20th Jul 2009 07:00
LENI GAS & OIL PLC
("LGO" or "The Company")
20, July 2009
MONTHLY UPDATE - JUNE
HUNGARY PRODUCTION INCREASE AND SPAIN DEVELOPMENT CONTINUES
Leni Gas & Oil plc (LGO), the AIM listed international oil and gas exploration, development and production company, today gives its monthly update for June 2009.
During June the Company's direct and indirect monthly production totalled 16,845 boe (average 562 boepd) which was 7% decreased from May (18,045 boe). Due to scheduled major development programs in Spain, planned interventions in Trinidad and production restrictions in the Gulf of Mexico 35% of company production was offline (25% planned development, 10% intervention and restrictions). The production schedule is expected to return to near full capacity in July with completion of an incremental production development program in Spain.
The monthly update from all countries of operation is summarised as follows:
Spain
The Ayoluengo Oilfield (100% LGO) in northern Spain, through LGO's 100% ownership of Compañia Petrolifera de Sedano, S.L. produced net to LGO 3,947 bbls of oil and 1.069 mmscf of gas during the month. Net LGO production in barrels of oil equivalent totalled 4,125.
Monthly production was slightly lower than the previous month with over 60% of the production scheduled offline due to the execution of the final stage of the first phase field stimulation program.
A 100% improvement in production is targeted at completion of this stage with improved productivity from the existing open perforations and re-opening of currently blocked zones. The well stimulation program was completed in mid July with a four week production system optimisation program currently underway to maximise productivity of each well.
The results of the program shall also refine the scope of the next major development program in Q4 2009 to perforate 400 metres of undepleted zones.
A new oil sales off-take agreement is also currently in the final stages of completion which shall increase both the monthly volume sales and sales price deck.
US Gulf of Mexico & Lower 48
The interests held by Byron Energy (28.94% LGO) in the US Gulf of Mexico and Gulf Coast is producing at a restricted rate of 5,000 boepd gross from the Eugene Island field as announced by the joint venture operator on 11 May 2009. LGO's indirect interest in the Eugene Island field through Byron Energy approximates to an effective net LGO monthly production in barrels of oil equivalent totalling 10,875.
Monthly production was restricted from the average of 6,000 boepd due to reduced gas sales pipeline system availability.
As announced on 08 April 2009, LGO has completed a Heads of Agreement with Byron Energy to transfer the Company's shareholding in Byron Energy from an indirect to a direct ownership of its US Gulf of Mexico oil and gas assets and is expected to complete in September.
Trinidad
The Icacos Oilfield (50% LGO rights) located on the Cedros Peninsula of Trinidad through LGO's 100% ownership of Eastern Petroleum (Australia) Pty Ltd produced gross 748 bbls during the month. The Oilfield produces no gas. Net LGO production in barrels of oil equivalent totalled 374.
Monthly production was reduced by 38% due to planned intervention.
Subsequent to negotiations with the Ministry of Energy of Trinidad new work program commitments has been provisionally agreed to substantially increase production above gross 500 bpd.
Acquisition proposals have been issued to the joint venture partner (50% rights) to acquire majority rights and change in control of the Oilfield.
Hungary
The Penészlek Gasfield (7.27% LGO) in eastern Hungary, through LGO's 7.27% ownership of PetroHungaria Kft produced net to LGO totalled 8.82 mmscf of gas and 1 bbl of condensate during the month. The Gasfield produces no oil. Net LGO production in barrels of oil equivalent totalled 1,471.
Monthly production was 71% higher due to joint venture decision to increase the production choke setting to maximise field recovery.
The joint venture has also agreed to commence drilling of the next Penészlek development well, Pen-105, at end July which is targeting the Pen-12 discovery with mean contingent gas resources of 1.46 bcf.
The development and production schedule of ZalaGasCo Kft (14.74% LGO) in western Hungary will be announced in due course, to include new acreage in south west Hungary from MOL as announced by Ascent Resources plc (AST) on 06 July.
Malta
LGO retains 10% in Area 4 Blocks 4, 5, 6 and 7 of Southern Offshore Malta with Mediterranean Oil & Gas ("MOG") retaining the balance. The Area is governed by a Production Sharing Contract with the Maltese Ministry of Natural Resources.
The joint venture is currently executing work program commitments to undertake various geoscience studies and data acquisition surveys to finalise the drilling targets for development of the acreage in 2010 and 2011.
David Lenigas, Executive Chairman, commented:
"As forecast June reported increased production from Hungary with the Company production schedule continuing steady with 35% of production offline due to major development in Spain and production restrictions in US Gulf of Mexico and Trinidad."
"In Spain, the last stage of the first phase stimulation program was completed in mid July to deliver major well productivity improvements in existing production zones and through re-opening blocked perforation zones. Once all individual well production systems are optimised during July and early August, we anticipate Spain gross production to be near 600 bopd. This rate excludes the Hontomin extended well test which is due to commence at end August."
"In Hungary the Penészlek Development Area exceeded the production schedule by almost 40% with the decision to modify the production management settings to maximise field recovery. We also look forward to increasing activity on ZalaGasCo with the recent asset addition in south west Hungary from MOL."
"In Trinidad, production was reduced due to planned intervention. However we are encouraged by provisional agreements with the Ministry of Energy to expand activity in Trinidad in order to substantially increase production."
"The Company expects the July production schedule to be a step change higher than June as the Spain production system is optimised subsequent to completion of the stimulation program. By the end of Q3 2009, the Company expects to release the full production schedule for the Gulf of Mexico interests on completion of the previously announced indirect to direct ownership conversion."
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
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 / Henry Lerwill
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.
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
boe = barrels of oil equivalent calculated on the basis of six thousand cubic feet of gas equals one barrel of oil
boepd = boe per day
bbls = barrels of oil
bopd = barrels of oil per day
mmscf = million standard cubic feet of gas per day
mmscfd = mmscf per day
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