TIDMSLE
RNS Number : 5844R
San Leon Energy PLC
30 June 2015
30 June 2015
San Leon Energy Plc
("San Leon" or "the Company")
Final Results
San Leon Energy, the AIM listed company focused on oil and gas
exploration in Europe and North Africa, today announces its audited
final results for the year ended 31 December 2014.
Highlights:
Operational
* Farm-in to Rawicz conventional field and the
Siekierki tight gas field by Palomar Natural
Resources for $20m and a 65% working interest.
Planned five well work programme and no up-front
drilling costs to San Leon. Post year end, announced
Rawicz-12 a commercial gas discovery and expected to
be the largest gas development in Poland for 20
years.
* Lewino-1G2 in the Gdansk W concession in Poland's
Baltic Basin regarded by the Board as the best single
vertical frac in a European shale well to date. A
horizontal multi-fracced well has been fully designed
and engineered with farm-out discussions ongoing.
* Initiated a three well shallow drilling programme in
the Karpaty area and Permian Basin in Poland. The K
ty and Giera towice wells in Karpaty did not flow
commercial hydrocarbons. Niwiska, the third well
(Permian Basin), was put on hold due to the low oil
price.
* Positive results from core sampling and bench test
retorting on the Timahdit oil shale licence, onshore
Morocco. Signed a MOU with Chevron Lummus Global to
upgrade the shale oil to synthetic crude.
* Preparations were made to drill the first will in the
conventional Tarfaya licence onshore Morocco. This is
expected to spud in early Q3 2015.
* The SM-1 well offshore Morocco recovered high quality
oil during drilling and testing but did not achieve
sustained flow and was plugged and abandoned.
Evaluation work ongoing.
Corporate
* Significant efforts have been made in reducing costs.
* As part of its asset optimisation strategy San Leon
exited Germany and Slovakia, relinquished all or part
of a number of Polish licences, as well as
relinquishing the Tarfaya oil shale licence in
Morocco.
* Oisin Fanning, Executive Chairman of San Leon, agreed
with the Board in 2014 to take 80 per cent of his
salary in shares, which came into effect on 1 January
2015.
Financial
* Total comprehensive loss for the year of EUR34.4m
(2013: loss of EUR25m).
* Total assets decreased to EUR281m at 31 December 2014
(2013: EUR308m).
* At year end the group had cash and cash equivalents
of EUR1.8m (2013: EUR11.4m).
* Post year end, San Leon announced a contingent
Placing of GBP29 million, as well as a share capital
reorganisation.
Outlook
* ToscaFund showed continued support by committing
GBP16 million as part of the GBP29 million placing,
subject to shareholder approval at the EGM. These
funds will help transform San Leon to a
cash-generating producer, and will bring other assets
towards development.
* Together with PNR, San Leon is in advanced stages of
the planning and design of several development
scenarios focused on bringing the Rawicz gas field
online in early 2016.
Enquiries:
San Leon Energy plc
Oisin Fanning, Executive
Chairman +353 1291 6292
Brandon Hill Capital
Oliver Stansfield +44 (0) 20
Jonathan Evans 3463 5000
finnCap Ltd
Corporate Finance
Matt Goode
Christopher Raggett
Corporate Broking +44 (0) 20
Joanna Weaving 7220 0500
Macquarie Capital
(Europe) Limited
Jon Fitzpatrick +44 (0) 20
Nicholas Harland 3037 2000
Westhouse Securities
Ltd
Nominated Adviser
Richard Johnson +44 (0) 20
Antonio Bossi 7601 6100
Vigo Communications
Financial Public
Relations
Chris McMahon +44 (0) 20
Alexandra Roper 7016 9572
Plunkett Public Relations +353 (0) 1
Sharon Plunkett 280 7873
www.sanleonenergy.com
Chairman's statement
2014 was a transformational year for San Leon Energy and for the
whole energy industry, but for different reasons.
For key energy players around the world, 2014 was the year when
the price of oil fell significantly, putting enormous pressure on
their financial performances and share prices, forcing some of them
to cut costs and jobs. For San Leon, 2014 was the year when one of
our assets, the Rawicz-12 well on the Rawicz gas field in
Southwestern Poland, tested at a highly successful 4.5 million
standard cubic feet per day.
