23rd Dec 2009 14:09
LENI GAS & OIL PLC
("LGO" or "The Company")
23, December 2009
CORPORATE ACTIVITY & PRODUCTION UPDATE - NOVEMBER
Leni Gas & Oil plc (LGO), the AIM listed International Oil and Gas Exploration, Development and Production Company, today gives its corporate update for the six week period commencing 1 November 2009 and production update for November:
Corporate Overview
During November the Company's direct and indirect monthly production totalled 12,001 boe (average 401 boepd) which was almost 10% higher than October.
Peak daily production for the month was 454 boepd. The full production capacity was restricted with planned works in Spain and the Gulf of Mexico and shut-in production in Hungary.
The Spain production schedule continues to be restricted by about one third whilst reservoir isolation works are implemented to shut-off water production and handle increased gas production. These works shall maximise current oil production and optimise the wells in advance of the next capital programs.
In the Gulf of Mexico work programs to increase Eugene Island production with new compression are continuing to return the production schedule to near capacity. Preparations for the next asset to be developed have commenced.
Trinidad production increased by 20% as a result of planned workovers with a new subsidiary incorporated to simplify commercials in advance of the new acreage licence being awarded.
David Lenigas, Executive Chairman, commented:
"In Spain we continue to steadily increase production despite restricting oil production whilst water shut-off and gas handling works are ongoing. These works shall both maximise the productivity of the single completions and prepare the operation for the next major capital programs to open new production zones."
"In the Gulf of Mexico the compression upgrades to return Eugene Island to production capacity are continuing, and preparations are underway for the next asset in the development program. We look forward to reporting the full production schedule and development program at year end."
"In Trinidad we are pleased with the results of the recent workovers to increase production and have commenced preparations to considerably increase our activities levels in country to step change production."
"Looking ahead, the Company forecasts the December production schedule to be similar to November. We also expect to report the program of activities for all countries for the next 6 months."
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 6,351 bbls of oil and 1.633 mmscf of gas during November. Net LGO production in barrels of oil equivalent totalled 6,230 (221 boepd).
Peak production reported during the month was 278 boepd which was 10% higher than October despite production restricted from the estimated unrestricted rate of 440 boepd.
Oil volumes were similar to October with high gas and water production restricting oil production due to co-mingling of fluids and liquid shut-off from the producing reservoirs. Well interventions are ongoing to individually isolate each producing reservoir to shut-off the water production, which shall continue to restrict full field oil production until completed. Re-commissioning and re-configuration works have also commenced on the gas processing facilities to handle the higher gas production. These works are scheduled to be completed before initiation of the 2010 capital program.
Update of the reserves potential with the recently re-processed 3D seismic for the Ayoluengo oilfield and refinement of the planned capital programs is continuing by the Company's technical providers to identify further potential for reserves recovery and to optimise the planned capital projects.
US Gulf of Mexico & Gulf Coast
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 2,155 boepd gross (61% gas and 38% oil) from the Eugene Island field as announced by the joint venture operator on 16 October 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 4,663 (156 boepd).
Works are continuing to enable additional gas and oil production at Eugene Island, including reviewing gas lift efficiencies in the field and installing a new gas compressor with significantly increased capacity. The increased volumes from completion of all works on Eugene Island shall be reported at year end by the joint venture operator.
Preparations for development of the next asset in the Byron Energy interests have commenced.
In relation to the conversion agreement to transfer the Company's shareholding in Byron Energy to direct ownership of its US Gulf of Mexico and Gulf Coast assets, the majority of pre-closeout actions have been completed, with full completion expected in the short term.
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 1429 bbls during November. The Oilfield produces no gas. Net LGO production in barrels of oil equivalent totalled 715 (24 bopd).
Production increase of 20% was reported as a result of planned workovers.
The new licence commitments to expand production investment of the acreage are in the final stage of legal review and are expected to complete shortly. These commitments shall also include a change in operator control to LGO.
The Company has incorporated Leni Trinidad Limited which is wholly owned by LGO to simplify commercial arrangements and shall assign all interests of Eastern Petroleum (Australia) Pty Ltd to Leni Trinidad Ltd during conclusion of the new licence.
Negotiations to acquire the remaining 50% of the Oilfield are continuing with the joint venture partner parent company.
Hungary
The Penészlek Gasfield (7.27% LGO) in eastern Hungary through LGO's 7.27% ownership of PetroHungaria Kft is currently shut-in pending completion of Pen-104aa testing and Pen-105 pipeline construction.
Pen-105 which was completed in September 2009 tested at a flowrate of over 78,000 m3 of gas per day (2.75 mmscfd) from a nine metre interval at the top of the Miocene volcaniclastic section. This well is now shut-in awaiting the construction of the pipeline connection to the main export pipeline.
Pen-104aa tested a Miocene volcaniclastic reservoir section identified by open-hole well logs and mud log shows to be potentially gas bearing. Pending further evaluation of the preliminary test results, it is anticipated testing operations will continue when further specialist equipment can be mobilised in January.
The drilling permits for the Pen-101 and Pen-106 wells have been issued and site construction will commence shortly. The drilling rig is expected to be mobilized to the location late in January 2010.
The ZalaGasCo joint venture (14.54% LGO) reported no activity during the period.
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 with a commitment to drill by July 2011. The joint venture is currently undertaking various geoscience studies and data acquisition surveys in accordance with the work program to firm the drill target and well plan.
Competent Person's Statement:
The technical information contained in this announcement has been reviewed and approved by Fraser S Pritchard, Executive Director 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
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. 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, Trinidad, Hungary and Malta with 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 programs.
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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