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Serinus Achieves Record Production and Cash Flow in 2013

CALGARY, ALBERTA -- (Marketwired) -- 03/20/14 -- Serinus Energy Inc. (TSX: SEN)(WARSAW: SEN) ("Serinus Energy", "SEN" or the "Company"), is pleased to report its financial and operating results for the year ended December 31, 2013.

In 2013, Serinus achieved several key goals and milestones, including record production and cash flow from its properties in Ukraine, and the addition of new reserves and production with the acquisition of Winstar Resources in June 2013.

2013 Highlights

--  In 2013, Serinus achieved record average production (net to SEN WI) of
    4,081 boe/d (vs. 2,655 boe/d in 2012), and exited the year at 4,986
    boe/d - a growth of 54% YoY - helped materially by the acquisition of
    Winstar Resources.
--  Organic growth in the Company's Ukraine properties continued, with
    average production (net to SEN WI) rising 25% to 3,319 boe/d, and
    reaching 3,626 boe/d in Q4.
--  Gross revenues for the year reached $146.7 million, up 47% over 2012.
    The portion allocable to SEN shareholders was $111.4 million vs. $69.7
    million in 2012.
--  Netbacks continue to be robust, with the Company's Ukraine production
    receiving $41.69/boe for FY2013, and Tunisia getting $68.68/boe (for the
    period from June 24, 2013 to year-end)
--  Funds from Operations continued to grow in 2013, reaching $55.1 million
    ($0.86/sh) vs. $33.3 million ($0.75/sh) in 2012.
--  Serinus' recorded net losses of $76.9 million ($0.98/sh) and $57.5
    million ($0.90/sh) in Q4 and FY2013 respectively. Income was impacted by
    an $83 million impairment charge against its holdings in Brunei Block L.
--  Net earnings, before impairment charges, for the year was $25.5 million
    ($14.4 million attributable to SEN shareholders), as compared to $8.8
    million in 2012 ($1.0 million attributable to SEN shareholders)

Notes: Serinus prepares its financial results on a consolidated basis, which includes 100% of its indirectly 70% owned subsidiary, KUB-Gas LLC ("KUB-Gas"). Unless otherwise noted by the phrases "allocable to Serinus", "net to Serinus", "attributable to SEN shareholders" or "net to SEN WI", all values and volumes refer to the consolidated figures. Serinus reports in US dollars; all dollar values referred to herein, whether in dollars or per share values are in US dollars unless otherwise noted.

Summary Financial Results (US$ 000's unless otherwise noted)

                     Three Months Ending               Year Ending
                         December 31                   December 31

                      2013       2012 Change        2013       2012 Change
Oil and Gas
 Revenue            43,700     27,338     60%    146,732     99,588     47%

Net Income (as
 reported)         (76,903)     1,065     na     (57,526)   (78,982)   (27%)
 per share,
  basic and
  diluted           ($0.98)     $0.02             ($0.90)    ($1.78)

Net Income
 (allocable to
 Serinus)          (79,740)      (917)    na     (68,682)   (86,769)   (21%)
 per share,
  basic and
  diluted           ($0.99)    ($0.20)            ($1.07)    ($1.95)

 Net Income        (78,211)     1,171     na     (58,971)   (79,019)   (25%)
 per share,
  basic and
  diluted           ($0.99)     $0.02             ($0.92)    ($1.78)

Cash Flow from
 Operations (as
 reported)          14,625      9,399     56%     55,074     33,259     66%
 per share,
  basic and
  diluted            $0.19      $0.20              $0.86      $0.75

Cash Flow from
 (allocable to
 SEN)              $11,013     $5,092    116%    $37,984    $16,706    127%
 per share,
  basic and
  diluted             0.14       0.11              $0.59      $0.38

 Expenditures       25,040     20,518     22%     75,560     57,361     32%

 Production (net
 to Serinus)
 Oil (Bbl/d)         1,047          -                557          -
 Gas (Mcf/d)        23,566     16,832     40%     20,418     15,098     35%
 Liquids (Bbl/d)       113        132    (14%)       120        139    (14%)
                ----------------------        ----------------------
 BOE (boe/d)         5,088      2,937     73%      4,081      2,655     54%

Average Sales
 Oil ($/Bbl)       $108.48                       $111.08
 Gas ($Mcf)         $11.34     $11.62             $11.39     $11.71
 Liquids ($Bbl)     $77.89     $98.04             $87.90     $98.91
                ----------------------        ----------------------
 BOE ($/boe)        $76.58     $71.00             $74.77     $71.77

