CUB Energy Inc. (KUB.V), announces its financial and operating results for the three and six months ended 30 June 2012. The Company saw record quarterly production and operating cash flow with strong netbacks of $8.79 per Mcf.

The Company's production and revenue is derived from nine licenses in Ukraine. Five licenses in Eastern Ukraine are owned and operated by KUB-Gas LLC ("KUB-Gas"), a subsidiary in which CUB has a 30% effective ownership interest, and four licenses are in Western Ukraine in which CUB has a 100% ownership interest. All dollar amounts are expressed in United States currency.

HIGHLIGHTS

-- Exit rate for Q2 of 1,217Boe/d;

-- Second quarter net back of $54/Boe generating cash flow of $5.9MM;

-- Continued strong natural gas price of $11.76/Mcf and condensate price of $102.32/bbl

-- Production averaged 1201Boe/d (95% natural gas) an increase of more than 300% over second quarter of 2011;

-- Drilled NM-1 and M-21 wells (30% net) in the quarter with one currently producing and one testing;

-- Converted the Makeevskoye license into a 20-year production license. (5,211 net square acres);

-- Two wells (30% net to Cub) were tied-in for commercial production at gross production rates of more than 1MMcf/d of natural gas from each well;

-- M-20 well was drilled to TD of 2000m (30% interest) and completion operations are underway on the R-8 sand that currently produces 8.9MMcf/d (2.67MMcf/d net to Cub) from the M-19 and M-21 offset wells;

Eastern Ukraine - Cub Energy through equity investment in KUB-Gas

-- Gas production averaged 21,304 Mcf/d (30% net: 6,391 Mcf/d) at the end of the period, and was more than triple the average production for the first six months of 2011.

-- In June 2012 the Company's net production from Kub-Gas LLC had increased to more than 6.6MMcf/d with gross production of more than 22 MMcf/d from
the four producing fields.

-- On July 6, 2012, drilling commenced on M-20. The well was drilled to a total depth of 2,000 metres and is cased pending completion.

-- On May 7, 2012, drilling commenced on NM-1. On June 19, 2012, the well was drilled to a total depth of 2,500 metres and cased after log and drilling information indicated 4 potential hydrocarbon-bearing zones.

-- On April 10, 2012, the Makeevskoye license was converted into a 20-year production license.

-- On March 27, 2012, O-8 and O-18 wells were tied-in for commercial production at gross production rates of more than 1 MMcf/d of natural gas from each well.

-- On February 6, 2012, drilling commenced on M-21. The well was drilled to a total depth of 2,210 metres and was completed on March 22, 2012. Two potential gas-bearing zones were identified and have been tested. The well came on production in early August 2012 at initial production rates of 1.7 million MMcf/d.

Western Ukraine - Cub Energy wholly owned subsidiary Tysagaz

-- The Company completed work overs on Yab 2 and RK 6. RK 6 well is now producing at a rate of 210Mcf/d.

-- Production increased to approximately 0.510 MMcf/d at the end of the period.

-- RK seismic was completed and preparations are under way to drill a well to approximately 1800 metres. As many as 2 wells are planned for the RK field pending the final seismic evaluation and company work plan assessment.

-- Tysagaz is currently producing gas from the RK license one of its four licenses. The produced gas does not meet the standards of the gas quality for input into the main pipeline - it is wet, low calorie and containing approximately 30% nitrogen.

-- The solution for marketing such low quality gas (i.e. being able to put it into the main pipeline) was found in 2007 by concluding an agreement with a regional transportation company for gas blending. In accordance with this contract the transportation company blends Tysagaz gas with the gas from the pipeline in the ratio 1:7, and the regional pipeline company receives a monthly fee for blending the gas from Tysagaz. With the upgrade of the RK facility (compression and dehydration) the blending ratio is expected to drop from 1:7 to 1:5 which would lower the overall blending cost of the gas.

-- The design of the RK gas plant is complete. Compression and dehydrating equipment have been ordered and the upgraded plant is expected to be operational in the 4th Quarter. This time frame fits well with the anticipated multi-well development-drilling program in the RK field, which is also expected to start in the 4th Quarter 2012.

-- 20 line kilometres of 2D seismic has been completed on the Stanivske field and the evaluation is underway.