TIDMLRL
RNS Number : 1516H
Leyshon Resources Limited
17 June 2013
17 June 2013
Leyshon Resources Limited
Update on Well ZJS6 And Well ZJS7
Leyshon Resources Limited (AIM/ASX:LRL) ("Leyshon" or the
"Company") provides the following update from its Zijinshan Gas
Project, located on the eastern fringe of the prolific Ordos Gas
Basin in Central China.
Its wholly owned subsidiary Pacific Asia Petroleum Limited
(PAPL) has discontinued the testing of well ZJS6, the second well
drilled in the current programme, located on the southern boundary
of the licence due to technical problems.
The well has a total depth of 2,320 metres with 80 metres of
cumulative potential pay interval intersected across 15 potential
pay zones. Several of the zones tested, which elsewhere in the
field are dry, have produced water.
It has not been possible to isolate or to accurately define the
source of the water nor to determine whether these are issues
specific to well ZJS6 or more general to this area of the licence.
Accordingly the decision has been made to discontinue testing on
the well for the time being and to focus exploration and appraisal
efforts on the upcoming programme.
It is possible that the well may be revisited at later date to
attempt to isolate the water and to test different zones. However
very useful information on the target zones has been gathered which
will be valuable for testing future wells.
Following the successful flow test on well ZJS5, located more
centrally in the licence, where one of the target zones recorded a
free gas flow rate of 160,000 scf/day, formation pressure testing
is ongoing with results expected in the next few weeks. Several
additional zones have been identified for flow testing later in the
year as part of the overall appraisal programme.
Interpretation of the recently acquired 318 kilometres of 2D
seismic data has been completed and the location for well ZJS7 has
been selected as approximately three kilometres to the north of
well ZJS5.
Negotiations on access, farmer compensation and local approvals
are underway and it is expected that the rig will be mobilized
shortly and the well spudded during the first or second week of
July, subject to unexpected delays, with approximately a four week
drilling time.
Well ZJS7 is the first of three wells committed to be drilled as
part of this year's accelerated exploration and appraisal
programme. A further three wells are planned to be drilled based on
favourable results. An additional rig will be mobilized to enable
all six wells to be completed by the end of the year. All wells are
expected to be flow tested in the event they intersect zones that
warrant testing.
Managing Director Paul Atherley commented " ZJS6 was the second
well in an 8 well programme, with not every well to be successful.
We are however confident in the full potential of our project,
particularly following the positive results from well ZJS5, and in
the ability of our team to unlock value from the license area going
forward."
We remain focused on the outcome at the end of the accelerated
exploration and appraisal programme. Accordingly the attention now
turns to well ZJS7 and subsequent wells as we progressively gain a
better understanding of the potential and as we work to de-risk the
project."
Initial Exploration Programme
All three wells, ZJS5, ZJS6 & ZJS7, are part of an initial
programme designed to explore and test the potential for commercial
gas production in a highly prospective and unexplored 380 square
kilometre central depression area that appears to demonstrate good
continuity with the neighbouring Sanjiaobei discovery.
PAPL has a 100% interest in the exploration phase of the
Production Sharing Contract (PSC) with PetroChina, which has the
right to back into a 40% interest at the development stage. The
wells are ideally located within approximately 10 kilometres of a
tie-in point on the recently commissioned Lin-Lin pipeline which
supplies the growing demand in Shanxi Province. Recent discussions
with potential off-take partners suggest that there continues to be
a shortage of locally sourced gas to feed the pipeline and as a
result prices are continuing to rise. Locally based major
industrial users are reportedly paying around U$ 12 per mscf.
Following the encouraging results from the programme to date the
PSC partners have accelerated the 2013 exploration and appraisal
programme, with a total estimated cost of up to US$20 million, with
the main objective to define a resource sufficient to delineate and
submit a Chinese Reserve Report in mid 2014. The Company is well
placed to carry out its 2013 exploration and appraisal programme
with a strong cash position of US$40 million (unaudited). With 249
million ordinary shares on issue this represents approximately A$17
cents per share and 10 pence per share. The cash position does not
take into account interest due nor all of the liabilities for the
first two wells.
For further information please contact:
Leyshon Resources Limited
Paul Atherley - Managing Director
Tel: +86 137 1800 1914
admin@leyshonresources.com
Cantor Fitzgerald Europe
David Porter/Rick Thompson (Nominated adviser)
Richard Redmayne (Corporate broking)
Tel: +44 (0)207 107 8000
Pelham Bell Pottinger
Charles Vivian /James MacFarlane
Tel:+44 (0)20 7861 3232
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 overtook the United States as the world's largest energy
consumer in 2010, however on a per capita basis it still only
consumes about 25% of the energy of the most developed nations. The
government has recently described the country's increasing
dependence on foreign energy sources as one of the "Grave
challenges to energy security".
Its main policy response to this challenge is the rapid
development of domestic unconventional gas resources, with a
particularly focus on the Eastern Flank of the Ordos Basin. The aim
is to rapidly increase the output of unconventional gas from the
currently very low levels to an annual production of 6.5 billion
cubic metres by 2015.
Leyshon, along with its partner PetroChina, is one of small
number of companies exploring for and looking to develop
unconventional gas production in the Eastern Flank of the Ordos
Basin. Managing Director Paul Atherley is the Vice Chairman of the
China Britain Business Council and serves on the European Union
Chamber Energy Working Group.
The qualified person, Frank Fu, who has reviewed this update,
has 21 years' experience in the oil & gas industry and is a
member of the Society of Petroleum Engineers. He holds a BS in
Geology and Exploration in Shanxi Mining College in Taiyuan,
Shanxi. Frank is currently the Chief Operation Officer for Leyshon
Resource and is based in Leyshon's Beijing office. He joined
company in 2012, prior to this, he had spent the majority of his
career at Conocophillips China and Conocophillips overseas gas and
oil projects.
This information is provided by RNS
The company news service from the London Stock Exchange
END
DRLFRMTTMBMBMAJ
Leyshon Resources (LSE:LRL)
Historical Stock Chart
From May 2024 to Jun 2024
Leyshon Resources (LSE:LRL)
Historical Stock Chart
From Jun 2023 to Jun 2024