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21 Jan 2009 12:00
LENI GAS & OIL Plc
("LGO" or "The Company")
21 January, 2009
Hungary Production Update and New Developments
Leni Gas & Oil plc (LGO) the AIM listed international oil and gas exploration, development and production company announces that it is planning to sidetrack the PEN-104 gas production well in the Penészlek Development Area of eastern Hungary. The well has been shut-in due to the failure of a compressor at the downstream gas processing facility which has caused unusually high export pipeline pressures. PetroHungaria kft (7.27% LGO), which operates the well, expects that a 450m sidetrack of the well will substantially increase the potential recoverable gas and will reduce the amount of water produced by the well.
Subject to permitting and rig availability, the side-tracked PEN-104 well could be ready to produce gas by the time repairs to the compressor are due to be completed in March 2009 which will reduce the pipeline pressure to its normal operating range.
The PEN-104 sidetrack opportunity has been identified from the analysis and interpretation of the 3-D seismic survey that was acquired in November 2008. In addition to this sidetrack, the partners have also approved the sidetrack of the PEN-102 well drilled and suspended by PetroHungaria in 2007 (which is anticipated to occur immediately following the PEN-104 sidetrack). Also, the partners are considering three other development projects, all of which were identified with the new 3-D seismic survey. These include the re-drill of PEN-9 and PEN-12, and a new well to produce from a structure south of PEN-12.
The new seismic shows that neither the existing PEN-9 or PEN-12 wells are situated in an ideal location for producing their associated reserves, although a sidetrack of PEN-12 is being considered as an option. While the PEN-104 and PEN-102 sidetracks can proceed quickly because of land access agreements already in place, the additional wells will require a full permitting procedure and are unlikely to be drilled until third quarter 2009. Potentially one to three wells to redevelop the prematurely abandoned Penészlek Miocene field could also be drilled this year however the deeper sections within the 3-D survey are still being evaluated.
David Lenigas, Executive Chairman, commented:
"The initial results of the 3D seismic interpretation in our East Hungary asset have identified a number of highly prospective developments for expanding production in the Penészlek development area during the next 12 months."
"The plan to sidetrack the PEN-104 well shall substantially increase recoverable gas and is the first stage of the development expansion which shall be funded in total from existing and future sales gas revenues."
Competent Person's Statement:
The technical information contained in this announcement has been reviewed and approved by Fraser S Pritchard, Executive Director (Operations) for Leni Gas & Oil Plc (member of the SPE) who has 20 years relevant experience in the oil industry.
Enquiries:
Leni Gas & Oil plc
David Lenigas, Executive Chairman
Tel +44 (0) 20 7016 5103
Beaumont Cornish Limited
Roland Cornish / Rosalind Hill Abrahams
Tel +44 (0) 20 7628 3396
Mirabaud Securities Limited
Rory Scott
Tel +44 (0) 20 7878 3360
Pelham PR
Mark Antelme / Henry Lerwill
Tel + 44 (0)20 3178 6242
NOTES TO EDITORS
Leni Gas & Oil Plc is an international oil and gas exploration, development and production company headquartered in London, trading on the London Stock Exchange's AIM index. The Company has assets in the US Gulf of Mexico and Lower 48, Spain, Trinidad, Hungary and Malta. LGO's strategy is delivering growth through the acquisition of proven reserves and the enhancement of producing assets in low risk countries.
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