KUB Cub Energy Inc

Cub Energy Inc. ("Cub" or the "Company") (TSX VENTURE:KUB) announces the
following operations update for the second quarter ending June 30, 2014. This
update includes ongoing operations from KUB-Gas LLC ("KUB-Gas"), which Cub has a
30% ownership interest, and Tysagaz JSC ("Tysagaz"), Cub's 100% owned
subsidiary.


Second Quarter Increased Production and Realized Prices

Average production for the second quarter was 1,868 barrels of oil equivalent
per day ("boe/d") (including Cub's WI in KUB-Gas), up from 1,857 boe/d in the
first quarter. This is a 25% increase over the second quarter of 2013 average
production of 1,490 boe/d. The second quarter exit rate was 2,154 boe/d,
representing a 10% increase from 1,952 boe/d exit rate in the first quarter. The
exit rate increased from the contribution of the M-17 and RK-21 wells, both of
which started production late in the second quarter 2014.


Noteworthy is the fact that KUB-Gas has reached record production with average
rates for July to date reaching 35 million cubic feet per day ("MMcf/d") (10.5
MMcf/d Cub WI). This is a 15% increase above 2013 production exit rates.


The estimated average prices received in Ukraine during the quarter increased to
$10.23/thousand cubic feet ("Mcf") and $79.86/barrel ("bbl"). The second quarter
gas price was significantly higher than the $8.67/Mcf price realized in the
first quarter of 2014, as the discounts on imported Russian gas during the prior
quarter expired on April 1, 2014, and Ukrainian Hryvnia ("UAH") reached a more
stable level vs. the U.S. dollar ("USD"). Gas sold in Ukraine by KUB-Gas and
Tysagaz is based on the import price of Russian gas, which in turn is linked to
the price of oil. Those discounts on Russian gas ended effective April 1, 2014.
KUB-Gas and Tysagaz are paid in UAH, making their realized price in USD also
subject to exchange rate risk. That exchange rate was substantially less
volatile during the second quarter than in the first quarter, which contributed
to the higher realized gas prices. 


Drilling & Workover Update

In western Ukraine, operations continue uninterrupted. The RK-1 re-entry has
reached TD of 3,995 metres, and it is currently undergoing preliminary
operations prior to perforating.


In eastern Ukraine, during the second quarter, the M-17 well in Ukraine was
completed and tested. Logs had indicated pay in the S5 and S6 zones, and
resource potential in the R30c and S7 sections. The S7 tested 900 Mcf/d without
stimulation. The S6 was tested at multiple rates, the highest of which was 6.6
MMcf/d at a flowing wellhead pressure of 2,970 psi. The S6 zone was placed on
production on June 26, and has averaged 6.4 MMcf/d (1.9 MMcf/d Cub WI) to date.
The S7 will be stimulated when development operations resume, and M-17 will be
completed as a dual producer at that time.


The O-11 well was spud on April 4, 2014, after the drilling rig moved on from
M-17. It reached its planned TD of 3,230 metres in late May, was cased and the
rig released. In late June, the well was perforated, and experienced a strong
air blow, followed by gas to surface. The well was shut in for a pressure build
up. No further testing will be undertaken at this time. 


The NM-4 well was spud on June 16, and drilled to a depth of 102 metres. Surface
casing was run to 100.2 metres and cemented in place prior to suspending
drilling operations.


Cautionary Notes: Test results noted above are not necessarily indicative of
long-term performance or of ultimate recovery. The test data contained herein is
considered preliminary until full pressure transient analysis is complete. Also,
BOEs BOEs may be misleading, particularly if used in isolation. A BOE conversion
ratio of 6 Mcf: 1bbl is based on an energy equivalency conversion method
primarily applicable at the burner tip and does not represent a value
equivalency at the wellhead.


Facilities

Gas began flowing through the new treatment facility at Makeevskoye on March 6,
2014, and the M-16 well was re-routed to that new facility at the end of April.
The overall configuration is now that higher pressure wells are tied into the
new plant, while lower pressure wells and the production from Olgovskoye field
flow through the old plant. The system has easily accommodated the new gas
volumes from the M-17 well. 


