TIDMLRL
RNS Number : 9245H
Leyshon Resources Limited
18 July 2012
LEYSHON RESOURCES LIMITED
18 July 2012
Proposed Acquisition Of Stake In China's Unconventional Gas
Revolution
Leyshon Resources Limited (AIM/ASX:LRL) ("the Company") is very
pleased to announce that it expects to finalise terms shortly to
acquire a company which holds a 100% interest in the Zijinshan
Production Sharing Contract located on the eastern fringe of the
prolific Ordos Gas Basin in Central China.
Respected industry advisor RISC has advised that in its view the
Zijinshan Gas Project contains gross prospective resources that are
potentially large due to the confirmation of the presence of
unconventional gas, with in place estimates in the range 1 to 3.8
Trillion Cubic Feet. The Ordos basin generally offers one of the
highest potential IRR's in China.
RISC does however caution that whilst the opportunity appears
attractive it contains significant risk which must be mitigated via
the acquisition of appropriate data and completion of a pilot plan.
The Company plans to retain RISC as its advisor in the exploration
and development phase of the project.
Under the proposal Leyshon will acquire a 100% interest in Hong
Kong Company Pacific Asia Petroleum Limited (PAPL) from Houston
based CAMAC Energy Inc. Leyshon is currently undertaking final due
diligence and the parties are expecting to finalise a Share and
Purchase Agreement to complete the transaction by the 27th
July.
PAPL is well established in the Oil and Gas Exploration sector
in China and under the proposed terms of the acquisition its
experienced technical team will be retained. The team has already
completed four wells under the Zijinshan Production Sharing
Contract, two of which have been cased, and acquired 160 kilometres
of 2 D seismic data which has been used to identify several major
gas exploration targets.
The initial exploration focus will be on drilling several new
wells to test extensions to nearby major shale gas discoveries and
production testing the cased wells.
The Zijinshan Production Sharing Contract is with one of China's
major oil and gas companies which has retained the right to buy
back a 40% interest in the contract at the completion of the
exploration phase and to jointly fund the project into
production.
As previously announced the Company remains firmly of the view
that, in light of the expanding demand for all types of energy
within Central China over the next ten years, high quality energy
assets located close to transport and distribution infrastructure
will become increasingly valuable over time.
As a result, management is of the view that the acquisition and
potential development of shale gas assets in the Ordos Basin has
the ability to complement the Company's potential energy coal
acquisition in Xinjiang.
Further announcements will be made in due course.
China now has the world's largest unconventional gas resources
outside the United States
The Ordos Basin, located in Central China 500 kilometres west of
Beijing, hosts the country's second largest gas resource. As part
of its plans to reduce its dependency on imported oil and gas, the
National Development and Reform Commission's (NDRC) latest Five
Year Plan provides for a dramatic boost for the development and
exploitation of unconventional gas in the eastern fringe of the
Ordos Basin. Major pipeline infrastructure is already in place
fuelling the escalating demand from nearby regional population
centres and industry.
Shale gas is an unconventional type of natural gas that is
formed by gas trapped within shale formations. With methane as its
main ingredient, it is a clean and high-efficiency energy resource.
While gas currently plays only a minor role in primary energy use
in China at around 4 percent, in March of this year, the Chinese
government announced a new shale gas development plan, one of the
stated aims of which is to produce annually 6.5 billion cubic
metres of natural gas by 2015.
With consumption set to almost treble over the next eight years,
China is expected to draw from all available sources to keep up
with demand.
To tap the potential of its reserves, the Chinese government has
unveiled a string of policies to boost production. At the end of
last year, the State Council, or China's cabinet, defined shale gas
as a type of mineral resource. In March, the government released
the 2011-2015 plan for the shale gas industry.
Major shale gas development zones will be established during the
period. State-owned petrochemical heavyweights have tested the
waters by making efforts to acquire and collaborate with overseas
owners and developers.
China's natural gas consumption was 131.7 billion cubic metres
in 2011, already a steep rise from the 2000 figure of 24.5bcm.
However, consumption levels are predicted to soar even higher to
reach 375bcm by 2020, thanks to the country's desire to increase
share of natural gas in its energy mix.
A senior official of the NDRC, said the shale gas industry
should be open to all types of investors, adding that departments
involved should offer tax and fiscal incentives to investors.
Industry participants have suggested that production growth rates
of 20% per annum will be required to meet future targets.
Cash Reserves
At quarter end the Company had A$51.0 million in cash, and is
due A$0.7 million in term deposit interest for a total of A$51.7
million (GBP 33.5 million). This is equivalent to A$ 21 cents per
share (14 pence per share).
For further information please contact:
Leyshon Resources Limited
PaulAtherley - Managing Director
Tel: +86 137 1800 1914 patherley@leyshonresources.com
Seymour Pierce
Jonathan Wright (Nominated adviser)
Richard Redmayne (Corporate broking)
Tel: +44 (0)207 107 8000
Background
http://www.leyshonresources.com
Leyshon was on the ground in 2003 when China opened its mining
sector to foreign investment. It has been fully engaged in China
since then and has its main operating office located in
Beijing.
China's latest Five Year Plan emphasizes the planned
urbanisation of a large number of Central China's rural population
into second and third tier cities lifting the urbanisation rate to
51.5% of the overall population.
This will result in significant increases in infrastructure
spending and energy demand. The Company is planning to invest in
high quality energy assets in China to meet this growing
demand.
Managing Director Paul Atherley is an Executive Committee member
of the China Britain Business
Council and serves on the European Union Chamber Energy Working
Group.
The statements of resources in this Release have been
independently determined to Society of Petroleum Engineers (SPE)
Petroleum Resource Management Systems (SPE PRMS) standards by
internationally recognized oil and gas consultants RISC Operations
Pty Ltd and NSAI.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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