Polish businessman Dr. Jan Kulczyk, Founder Kulczyk Oil Ventures Inc., Kulczyk Investments S.A. and CEED Institute. Courtesy of KOV

Calgary, Alberta, Canada and Warsaw, Poland - April 25, 2013

Kulczyk Oil Ventures Inc. (“KOV”), an international upstream oil and gas exploration and production company, is pleased to announce that it has entered into an agreement (the “Arrangement Agreement”) with Winstar Resources Ltd. (“Winstar”) pursuant to which KOV will acquire all of the issued and outstanding shares of Winstar (the “Acquisition”).

Kulczyk Oil Ventures Inc. (KOV) is an international upstream oil and gas exploration and production company with a diversified portfolio of projects in Ukraine, Brunei and Syria and with a risk profile ranging from exploration in Brunei and Syria to production and development in Ukraine. The common shares of the Company trade on the Warsaw Stock Exchange under trading symbol “KOV”. Courtesy of KOV

The combination of Warsaw-listed KOV with Winstar will have 4,760 barrels of oil equivalent per day (“boe/d”) of production in Tunisia and Ukraine and an attractive exploration portfolio in Brunei and Romania.


Acquisition Highlights and Rationale

- Under the terms of the Acquisition, Winstar shareholders will be entitled to receive 7.555 shares of KOV or C$2.50 in cash, subject to a maximum of C$35 million in cash;

- The Acquisition values the entire issued and to be issued share capital of Winstar at approximately C$112 million;

- As a condition of the Acquisition, KOV will apply to list its shares on the Toronto Stock Exchange (“TSX”), undertake a 10:1 share consolidation and be renamed Serinus Energy Inc.;

- The Company will continue to be listed on the Warsaw Stock Exchange (“WSE”);

- Upon closing, Bruce Libin and Evgenij Iorich, current directors of Winstar, will join the KOV board as non-executive directors;

- The Acquisition represents a material increase in KOV’s reserves and production, acquiring 11.2 million barrels of oil equivalent (“MMboe”) of working interest 2P reserves and approximately 1,660 boe/d of current net production;

- The Acquisition provides the ability for KOV to leverage its proven operational expertise to materially increase production, reserves and cash flow from Winstar's assets;

- The Acquisition is anticipated to result in a company with:

o 13 licences across five countries, with operatorship on all licences;

o 20.6 MMboe of working interest 2P reserves and approximately 4,760 boe/d of current net production;

o Continuous development drilling in Ukraine and Tunisia targeting substantial increases in production; and

o High-impact exploration drilling in Brunei and Romania;

- The Winstar Board is recommending that Winstar shareholders vote in favour of the Acquisition and KOV has received support agreements from 54.2% of Winstar shareholders, including all of the directors and officers of Winstar, to vote in favour of the Acquisition at the Winstar shareholder meeting.

Winstar Resources Ltd. is a publicly traded oil and gas company listed on the Toronto Stock Exchange, focused primarily on Tunisia. Based in Calgary, Alberta, Canada, with offices in the Netherlands, Switzerland, Romania and Tunisia, Winstar is an oil and gas exploration, development and production company. Winstar’s principal areas of operations are in Tunisia where it holds operated working interests in four onshore producing oil and gas fields and one currently suspended oil and gas concession. Courtesy of Winstar

Commenting on the Acquisition, Tim Elliott, President and Chief Executive Officer of KOV said:
“The combination of Winstar's and KOV's assets will result in a company with 2P reserves in excess of 20 MMboe and production of 4,760 boe/d with a clear path to materially increasing production in the near term. The acquisition will also allow KOV to leverage its proven operational expertise to rapidly, and materially, increase production, reserves and cash flow from Winstar’s Tunisian assets for the benefit of both companies’ shareholders. We thank everyone involved in this transaction and are looking forward to working with Winstar's staff going forward.”

Timothy M. Elliott, President and Chief Executive Officer of KOV. Courtesy of KOV

Commenting on the Acquisition, Bruce Libin, Chairman of Winstar said:
“After evaluating Winstar’s strategic alternatives over the last months, including thorough consideration of our ability to create shareholder value as an independent entity, the Board concluded the proposed transaction with KOV is in the best interests of shareholders. We believe that KOV’s business plan, highly experienced management team, proven track record of identifying and delivering value in upstream oil and gas assets and the combination of KOV’s and Winstar’s assets provides an attractive diversified portfolio with significant potential to enhance shareholder value. I look forward to being a shareholder and director of the new KOV.”

