CERP.L Regulatory News (CERP)

For Immediate Release (7am GMT)

14th December 2010

LENI GAS AND OIL PLC

("LGO" or the "Company")

Operational Update, Spain

Leni Gas & Oil plc, the AIM listed international oil and gas production, development and exploration Company, today announces plans to commence extensive field reactivation work on its Ayoluengo Oil Field in Northern Spain. LGO has also executed the long term oil sales agreement with BP Oil España, S.A. Unipersonal ("BP"), previously announced in May 2010.

Highlights

·; LGO's wholly owned subsidiary Compañía Petrolífera de Sedano, S.L. ("CPS") and BP have executed an Oil Sales and Purchase Agreement for the future sale of all refinery grade oil from CPS to the Castellon refinery.

·; The Company has received a field wide environmental permit from the Spanish authorities which permits operations on any of the existing 53 well locations and modifications to the processing facilities.

·; A campaign of well remediation and perforation will be undertaken and further work will be conducted to increase wellbore productivity and production reliability.

·; An additional workover rig including cementing and wireline equipment will be mobilised to the field in early February 2011. It is anticipated the work will take 2 months to complete.

·; Production from existing producing zones and from new zones is expected to rise significantly by late April 2011.

Workover programme

The planned work will initially be concentrated on the top ranked open wells that are believed to have the greatest potential for enhanced commercial flow rates. Both gas and water shut off will be undertaken, as necessary, as well as the re-perforating of existing undepleted zones and the perforating of new zones. This will be combined with casing and tubing repairs to ensure all existing producers are on line with enhanced oil production and reliability.

In addition to the Company owned workover rig, a second drilling unit will be contracted to increase the efficiency of the planned work. Work is expected to commence in early February and take up to 60 days to complete. Options exist to extend the programme and for the additional rig to carry out work on reopening, deepening or sidetracking wells at Ayoluengo or Hontomin once plans for those activities are finalised.

Having received the environmental permit for all future works on the Ayoluengo infrastructure, LGO will commence the initial phase of interventions which will target the producing eastern flank of the field where STOIIP of 79 mmbo has been identified and where the historic recovery factor has been only 21%. Work on the western flank, which contains 27 mmbo STOIIP, will be undertaken in the second half of 2011 in collaboration with Praxair España, S.L., once design work on the EOR trials announced on the 1st October 2010 has been completed.

Previous studies by the Company's technical consultants have indicated that, following the planned remediation work, incremental oil production capacity in the eastern flank of the field could rise to between 300 and 500 bopd. This will depend on the success of the water and gas shut-off operations and the extent to which reservoir pressure in undepleted zones has been accurately predicted. Once initial results have been achieved LGO will be in an improved position to set new 2011 production targets which will be published in due course.

Production of oil continues at the recently recompleted Hontomin-2 well. Following further evaluation it is envisaged that a side-track to the original well bore will be drilled to the crest of the structure to maximise potential production. Any such sidetrack will be carried out following of the Ayoluengo workover programme outlined above.

Oil Sales Agreement

Following the signature of a Heads of Terms, announced on the 6th May 2010, CPS and BP have concluded a binding agreement which has now been executed.

The agreement is for a minimum of 5 years and may be extended without limit. Sales under the agreement could start at any time up until early 2012 once CPS can deliver oil to agreed refinery quality specifications, and BP has completed the necessary capital works to receive the oil. The Ayoluengo central processing and storage facilities have recently been upgraded and further engineering work is planned during 2011 in order to ensure these specifications can be met. Environmental permits have been granted for all required work on the central processing facility at Ayoluengo and engineering work will be scheduled as required.

A price formula related to the spot price of Brent marker crude has been agreed that ensures that all contracted oil sales is marketed in line with prevailing world market conditions. CPS will initially transport oil to Castellon by means of road tankers, though should volumes be sufficient, plans will be explored for combinations of pipeline and rail evacuation to complement the existing road routes.

Neil Ritson, Chief Executive commented:

"LGO is poised to execute the most comprehensive well workover campaign on the Ayoluengo field in nearly two decades. The Company now has the financial and technical strength required to execute on this exciting programme in early 2011. Once additional production capability is established the presence of a long term oil sales arrangement with BP will enhance our capability to deliver."

Competent Person's Statement:

The information contained in this announcement has been reviewed and approved by Neil Ritson, Chief Executive Officer and Director for Leni Gas & Oil Plc who has over 30 years of relevant experience in the oil industry. Mr. Ritson is a member of the Society of Petroleum Engineers, an Active Member of the American Association of Petroleum Geologists and is a Fellow of the Geological Society of London.

Enquiries:

Leni Gas & Oil plc

David Lenigas, Executive Chairman

Neil Ritson, Chief Executive Officer

Tel +44 (0) 20 7016 5103

Beaumont Cornish Limited

Roland Cornish / Rosalind Hill Abrahams

Tel +44 (0) 20 7628 3396

Pelham Bell Pottinger

Mark Antelme / Henry Lerwill

Tel + 44 (0)20 7861 3232

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. LGO's strategy is to acquire projects and businesses within the oil and gas sector that contain a development premium which can be unlocked through a combination of financial, commercial, and technical expertise.

LGO operates a low risk portfolio of production expansion assets in the US Gulf of Mexico, Spain and Trinidad, and holds non-operated exploration acreage Malta. LGO's assets have significant play upside using similar strategies to leverage technologies and proven production enhancement techniques. LGO specifically targets near term production with upside exploitation potential and manages its portfolio to ensure all assets have accelerated incremental reserves and production enhancement programmes.

GLOSSARY

bopd = barrels of oil per day

EOR = Enhanced Oil Recovery

mmbo = million barrels of oil

STOIIP = stock tank oil initially in place