Ukraine Outlook

In western Ukraine, Cub is continuing with its RK-1 operations and plans to then
move to the RK-23 well, targeting the L and D sands. 


In eastern Ukraine, once the security situation improves enough to resume
development activities, drilling will resume on NM-4, after which the rig will
move to M-22. NM-4 is testing a Moscovian stratigraphic trap, and if successful,
will establish a new play type within Cub's Ukrainian licences. The M-22 well is
targeting a new Serpukhovian accumulation to the southwest of the pool
containing the M-16 and M-17 wells. A fracture stimulation campaign has also
been planned in October for O-11 and O-15 (both R30c and S6 zones), NM-3 (Visean
oil potential) and M-17 (S7).


About Cub Energy Inc.

Cub Energy Inc. (TSX VENTURE:KUB) is an upstream oil and gas company, with a
proven track record of exploration and production cost efficiency in the Black
Sea region. The Company's strategy is to implement western technology and
capital, combined with local expertise and ownership, to increase value in its
undeveloped land base, creating and further building a portfolio of producing
oil and gas assets within a high pricing environment.


For further information please contact us or visit our website:
www.cubenergyinc.com.


Reader Advisory

Except for statements of historical fact, this news release contains certain
"forward-looking information" within the meaning of applicable securities law.
Forward-looking information is frequently characterized by words such as "plan",
"expect", "project", "intend", "believe", "anticipate", "estimate" and other
similar words, or statements that certain events or conditions "may" or "will"
occur. Cub believes that the expectations reflected in the forward-looking
information are reasonable; however, there can be no assurance those
expectations will prove to be correct. We cannot guarantee future results,
performance or achievements. Consequently, there is no representation that the
actual results achieved will be the same, in whole or in part, as those set out
in the forward-looking information.


Forward-looking information is based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those anticipated in the forward-looking information.
Some of the risks and other factors that could cause the results to differ
materially from those expressed in the forward-looking information include, but
are not limited to: general economic conditions in Ukraine, the Black Sea Region
and globally; political unrest and security concerns in Ukraine; industry
conditions, including fluctuations in the prices of natural gas; governmental
regulation of the natural gas industry, including environmental regulation;
unanticipated operating events or performance which can reduce production or
cause production to be shut in or delayed; failure to obtain industry partner
and other third party consents and approvals, if and when required; competition
for and/or inability to retain drilling rigs and other services; the
availability of capital on acceptable terms; the need to obtain required
approvals from regulatory authorities; stock market volatility; volatility in
market prices for natural gas; liabilities inherent in natural gas operations;
competition for, among other things, capital, acquisitions of reserves,
undeveloped lands, skilled personnel and supplies; incorrect assessments of the
value of acquisitions; geological, technical, drilling, processing and
transportation problems; changes in tax laws and incentive programs relating to
the natural gas industry; failure to realise the anticipated benefits of
acquisitions and dispositions; and the other factors. Readers are cautioned that
this list of risk factors should not be construed as exhaustive.


This cautionary statement expressly qualifies the forward-looking information
contained in this news release. We undertake no duty to update any of the
forward-looking information to conform such information to actual results or to
changes in our expectations except as otherwise required by applicable
securities legislation. Readers are cautioned not to place undue reliance on
forward-looking information.


Neither the TSX Venture Exchange nor its Regulation Services Provider (as that
term is defined in the policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this release.


FOR FURTHER INFORMATION PLEASE CONTACT: 
Cub Energy Inc.
Mikhail Afendikov
Chairman and Chief Executive Officer
(713) 677-0439
mikhail.afendikov@cubenergyinc.com


Cub Energy Inc.
Patrick McGrath
Chief Financial Officer
(713) 577-1948
patrick.mcgrath@cubenergyinc.com
www.cubenergyinc.com

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