                     December 31                   December 31
                ----------------------        ----------------------
                      2013       2012               2013       2012
                ----------------------        ----------------------
Cash &
 Equivalents        19,916     35,553             19,916     35,553
Working Capital    (23,132)     1,217            (23,132)     1,217
Long Term Debt       8,030     17,112              8,030     17,112

 Outstanding    78,611,441 48,175,673         78,611,441 48,175,673
 Average for
  period        78,611,441 48,175,673         64,018,949 44,452,298

General & Financial Highlights

--  On June 24, 2013, the Company closed the acquisition of Winstar
    Resources Limited. In connection with that acquisition, the Company
    changed its name from Kulczyk Oil Ventures Inc. to Serinus Energy Inc.,
    consolidated its common shares on a basis of one post-consolidation
    share for ten pre-consolidation shares, and listed its common shares on
    the Toronto Stock Exchange. The acquisition added 11.5 MMboe of 2P
    reserves and 23.9 MMboe 3P evaluated as at December 31, 2013. The
    Winstar assets produced 1,512 boe/d in the second half of 2013.
--  Excluding the acquisition of Winstar, Serinus made capital expenditures
    of $75.6 million in 2013, of which $30 million, $2.7 million, $0.8
    million and $42.1 million were spent in Ukraine, Tunisia, Romania and
    Brunei respectively.
--  In July 2013, the Company entered into a strategic relationship with
    Dutco Energy Ltd ("Dutco") which involved entering into an option
    agreement with Dutco, which gives Dutco the right to acquire an interest
    in Brunei Block L in consideration for providing the Company with a $15
    million secured credit facility. The credit facility was used to fund
    capital expenditures in Brunei. As at December 31, 2013, the full $15
    million had been drawn on this facility.
--  During 2013, the Company through its 70% owned subsidiary in the Ukraine
    made an early repayment of $10 million on the European Bank for
    Reconstruction and Development ("EBRD") loan (the "EBRD Ukraine
    Facility") from cash generated by operations in Ukraine, in addition to
    the regular scheduled repayments, leaving a balance of $7.6 million
    outstanding as at December 31, 2013.
--  In November 2013, Serinus entered into two new loan agreements in the
    aggregate amount of USD $60 million (the "EBRD Tunisia Facility") with
    EBRD to assist the Company in funding the capital program being planned
    for its recently acquired oil and gas fields in Tunisia. As at December
    31, 2013, the Company had drawn $5 million.
--  Serinus recognized impairment of its assets in Brunei Block L, and as a
    result, took an $83 million impairment charge. The impairment recognizes
    that the wells drilled in the exploration phase have been unsuccessful.
    The Company continues to evaluate its drilling campaign together with
--  Dividends in the amount of $32.5 million were successfully paid out of
    the Ukraine by KUB-Gas LLC ("KUB-Gas") from cash generated from
    Ukrainian operations during 2013 to its parent, KUBGAS Holdings Limited
    of which $9.7 million was allocated to the non-controlling shareholder.
    Serinus acquired its indirect 70% interest in KUB-Gas in June 2010 for
    $45 million. Since then, KUB-Gas has invested over $103 million in
    drilling, completions and facilities in the Ukraine licences, funded
    initially via shareholder loans, and then a combination of the EBRD
    Ukraine Facility and cash flow. Over the same period, KUB-Gas also
    repaid $15 million of the EBRD Ukraine Facility, and paid out $40
    million in dividends.

Operational Highlights & Update

--  Average production in 2014 to the end of February was 4,843 boe/d (1,057
    barrels per day ("bbl/d") of oil, 22 million cubic feet per day
    ("MMcf/d") of gas, 98 bbl/d of liquids). Serinus intends to issue a
    first quarter 2014 operational update in early April.
--  In Ukraine, on March 6th, KUB-Gas started up the new Makeevskoye gas
    facility, and the Company expects that gross production will increase by
    5 MMcf/d (3.5 MMcf/d net to SEN WI) or more as the previously
    constrained production is brought on line.
--  On March 19th, the Company announced that KUB-Gas had cased the M-17
    well to its total depth of 3,445 metres, and is preparing to complete,
    test and tie in the well. The primary objective, the S6 sand, showed 9
    metres of gas pay, and other zones exhibited either pay or resource
    potential. The O-24 well was also tested and flowed gas at low rates. It
    will be added to the upcoming stimulation program.
--  Despite the recent events in Ukraine, the Company is pleased to report
    that all of its personnel are safe, and operations have continued
    without interruption.
--  On March 11th, Winstar Tunisia signed a drilling contract for the use of
    a 2,000 horsepower IDECO-E2100 drilling rig for the Company's 2014
    drilling campaign at the Sabria Field. The spud date of the first well,
    Winstar-12bis, is anticipated at the beginning of June 2014. Upon
    completion of Winstar-12bis, the drilling rig will be moved 2.5
    kilometres southwest to drill the Winstar-13 well. Major contracts for
    other services required to execute the 2014 drilling program are in
    various states of technical and commercial tender evaluation, with a
    number of service contracts having been awarded. The Winstar-12bis
    location has been surveyed, the geotechnical evaluation of the site
    completed, and construction of the location is underway.
--  The planned drilling program in Romania has been delayed to September
    (from late May) to optimize the allocation of Company personnel, and to
    allow for potential variations in the timing of cash flows within the


