12th Jan 2009 11:00
LENI GAS & OIL Plc
("LGO" or "The Company")
12 January 2009
Eugene Island, Gulf of Mexico, Production Update
Leni Gas & Oil plc (LGO) the AIM listed international oil and gas exploration, development and production company notes today's update by the joint venture operator, Leed Petroleum ("LDP"), announcing results of LDP's reserve audit and recent production figures for the Eugene Island field in the Gulf of Mexico.
Latest production figures state that the current gross daily production rate from the Eugene Island field is approximately 5,000 boepd.
The Eugene Island acreage is operated by Leed Petroleum in which LGO has an indirect interest through its 28.94% holding in Byron Energy Pty Ltd ("Byron"), approximate to an effective net working interest of 8% in the Eugene Island acreage.
David Lenigas, Executive Chairman, commented:
"Today's announcement regarding the Eugene Island field represents significant growth in Leni Gas and Oil's production and highlights the importance of this asset to the Company. We look forward to further production increases in the short term as the work planned for the A-6 well on the Eugene Island field gets underway."
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
Leed Petroleum PLC today announced the following:
Reserve and Production Update
Leed's proven and probable reserves increased to 24.1mmboe
Current gross production at Eugene Island approximately 5,000 boepd
Leed Petroleum PLC (AIM: LDP), the oil and gas exploration and production company focused on the Gulf of Mexico, today announces the results of a reserve audit and recent production figures for the Eugene Island field.
Reserve estimates
Collarini Associates, an independent reserve auditor, ("Collarini") has audited Leed's reserves, effective as of 1 January 2009. The Company's net attributable reserves have grown as set out immediately below:
|
Reserve Category |
Oil & Liquids (mmbls) |
Gas (bcf) |
Total (Oil and Gas) (mmboe) |
|
1P Reserves |
3.85 |
47.2 |
11.7 |
|
2P Reserves |
7.87 |
97.22 |
24.1 |
|
3P Reserves |
16.25 |
322.39 |
70.0 |
The comparative net attributable reserve positions as at June 2007, April 2008 and January 2009 are set out in the following table:
|
1 June 2007 |
1 April 2008 |
1 January 2009 |
|||
|
Reserve Category |
(mmboe) |
(mmboe) |
(mmboe) |
Increase from Apr-08 |
Increase from Jun-07 |
|
1P* Reserves |
6.1 |
8.8 |
11.7 |
33% |
92% |
|
2P* Reserves |
15.8 |
20.6 |
24.1 |
17% |
53% |
|
3P* Reserves |
53.4 |
62.8 |
70.0 |
12% |
31% |
Source: Collarini
Importantly, the Company's Proved Developed Reserves have increased by 154% since admission to AIM and by 33% since the 1 April 2008 audit. The combination of increasing Proved Developed Reserves in addition to the increase in overall 1P, 2P and 3P reserves highlights the Company's ability to deliver on its stated goals of converting existing reserves into developed, saleable product in parallel to growing the Company's reserve base.
The recent growth in Leed's reserves is primarily attributable to:
* the successful drilling activity conducted at Eugene Island, which included the
A-7 and A-8 wells; and
* reserves attributable to South Marsh Island block 8, which the Company acquired
at the last Minerals Management Service ("MMS") lease sale held in March 2008
and awarded to Leed in July 2008.
The Company believes that substantial additional exploration potential exists on
its properties which is not accounted for in the reserve numbers reported in
this announcement.
Eugene Island Production Update
Production from the Company's Eugene Island properties has significantly improved cash flow and increases the ability of Leed to continue to fund further development and exploration projects. The current gross daily production rate from the Company's Eugene Island field is approximately 5,000 boepd (50% oil), or 3,750 boepd on a working interest basis, as compared to the estimated gross average production during the quarter ended 31 December 2008 of approximately 3,000 boepd (50% oil), or 2,250 boepd on a working interest basis. The Company will have the capacity to make additional and material flow rate increases following execution of the previously announced A-6 re-completion and once an upgrade of platform water handling facilities has been finalised. Both projects are expected to be finished early in the current quarter.
The majority of the Company's production is from the wells outlined below:
* The Eugene Island A-6 well produced at a gross average of 498 boepd (374 boepd on a working interest basis) during the quarter ended 31 December 2008. The well continues to produce stably at this rate and is expected to do so until the re-completion is conducted. The A-6 well re-completion will take place during the first quarter of this year and is expected to have a material impact on production from the Eugene Island field.
* The Eugene Island A-7 well produced at a gross average of 2,177 boepd (1,623 boepd on a working interest basis) during the quarter ended 31 December 2008. Higher than expected water production has resulted in the well producing at a lower rate than originally tested. The well continues to produce 2,020 boepd. The Company will continue to monitor and evaluate the flow of the A-7 and has the ability over time to access five additional pay zones (including the initial completion, which is still accessible) from this well.
