 the Board of Directors of KOV has elected
to seek a listing of Company’s common shares on the London Alternative
Investment Market (“AIM”) and that the Company intends to raise new
equity capital there in Autumn 2011. Detailed plans and timing of the
AIM listing and further information about the amount of capital expected
to be raised in the proposed financing will be released at a later date
once this information has been determined.

Kfahoo,

Ah - thanks

Given the above from post #27

Presumably that gives us some idea of where at least some of these funds will be going, and of probable timing.

the Company intends to raise new equity capital there (London) in Autumn 2011. Detailed plans and timing of the AIM listing and further information about the amount of capital expected to be raised in the proposed financing will be released at a later date

IIRC, (and I haven't checked), KOV are due to end up with around 9.5 per cent interest in the Nigeria deal, which, on on a US $ 600 million low figure, means they might be seeking to raise up to US $ 57 million.

I hope that the market will be in a good mood after the summer !

And we should know by then, of course, what's happened with their plans to drill on the Syrian licence - whether drilled, and either dry or not, or if political events in Syria have forced a delay

More information on the AIM plans in this Upstream Online piece

(and yes, I did miscalculate above what they might need to raise - more like double the $ 57 million I said above)

http://www.upstreamonline.com/live/article255929.ece

Poland’s Kulczyk Oil Ventures is targeting a secondary listing in London as it seeks to pay for its recent investment in Nigeria.

Eoin O'Cinneide 11 May 2011 10:15 GMT

The independent is to list on London’s Alternative Investment Market (AIM) as it seeks to tap a broader range of investors to also finance plans in Syria and Brunei.

Kulczyk did not put a number on the amount of cash it would seek through a planned equity grab on London’s secondary bourse this autumn but said it remains committed to its current listing in Warsaw.

“The decision by the company to seek dual listing of its common shares on AIM is driven by the desire to provide broader investor access to [Kulczyk] shares on a major equity market recognised for international oil and gas companies,” a statement from the company read on Wednesday.

Kulczyk was this week confirmed as one member in the Neconde Energy consortium which has taken a 45% stake in a Nigerian oil block sold by supermajor Shell, France's Total and Italy’s Eni.

“[Kulczyk] intends to raise funds on AIM in an amount sufficient to fund its ownership interest in the OML 42 license in Nigeria via its participation in the Neconde consortium,” it continued on Wednesday.

The stake in OML 42 block is rumoured to have cost a total of between $600 million and $800 million. With Kulczyk holding a 20% share in the consortium and a 9% interest in the block, the Pole’s financial commitment even at the lower end of the scale may have hit $120 million.

"[The company] will work with the Neconde consortium to re-activate production in a fast and efficient way and to expand the base of production and reserves from OML 42 over the coming years,” Kulczyk wrote.

The statement continued: “A portion of the new equity funds to be raised on AIM will be used by [Kulczyk] to fund its 2012 work programme for Brunei, where it holds 40% and 36% stakes in Block L and Block M, respectively and in Syria, where KOV has an effective 45% stake in Block 9”.

Published: 11 May 2011 10:15 GMT | Last updated: 11 May 2011 10:16 GMT

21st May '11

http://keyinvest-ch.ubs.com/DE/Showpage.aspx?pageID=395&NewsID=163028

INTERVIEW-KOV sees London AIM listing in autumn

Date: 20.05.2011 10:38:00

* Director says company could be worth 1 bln euros

* Expects swift approvals for Nigerian oil field buy

By Patryk Wasilewski

WARSAW, May 20 (Reuters) - Polish firm Kulczyk Oil will list on London's AIM early in the autumn and hopes its value will rise nearly sixfold to 1 billion euros ($1.43 billion) as investors price in its growing oil output, a KOV executive told Reuters.

Kulczyk Oil, which has a market capitalisation of some $250 million, plans to issue new shares and list in London to help finance an acquisition of a 9 percent stake in a Nigerian oil block from oil giants Shell , Total and Eni

"After this transaction is finalised, Kulczyk Oil will be a totally different company," Dariusz Mioduski, member of KOV's board of directors, said in an interview on Friday.

"If the company carries out its plans, it will become a mid-sized player on the oil production production market and could be worth as much as 1 billion euros."

The current value of the stock barely exceeds the value of its Ukrainian assets alone and does not reflect the potential of its assets in Brunei, Syria and Nigeria, he added.

The consortium consisting of Kulczyk Oil and Nigeria's Nest Oil, Aries and VP Global, did not disclose the price for the 45 percent stake in the OML 42 oil block, but sources told Reuters the deal was worth $600 million.

The oil field bought by the Polish-Nigerian consortium has reserves estimated at some 126 million barrels of oil, but the company expects the reserves to rise after a thorough analysis scheduled for the summer.

The transaction is still subject to a number of approvals, but Mioduski said he was confident the process will be swift and shorter than the maximum 20 weeks set in the deal.

The company owned by Poland's richest man Jan Kulczyk also eyes tightening its grip on its other oil production assets in Brunei in which it has 40 and 36 percent stakes.

"We will amend our strategy and will try to become operator on all of our licenses," Mioduski said. "We do not rule out that we will be increasing our stake in the Brunei licenses to acquire control."