Norman W. Holton, Vice Chairman of the Board of Directors, Kulczyk Oil Ventures Inc. – Canada. Courtesy of KOV

Information With Respect to Winstar

Winstar is an independent oil and gas exploration, development and production company listed on the TSX.

Winstar’s principal area of operations is in Tunisia, where it holds operated interests in four onshore producing oil and gas fields and one re-development concession.

Jakub Korczak, Vice President Investor Relations and Managing Director CEE of KOV. Courtesy of KOV

In addition, Winstar has farmed in on the Satu Mare exploration block in Romania with an option to earn up to a 60% working interest.

In Tunisia, Winstar holds a 100% operated interest in the Chouech Essaida, Ech Chouech, Zinnia and Sanrhar concessions, and a 45% operated interest in the Sabria concession.

Kulczyk Oil Ventures Inc. Syria - Block 9. Courtesy of KOV

As at 31 December 2012, Winstar reported working interest 2P reserves of 11.2 MMboe.

Winstar’s net production for the first half of April from its Tunisian assets was approximately 1,660 boe/d.

Kulczyk Oil Ventures Inc. Syria - Block 9. Courtesy of KOV

Winstar’s asset base is detailed in the accompanying table: 

Winstar’s asset base is detailed in the accompanying table. Courtesy of Winstar

Acquisition Structure

The Acquisition will take place through a Plan of Arrangement under the provisions of the Business Corporations Act (Alberta).

Kulczyk Oil Ventures Inc. Brunei – Lukut-1. Courtesy of KOV

KOV and the Consortium (as defined below) will offer Winstar shareholders, in exchange for each Winstar share held, either:

- 7.555 shares of KOV (the “Share Consideration”); or

- C$2.50 in cash (the “Cash Consideration”).

Kulczyk Oil Ventures Inc. Brunei – Lempuyang-1. Courtesy of KOV

The Cash Consideration will be subject to a maximum of C$35 million in cash being paid to Winstar shareholders in aggregate and will be funded by a consortium of investors (the “Consortium”) led by Kulczyk Investments S.A. (“KI”), the major shareholder of KOV.

Kulczyk Oil Ventures Inc. Ukraine - gas production facilities. Courtesy of KOV

The Plan of Arrangement will include a sequence of transactions in the following order:

- The Consortium will purchase shares from those Winstar shareholders who wish to tender their shares for the Cash Consideration;

- KOV will purchase shares from those Winstar shareholders who wish to tender their shares for the Share Consideration; and

- The Consortium will then tender their shares to KOV for the Share Consideration.

Pursuant to the terms of the Acquisition, Winstar shares acquired by the Consortium for the Cash Consideration will be subsequently tendered for the Share Consideration which will be subject to a hold period of 180 days following closing of the Acquisition.

KOV will issue 272 million shares to Winstar shareholders and the Consortium.

In addition, it is a condition of the Arrangement Agreement that KI exercises its option to convert the existing US$12 million loan amount plus accrued interest into common shares of KOV on or prior to the effective date of the Acquisition in accordance with the provisions of the loan agreement.

Kulczyk Oil Ventures Inc. Ukraine - gas production facilities. Courtesy of KOV

KOV has been informed by KI that it is KI’s current intention to serve the conversion election notice on or about 8 May 2013.

The loan amount will be converted into KOV shares at a price per share equal to the five day volume weighted average price of KOV shares on the WSE during the five trading days immediately prior to but excluding the date of the conversion election notice, therefore the exact number of KOV shares issuable to KI upon conversion of the convertible debenture is uncertain, as the final conversion price will only be determined in the future.

The conversion election notice will state that the conversion of the loan amount into KOV shares is conditional upon the successful closing of the Acquisition.

Kulczyk Oil Ventures Inc. Ukraine - gas production facilities. Courtesy of KOV

Upon completion of the Acquisition, Winstar shareholders and optionholders will hold approximately 21%, and KOV shareholders will hold approximately 79%, of KOV’s enlarged resultant issued share capital.


TSX Listing, Share Consolidation and Name Change

Subsequent to the closing of the Acquisition, the shares of Winstar will cease trading and will be de-listed from the TSX.

KOV will thereafter make an original listing application to the TSX to list the ordinary shares of KOV (including those issued in connection with the Acquisition) on the TSX.

It is a condition to the completion of the Acquisition that the ordinary shares of KOV shall have been approved for listing on the TSX, subject only to the filing of documentation that cannot be filed prior to the effective date, such that the ordinary shares of KOV shall be listed and posted for trading on the TSX as soon as is reasonably practicable following the effective date in accordance with TSX policies.

Prior to the proposed listing on the TSX, KOV will seek to undertake a 10:1 share consolidation of the post-Acquisition shares outstanding and be renamed Serinus Energy Inc.

