Leni has signed a binding Non-Disclosure and non-binding Commercial Terms Agreement setting out the potential terms of an agreement to cooperate with Sorgenia and Rohöl-Aufsuchungs Aktiengesellschaft ("RAG") to assess a potential joint venture for the exploitation of unconventional gas opportunities in Spain.
As previously reported in May 2010, LGO has identified unconventional gas prospectivity in the Lower Jurassic within the acreage held by the Company which spans over 550 sqkm in the proven Basque-Cantabrian basin in northern Spain. These prospects are currently being assessed.
Sorgenia is a major European conglomerate engaged in the production, import and sales of electricity and gas, and is actively seeking shale gas acquisitions to increase its gas supply in Europe. RAG is major European gas exploration and production company with operations in Austria, Hungary, Germany and Poland and is a recognized leader in shale gas exploitation in Europe
Under terms of the Agreements, LGO, Sorgenia and RAG have agreed an exclusivity period of 10 weeks to complete their assessment of the Company's unconventional gas opportunities in Spain and finalize full terms and conditions of a formal three way agreement between the parties based on the Commercial Terms Agreement.
David Lenigas, Executive Chairman, commented, "LGO has now attracted four international companies to potentially assist with the full exploitation of the Company's entire Spain acreage."
"The existing producing oilfields, developments and exploration prospects have been neglected for many years and with BP agreeing to take long term oil sales for their refinery on the east coast of Spain, Praxair participating in a nitrogen enhanced oil recovery joint venture announced last month and now this agreement with Sorgenia and RAG to co-explore and develop the unconventional gas potential of our acreage, we see tremendous medium to long term potential for the Company."
"The Sorgenia and RAG venture on completion will significantly de-risk the unconventional gas potential of our Spain acreage and shall accelerate the development of this very important and strategic asset."
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