Kulczyk Oil, which increased its value by 8 percent this year, owns oil fields in Ukraine and licenses in Brunei and Syria. ($1=.6977 Euro)

22nd May '11

http://demo.e-pap.pl/espi?plik=dane/20110520/20110520_173201_0000174392.xml&xsl=depesza3.xsl&id=hyxq68qa41#start

In reference to the current report No. 25/2011 of May
5th, 2011 the Management of KULCZYK OIL VENTURES INC. (‘KOV’, ’Kulczyk
Oil’ or ‘Company’), hereby informs that on May 20, 2011 the Company’s
indirectly held 70% subsidiary - KUB-Gas LLC - has signed a USD 40
million Loan Agreement (the ‘Loan’) with the European Bank for
Reconstruction and Development (the ‘EBRD’, ‘Bank’). The loan purpose
and its security are as presented in abovementioned current report, with
reservation concerning change of number of tranches and installments.

8th Jun '11

As expected, Kulczyk have now said that they will NOT be spudding their Syria exploration well later this month. North-west Syria is a bit too unstable at the moment !

http://www.bloomberg.com/news/2011-06-08/kulczyk-oil-postpones-drilling-in-syria-s-block-9-korczak-says.html

Exploration is due “to commence early in the third quarter,” Jakub Korczak, vice president for investor relations at the Warsaw-listed company, said in response to e-mailed questions. He didn’t say whether the delay was due to violent unrest that has engulfed Syria since mid-March.

Kulczyk was due to start drilling in the block in May, according to an April 26 Syrian Oil Ministry statement citing Chief Executive Officer Timothy Elliott.

The third quarter is still a bit optimistic, given current events, in my view.

I also note that:

Thirteen foreign companies, including Kulczyk, Total SA (FP), Eni SpA (ENI), China National Petroleum Corp., have submitted bids for exploration rights in eight onshore blocks covering 40 percent of Syria’s territory. Syria has also asked companies to submit bids for three offshore concessions by Oct. 5.

Syria is not exactly the most enticing country in the Middle East at the moment in terms of political (and other) risk !

I've not noticed any news reports on existing oil production yet being affected by the conflict, but that must, presumably, be on the cards if things continue to deteriorate

Oil production was very slightly up in the first quarter

http://www.bloomberg.com/news/2011-05-04/syria-crude-output-little-changed-in-first-quarter-gas-up-16-.html

but that was before the unrest really began to spread.

Up to May 12th, Gulfsand's operations were still not affected, though

http://af.reuters.com/article/energyOilNews/idAFLDE74B09M20110512?sp=true

Right,

here's the official Kulcyzk statement - a spud in July being planned.

http://opensource.sys-con.com/node/1865891

(Marketwire) -- 06/08/11 -- Kulczyk Oil Ventures Inc. ("Kulczyk Oil" or "KOV") (WARSAW: KOV) is pleased to announce that Kulczyk Oil and its joint venture partners have executed a drilling rig contract with Sinopec International Petroleum Company for a drilling campaign in Block 9, Syria. Two exploration wells are planned for drilling this year with Itheria-1, the first well in the program, expected to commence drilling in July.

The Itheria Prospect is estimated to contain potential Prospective Resources of 338 million barrels of oil equivalent (Best Estimate). The planned total depth of the well is 3,200 metres and it is expected to take 80 days to drill, on a dry hole basis.

Kulczyk Oil is monitoring the situation in Syria closely and will provide and update if circumstances occur which impact the drilling of Itheria-1 and the timing of drilling operations. At the present time KOV is not aware of any oil field or exploration activities that have been halted by the current security issues in Syria. Kulczyk Oil is in close communication with other operators in Syria and has prepared operational and management plans to deal with operations and the safety of personnel in the event of an escalation of the situation.

Still seems a bit optimistic to me, although perhaps the army is promising protection'. A map of the concession area below.

Lots of unrest in that area, I hear, although not as bad as it is to the south of the block.

marben100

9th Jun '11

Hmmm... doing my homework for tomorrow's meeting, surprised to discover that Aminex has bought shares in Kulczyk and currently owns 665,661 (note 13, p42 of the annual report). I'll be asking about that.

Marben,

well, well, well.

I wonder what the interest is?

The Ukraine would seem a bit unlikely. Syria? Not if one follows political risk. So presumably EITHER Brunei OR the new Nigerian interests OR to establish an interest ahead of KOV's planned AIM listing later this year?

Do, please, post any information you get at the AEX AGM !

22nd Jun '11

Nigeria's NNPC seems to be flexing its muscles over the issue of who will be operator on the blocks being sold off by Shell

http://allafrica.com/stories/201106210984.html

Lagos — There are palpable fears among International Oil Companies (IOCS) operating in Nigeria's multi-billion dollars oil and gas industry as the federal government blew hot on the operatorship of the controversial Joint Venture oil blocs, declaring that whoever buys the IOCs interests with intention to operate does that at its risk.

The government, owner of 55 per cent shares in all the oil fields, maintained that bidders for the interest, which Royal Dutch Shell is selling, should beware of the need to forget the operatorship of the fields.

The government also stated it was ready for the takeover of the fields operated by the IOCs declared that the Nigerian National Petroleum Corporation (NNPC) is matured to operate the fields.

Group General Manager, Group Public affairs of the NNPC, Dr. Levi Ajuonuma told Daily independent in a telephone chat that the government, being the highest shareholder does not need to beg anybody for the operatorship, "which would be done through the Nigerian Petroleum Development Company (NPDC)."

Not sure how this will be received by Kulczyk and others who have made successful bids.

Can anyone with knowledge of NNPC give any opinion on how qualified they are as operators?

Kulczyk Oil Ventures - why look at Warsaw?

BRUNEI

Unlock the rest of this article with a 14 day trial

About the Author

ManSiarad

59 comments

Unlock the metrics for all these stocks and more...

Unlock the metrics for all these stocks and more...