* As announced on 6 January 2008, the Eugene Island A-8 well flowed at a gross rate of 2,557 boepd (1,918 boepd on a working interest basis). The well production is stable with negligible water being observed.
Howard Wilson, President and Chief Executive of Leed, commented:
"We are delighted both with the progress of the Company since our admission to AIM and that Leed has a solid reserve and production base on which to build our future growth plans.
The Company's latest reserve report highlights the success of our Eugene Island drilling programme, in addition to our ability to identify and acquire quality assets through the US Government's MMS lease sale process. It also demonstrates Leed's ability to commercialise its assets and deliver value and growth to our shareholders.
The production and revenue base has likewise grown tremendously and has significantly enhanced the Company's cash flows. We are now focused on improving operational efficiency to maximise cash flow in the short term and to strengthen the Company's balance sheet for the next stage of our development."
NOTES TO EDITORS
Review by a qualified person
The information contained in this announcement has been reviewed and approved by
Chris Thompson, Manager of Business Development at the Company, BSC GradDip, who
is a reservoir engineer (SPE) with over 16 years experience within the sector.
Reserve Estimates
Collarini Associates' reserve estimates stated in the announcement are made in
accordance with guidelines published by the Society of Petroleum Engineers and
are based on its interpretation of the available data.
Operations
Leed Petroleum PLC is an AIM quoted independent oil and gas exploration and
production company. The Company's operations are concentrated in the Gulf of
Mexico region where Leed has established a significant portfolio of producing
and development assets. The Company has interests in 17offshore fields and one
onshore field in the region.
Leed's strategy is to grow the Company's portfolio through organic development
of its existing assets and to utilise its regional expertise to identify and
purchase value adding assets.
Glossary
bcf - billion standard cubic feet of gas
boepd - barrels of oil equivalent per day, calculated on the basis of one
thousand cubic feet of gas equals one barrel of oil
mmbls - million barrels of oil
mmboe - million barrels of oil equivalent, calculated on the basis of one
thousand cubic feet of gas equals one barrel of oil
Reserve Definitions*
1P - Proved Reserves
2P - Proved and Probable Reserves
3P - Proved, Probable and Possible Reserves
Proved Reserves are 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. When probabilistic methods are used,
reasonable certainty means there is a 90% probability that the quantities
produced will exceed the estimate of proved reserves. Proved reserves are
limited to those quantities of hydrocarbons which have been evaluated either by
actual production or by analytical tools and methods which demonstrate
reasonable certainty of future recovery.
Probable Reserves are those reserves which geologic and engineering data
demonstrate with a degree of certainty sufficient to indicate they are more
likely to be recovered than not. When probabilistic methods are used, there is
at least a 50% probability that the quantities actually produced will exceed the
sum of proved and probable reserves.
Possible Reserves are those reserves which geologic and engineering data
demonstrate are less certain than probable reserves and can be estimated with a
low degree of certainty, insufficient to indicate whether they are more likely
to be recovered than not. When probabilistic methods are used, there should be
at least a 10% probability that the quantities actually produced will exceed the
sum of proved, probable and possible reserves.
Proved Developed Reserves are those reserves which include Producing,
Nonproducing, Shut-in and Behind Pipe Reserves, but not Undeveloped Reserves.
Producing Reserves are those reserves which are expected to be recovered from
existing completion intervals open and producing at the time of the estimate.
Shut-in Reserves are those reserves which are expected to be recovered from
existing completion intervals open at the time of the estimate, but which had
not started producing, or were shut-in for market conditions, pipeline
connection, or were not capable of production for mechanical reasons.
Behind Pipe Reserves are those reserves which are expected to be recovered from
zones behind casing in existing wells, which require additional completion work
or a future recompletion prior to commencement of production.
Undeveloped Reserves are those reserves which are expected to be recovered from
new wells, from deepening existing wells, or where a relatively large
expenditure is required to recomplete an existing well or to install production
or transportation facilities or improved recovery projects. Proved Undeveloped
Reserves are restricted to established reservoirs where existing wells have
defined reservoir limits and content with reasonable certainty.
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.
The Eugene Island acreage is operated by Leed Petroleum, in which LGO has an indirect interest through its 28.94% holding in Byron Energy Pty Ltd ("Byron"). Byron has a 25% Working Interest in both Eugene Island Blocks 183 and the southern half of Block 184 (Net Revenue Interest up to 20.83% in Block 183 and 19.17% in the southern half of Block 184), including the Eugene Island 184A platform and production facilities. Byron has also a 12.5% Working Interest (Net Revenue Interest 9.58%) in the northern half Eugene Island Block 184 and 10.37% Working Interest (Net Revenue Interest 8.64%) in Eugene Island Block 172, excluding the Eugene Island 172 producing reserves and platform.
GLOSSARY
boepd : barrels of oil equivalent per day calculated on the basis of one thousand cubic feet of gas equals one barrel of oil
bopd : barrels of oil per day
bwpd : barrels of water per day
mmscfd : million standard cubic feet of gas per day
psia : pounds per square inch absolute
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