2014 saw San Leon move considerably closer to its production and
cash flow goal, enhanced by the placing announced in June 2015. The
partnership deal, struck in July 2014 with Palomar Natural
Resources around its Rawicz and Siekierki fields, involves
significant work programmes and an up-front payment to the Company
of $20 million, positioning San Leon for near-term production.
Rawicz saw the first well drilled since the 1980s, and in early
2015, after the reporting period, we announced a highly successful
well test which is expected to lead to Rawicz being the largest gas
development in Poland for 20 years. This has now booked material
reserves for San Leon.
Siekierki has an existing stock of three wells that tested at 3
mmscf/d each.
Poland
Besides Rawicz and Siekierki, the significant success of the
Lewino-1G2 well in the Gdansk W concession in Poland's Baltic Basin
makes it the most successful single shale frac in a vertical well
in Europe. During 2014 a horizontal multi-fracced well was fully
designed and engineered and is now the subject of ongoing farm-out
activity. Other Operators' work in this area adds further weight to
there being a significant chance that the planned well could prove
the commerciality of this enormous play potential.
Other well activity has been less successful. The Company
carried out drilling in two wells in its three well shallow
drilling programme in Poland. Unfortunately neither well flowed
commercial hydrocarbons, and the results will be used to high-grade
the portfolio. Niwiska, the third well in the programme, has been
put on hold due to the low oil price.
Morocco
The SM-1 well offshore Morocco, operated by Genel Energy,
recovered high quality oil during drilling and testing, but did not
achieve sustained flow and was plugged and abandoned. San Leon was
carried for part of the well cost, although the drilling problems
encountered and the addition of well testing to the programme,
required material funding by the Company. The Company expects
follow-up well activity on the block.
Onshore, preparations were made to drill our first well in the
Tarfaya licence, in the conventional Tertiary sandstone.
The 36 Km(2) (c7000 acres) Timahdit oil shale licence continues
to show real promise. In August 2014, surface and core samples of
oil shale were bench tested by Enefit in Germany to assess the
ability of the Enefit process to generate shale oil. The results,
announced in January 2015, prove the Enefit process (which is
already used in Estonia) to be applicable to the Company's acreage,
with attractive yields per tonne of rock, and will now be used to
assess the efficiency of the Chevron Lummus upgrading technology on
the shale oil.
Corporate
Significant efforts have been made to manage costs. The Company
has exited Germany and Slovakia, and relinquished all or part of a
number of Polish licences. The Warsaw office has been moved to new
premises, roughly halving its rental overhead. During 2014 I agreed
with the Board that I would take 80 per cent of my salary in
Company shares from 1st January 2015. These shares will be issued
in due course.
Once again the Company recorded no Lost Time Incidents (LTIs)
for the year, reflecting the firm HSEQ commitment of all staff and
contractors. It remains our top priority.
Outlook
Our Company is now poised to generate cash flow from 2016,
starting with the Rawicz gas field, followed by Siekierki, and then
joined in 2018 by the Barryroe oil field, offshore Ireland.
The proposed recent placing will enable the Company to retain
and benefit from those assets, as well as to execute other exciting
activities from the portfolio. Immediate priorities are drilling
the Tarfaya-1 gas well, onshore Morocco, and a well in Albania
using an onshore drilling location to target an offshore oil
target.
While deal-making in the Exploration & Production sector has
slowed with the depressed oil price, we continue to experience
significant interest in many of our assets. In particular, the
Baltic Basin shale and tight sandstone assets in Poland are ripe
for further appraisal and are considered by San Leon to be on the
cusp of proving commerciality. In addition, our Romanian assets
combine a discovery with a variety of exploration targets that are
ready to drill.
I believe San Leon now has the critical mass to capitalise on
its cash flow and existing assets and to deliver the shareholder
value that we have been working towards. The proposed increase in
ToscaFund's stake in the Company to approximately 42% makes San
Leon strong and resilient, and positions us as one of the few AIM
production growth stories.
LONG TERM PROJECTS
Morocco
Oil shale technology development
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