KOV will call a meeting of its shareholders to consider and approve the share consolidation and name change, with such meeting expected to be held in mid-June 2013.


Winstar Support

The strategic alternatives process announced by Winstar in July 2012 has concluded and the Winstar Board is recommending that Winstar shareholders vote in favour of the Acquisition.

All directors and senior officers of Winstar, certain investment funds administered by Yorktown Partners Group (“Yorktown”), the principals of Yorktown and Pala Assets Holdings Limited (“Pala”), collectively representing approximately 54.2% of the issued and outstanding shares of Winstar, have committed to vote all Winstar shares beneficially owned or controlled by them in favour of the Acquisition, subject to the terms and conditions of the support agreements entered into with KOV in support of the Acquisition.

Kulczyk Oil Ventures Inc. Ukraine - Compressor in Vergunskoye. Courtesy of KOV

All directors and senior officers of Winstar, Pala and the Yorktown principals, who collectively hold 27.9% of the issued and outstanding shares of Winstar, will elect to receive the Share Consideration.

The investment funds administered by Yorktown, which collectively hold approximately 26.3% of the issued and outstanding shares of Winstar, will elect to receive the Cash Consideration.


Additional Terms of the Arrangement Agreement

Timing

Pursuant to the Arrangement Agreement, Winstar will call a meeting of its shareholders to consider and approve the plan of arrangement implementing the Acquisition, such meeting is expected to be held in mid-June 2013.

It is expected that the information circular relating to the Acquisition will be mailed to Winstar shareholders in May 2013 and that, subject to the satisfaction, or where relevant waiver, of all relevant conditions, the Arrangement will become effective and the Acquisition completed by the end of June 2013.

Conditions

The Acquisition is subject to a number of customary conditions, including the receipt of approval by 66 2/3% of the votes cast by Winstar shareholders in person or by proxy at a special meeting of Winstar shareholders, receipt of approval by the Court of Queen’s Bench of Alberta and receipt of stock exchange approvals.

Non-Solicitation Agreement and Termination Fees

The Arrangement Agreement includes customary non-solicitation covenants by Winstar and provides Winstar with the ability to respond to unsolicited proposals considered superior to the Acquisition in accordance with the terms of the Arrangement Agreement. In the event a superior proposal is accepted, Winstar will be required to pay a termination fee of C$4.5 million to KOV.

KOV has the right to match a superior proposal. In the event KOV fails to satisfy its obligations under the Arrangement Agreement and complete the Acquisition, KOV will be required to pay a reverse termination fee of C$4.5 million to Winstar.


Post Combination


Subsequent to the successful closing of the Transaction, the shares of Winstar will cease trading and will be de-listed from the TSX.

Winstar anticipates that KOV will make an original listing application to the TSX to list the ordinary shares of KOV (including those issued in connection with the Transaction) on the TSX.

It is a condition to the completion of the Transaction that the ordinary shares of KOV shall have been approved for listing on the TSX, subject only to the filing of documentation that cannot be filed prior to the effective date, such that the ordinary shares of KOV shall be listed and posted for trading on the TSX as soon as is reasonably practicable following the effective date in accordance with TSX policies.

Serinus Energy Inc will maintain its listing on the Warsaw Stock Exchange which provides improved access to European investors and capital.

On closing, the board of directors of the company will comprise of ten directors, eight from KOV and two from Winstar with the addition of Bruce Libin and Evgenij Iorich as non-executive directors.

Serinus Energy Proposed Board of Directors. Courtesy of Winstar

Advisors

Macquarie Capital (Europe) Limited is acting as exclusive financial advisor to KOV in connection with the Acquisition.

FirstEnergy is acting as exclusive financial advisor to Winstar in connection with the Transaction.


About Winstar Resources Ltd.


Based in Calgary, Alberta, Canada, with offices in the Netherlands, Switzerland, Romania and Tunisia, Winstar is an oil and gas exploration, development and production company.

Winstar Resources Ltd. Tunisia map. Courtesy of Winstar

Winstar’s principal areas of operations are in Tunisia where it holds operated working interests in four onshore producing oil and gas fields and one currently suspended oil and gas concession.

Winstar Resources Ltd. Tunisia - Sabria concession. Courtesy of Winstar

In addition, Winstar has farmed in on the Satu Mare concession in northwest Romania with an option to earn up to a 60% working interest.

Winstar Resources Ltd. Romania – Satu Mare concession. Courtesy of Winstar

In Tunisia, Winstar holds a 100% operated interest in the Chouech Essaida, Ech Chouech, Zinna and Sanrhar concessions, and a 45% operated interest in the Sabria concession.