The Company expects its capital expenditure budget for 2014 will exceed $55 million, and will include the following:

--  In Ukraine, the Company plans to drill 4 new wells in 2014. These will
    be funded through cash flow in Ukraine, although with the uncertainty in
    gas prices there, it is possible that the program could be constrained.
--  Fracture stimulations are planned for five wells in Ukraine, including
    NM-3, O-11, O-15, K-3 and O-24.
--  Two wells will be drilled in the Sabria field in Tunisia. Each well is
    anticipated to cost $14.4 million ($6.5 million SEN WI) and take 70 days
    to drill. The expected spud date for the first well is late May.
--  Workovers are planned to begin in April for four wells in Tunisia, ECS-
    1, EC-4, CS-11, and CS-8. CS Sil-1 and CS Sil-10 will also be serviced
    by a coiled tubing rig. Pending regulatory approval, ECS-1 and EC-4 will
    be fractured during the summer.
--  In Romania, Serinus will drill two exploration wells and shoot 180 km2
    of new 3D seismic. Each well is expected to cost $3 million. Spud date
    for the first well is anticipated to be in September. The seismic
    acquisition is also slated to commence in September 2014.

The Company is targeting production growth of between 30% - 35% by year end 2014.

Supporting Documents

The full Management Discussion and Analysis ("MD&A") and Financial Statements have been filed in English on and in Polish and English via the ESPI system, and will also be available on

About Serinus

Serinus is an international upstream oil and gas exploration and production company with a diversified portfolio of projects in Ukraine, Brunei, Tunisia, Romania and Syria and with a risk profile ranging from exploration in Brunei, Romania and Syria to production and development in Ukraine and Tunisia. The common shares of the Company trade under trading symbol "SEN" on both the WSE (Warsaw Stock Exchange) and the TSX.

In Ukraine, Serinus owns an effective 70% interest in KUB-Gas LLC through its 70% shareholding of KUBGas Holdings Limited. 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.

In Tunisia, Serinus owns a 100% working interest in the Chouech Essaida, Ech Chouech, Sanrhar and Zinnia concessions, and a 45% working interest in the Sabria concession. Four of the concessions are currently producing oil or gas.

In Brunei, Serinus 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.

In Romania, Serinus has an undivided 60% working interest in the onshore Satu Mare concession, a 2,949 square kilometre exploration and development block, in north western Romania.

In Syria, Serinus 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 kilometre area in northwest Syria. 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. Serinus declared force majeure, with respect to its operations in Syria, in July 2012.

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

For further information, please refer to the Serinus website (

Translation: This news release has been translated into Polish from the English original.

Forward-looking Statements This release may contain forward-looking statements made as of the date of this announcement with respect to future activities that either are not or may not be historical facts. Although the Company believes that its expectations reflected in the forward-looking statements are reasonable as of the date hereof, any potential results suggested by such statements involve risk and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Various factors that could impair or prevent the Company from completing the expected activities on its projects include that the Company's projects experience technical and mechanical problems, there are changes in product prices, failure to obtain regulatory approvals, the state of the national or international monetary, oil and gas, financial, political and economic markets in the jurisdictions where the Company operates and other risks not anticipated by the Company or disclosed in the Company's published material. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties and actual results may vary materially from those expressed in the forward-looking statement. The Company undertakes no obligation to revise or update any forward-looking statements in this announcement to reflect events or circumstances after the date of this announcement, unless required by law.

Suite 1170, 700-4th Avenue SW, Calgary, Alberta, Canada
Telephone: +1-403-264-8877

Al Shafar Investment Building, Suite 123, Shaikh Zayed Road, Dubai, UAE
Telephone: +971-4-339-5212

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

Serinus Energy Inc. - Canada
Norman W. Holton
Vice Chairman
[email protected]

Serinus Energy Inc. - Canada
Gregory M. Chornoboy
Director - Capital Markets & Corporate Development
[email protected]

Serinus Energy Inc. - Poland
Jakub J. Korczak
Vice President Investor Relations & Managing Director CEE
+48 22 414 21 00
[email protected]

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