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29 Apr 2009 10:17
LENI GAS & OIL PLC
("LGO" or the "Company")
29 April, 2009
SPAIN PRODUCTION TO INCREASE WITH HONTOMIN EXTENDED WELL TEST
Leni Gas & Oil plc, the AIM listed international oil and gas exploration, development and production company, today confirms that all regulatory permits and approvals have been issued to commence the planned extended well test on the Hontomin-2 well in Northern Spain.
The objective of the extended well test is to appraise the long term production potential of the well and determine the optimum exploitation plan for the Hontomin field which currently is to maximise production by a side-track of Hontomin-2 in the second quarter 2010 during the Ayoluengo infill well drilling campaign.
The Hontomin structure is formed in a highly faulted thrusted anticline and covers a maximum area of 2.9 km2 with mean STOIIP of 2.40 mmbo. Hontomin-2 was originally drilled by Chevron in the 1960s and discovered oil in the lower Lias calcarenite which has a gross thickness of 80m. The discovery well produced an average of 113 bopd during a short production test with 50% water cut.
LGO will utilize the data gathered from the extended well test together with the licence area re-interpretation results which were previously announced on 21 October 2008 to determine the most effective exploitation plan for the Hontomin structure. All production from Hontomin will be transported 38km to the production facilities at the Ayoluengo oilfield for processing and oil sales. The extended well test is targeted to commence in July 2009 at conclusion of the Ayoluengo Phase 1 Stimulation Program and completion of all Hontomin site preparation works.
The Hontomin exploitation plan will also include tertiary enhanced oil recovery work programs under the joint development agreement with CIUDEN as announced on 10 March 2009. The Hontomin enhanced oil recovery program shall aim to acquire 3D seismic on areas of the Hontomin structure to determine the optimum approach for CO2 sequestration and enhanced oil recovery. The combination of the proposed side-track and tertiary oil recovery shall aim to exceed reserves recovery above 50% from the Hontomin structure.
The Company has an 85% interest in the Huermeces exploration permit, with Tethys Oil A.B. retaining the remaining 15% equity.
David Lenigas, Executive Chairman, commented:
"Commencement of our extended well test on Hontomin will bring on production the first of four possible incremental reserves in our Spain acreage from total unrisked mean prospective and contingent resources of 13 mmboe. The other three incremental reserve locations are also scheduled to undergo appraisal during the second half of 2009."
"The Hontomin-2 extended well test may add about 100 bopd to our current daily production in Spain of 300 bopd, however the focus of the well test and the additional tertiary recovery programs with CIUDEN during 2009 will be to plan the optimal approach to maximise recovery from the field in 2010. The Company's target is to recover about 1 million barrels of oil from the Hontomin structure."
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.
Enquiries:
Leni Gas & Oil plc
David Lenigas, Executive Chairman
Fraser Pritchard, Executive Director (Operations)
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
Tel + 44 (0)20 7337 1500
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.
CIUDEN is a Spanish foundation incorporated by the Ministry of Industry, Trade and Tourism, the Ministry of the Environment and the Ministry of Science and Innovation within the Spanish Government. One of CIUDEN's most important technical objectives is research and development (R&D) related to carbon capture and storage (CCS). As part of the R&D effort two pilot plants have been planned, one for carbon capture for which construction has commenced and another where R&D activities to investigate the "life cycle" of underground storage of CO2 will be performed.
GLOSSARY
All figures are net LGO unless otherwise stated
All reserves and resources definitions used are per the Society of Petroleum Engineers 2005
classification
AIM = London Stock Exchange Alternative Investment Market
bbls = barrels of oil
bopd = barrels of oil per day
Contingent Resources = those quantities of petroleum which are estimated, on a given date, to be
potentially recoverable from known accumulations but which are not currently considered to be
commercially recoverable.
CO2 = carbon dioxide
Prospective Resources = those quantities of petroleum which are estimated, on a given date, to be
potentially recoverable from undiscovered accumulations.
Proved Reserves = the estimated volumes of crude oil, condensate, natural gas and natural gas
liquids which, based upon geologic and engineering data, are reasonably certain to be commercially
recovered from known reservoirs under existing economic and political/regulatory conditions and
using conventional or existing equipment and operating methods
STOIIP = Stock Tank Oil Initially In Place
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