Winstar Resources Ltd. Romania – Satu Mare concession. Courtesy of Winstar

As at December 31, 2012, Winstar reported net proved and probable reserves of 11.2 million boe and in its southern Tunisian acreage, has identified high potential for unconventional Silurian shale resources.

Winstar ara 2008 awards. Courtesy of Winstar

Winstar’s net production for the first half of April 2013 from its Tunisian assets is approximately 1,660 boe/d.


Director Resignations/Retirement

Bernard de Combret resigned as a director of Winstar on April 18, 2013.

Charles de Mestral resigned as a director and retired as an officer of Winstar on April 23, 2013.

Winstar understands these actions were based on a difference in views as to the strategic direction of the Company.


For further information to Winstar contact:

Company:

Mr. Bruce Libin, Chairman +1 403 243 8805
Mr. David Monachello, President +1 403 513 4200
Mr. Jerrad Blanchard, Chief Financial Officer +1 403 513 4204

Financial Advisor:

Mr. Majid Shafiq, FirstEnergy Capital LLP +44 207 448 0200
Mr. Travis Inlow, FirstEnergy Capital LLP +44 207 448 0200
Mr. Khalid Ahmed, FirstEnergy Capital LLP +44 207 448 0200


About Kulczyk Oil Ventures Inc.


Kulczyk Oil Ventures Inc. (KOV) is an international upstream oil and gas exploration and production company with a diversified portfolio of projects in Ukraine, Brunei and Syria and with a risk profile ranging from exploration in Brunei and Syria to production and development in Ukraine.

The common shares of the Company trade on the Warsaw Stock Exchange under trading symbol “KOV”.

In Ukraine, KOV owns an effective 70% interest in KUB-Gas LLC.

Kulczyk Oil Ventures Inc. Ukraine investments map. Courtesy of KOV

The assets of KUB-Gas LLC consist of 100% interests in five licences near to the City of Lugansk in the northeast part of Ukraine.
Four of the licences are gas producing.

Kulczyk Oil Ventures Inc. Brunei investments map – Block L. Courtesy of KOV

In Brunei, KOV owns a 90% working interest in a production sharing agreement which gives the Company the right to explore for and produce oil and natural gas from Block L, a 1,123 square kilometers area covering onshore and offshore areas in northern Brunei.

Kulczyk Oil Ventures Inc. Brunei investments map – Block M. Courtesy of KOV

In Syria, KOV holds a participating interest of 50% in the Syria Block 9 production sharing contract which provides the right to explore for and, upon the satisfaction of certain conditions, to produce oil and gas from Block 9, a 10,032 square kilometers area in northwest Syria.

Kulczyk Oil Ventures Inc. Syria investments map. Courtesy of KOV

The Company has an agreement to assign a 5% ownership interest to a third party which is subject to the approval of Syrian authorities, and which, if approved, would leave the Company with a remaining effective interest of 45% in Syria Block 9.

KOV declared force majeure, with respect to its operations in Syria, in July 2012.

Polish businessman Dr. Jan Kulczyk, Founder Kulczyk Oil Ventures Inc., Kulczyk Investments S.A. and CEED Institute. Courtesy of CEED Institute

The main shareholder of the Company is Kulczyk Investments S.A., an international investment house founded by Polish businessman Dr. Jan Kulczyk.


Contacts

Canada

Suite 1170, 700-4th Avenue S.W., Calgary, Alberta, Canada
Telephone: +1-403-264-8877
Facsimile: +1-403-264-8861

Dubai

Al Shafar Investment Building, Suite 123, Shaikh Zayed Road,
Box 37174, Dubai, United Arab Emirates
Telephone: +971-4-339-5212
Facsimile: +971-4-339-5174

Poland

Nowogrodzka 18/29
00-511 Warsaw, Poland
Telephone: +48 (22) 414 21 00


Media contacts

Jakub Korczak
Vice President Investor Relations, Managing Director CEE
Kulczyk Oil Ventures INC
ul. Nowogrodzka 18/29
00-511 Warsaw, Poland
tel.: +48 22 414 21 00
http://www.kulczykoil.pl  

Norman W. Holton
Kulczyk Oil Ventures Inc. – Kanada
nholton@kulczykoil.com  
tel.: +1-403-264-8877


Sources: Kulczyk Oil Ventures Inc. and Winstar Resources Ltd

Kulczyk Oil Ventures Inc.

http://media.kulczykoilventures.com/  

Winstar Resources Ltd

http://www.winstar.ca/  



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