Leni to Commence Workover of Spanish Wells

Leni announced further details regarding its operations in Northern Spain and Trinidad.


  • LGO's wholly owned Spanish subsidiary Compañía Petrolífera de Sedano, S.L. ("CPS") is ready to commence the planned workover of wells on the Ayoluengo and Hontomin Fields
  • All necessary equipment for the program of well recompletion is under contract and field operations will commence imminently
  • Plans to test nitrogen to enhance oil recovery continue to be progressed with Praxair Inc, and start-up of field operations are now expected in the third-quarter 2011 after the planned well recompletion operations have been carried out
  • The previously announced Unconventional Gas Venture with Sorgenia International BV ("Sorgenia") and Rohöl-Aufsuchungs Aktiengesellschaft ("RAG") has successfully completed the initial technical assessment phase
  • Additional exploration licenses have been applied for to increase the Company's holdings in its core business area in Northern Spain
  • Following the planned workover program in Spain production is expected to increase to at least 300 bopd and is hoped to reach in excess of 500 bopd 

Workover Program

Following a full re-evaluation of all available well data, plans have been finalised to workover a minimum of six oil wells in the Ayoluengo Field and the producing Hontomin Field well. Additionally, four further Ayoluengo wells have been planned as contingent targets should the core program wells be completed quickly, be judged inaccessible or show better than expected results. 

A 60 tonne workover rig has been contracted for a minimum 90 day period to complement the existing Company owned service rig. Wireline logging and perforating equipment is on hire, along with the necessary cementing services. A minimum 144 meters of existing perforations are planned to be re-shot to ensure improved well bore connection with the reservoir and to remove accumulated scale. Additionally a further 85 meters of perforations targeting reservoir zones which have never previously been open for production will also be shot, of which 80 meters are in the priority wells at Ayoluengo (Ayo-4, 5, 32, 36, 37 and 46) and in Hontomin-2. 

Operations to improve the reliability of the re-perforated wells will also be undertaken including the replacement of production tubing and pump rods. An Electrical Submersible Progressive Cavity Pump (PCP) is planned to be installed in well Ayo-37 which, due to its configuration, will benefit from this more advanced pumping technology. 

The initial 90 day work program has been budgeted at a capital cost of €1.2 million, funds which were raised as part of the placement in November 2010. 

Field operations will be commenced immediately the final permit has been received from the relevant authorities relating to the use of the explosives that are required during the perforation phase, at which time all equipment and contract personnel will be mobilized to site. 

Production and Other Operations

During 2011 production from LGO's Ayoluengo Field operations has averaged 122 bopd. It is anticipated that following the workover program, which is located on the eastern flank of the field, production will be at least 300 bopd and it has been estimated that production of over 500 bopd is possible from the planned workovers. 

Discussions with Praxair as previously announced in October 2010, are continuing concerning the pilot nitrogen enhanced oil recovery project. It is hoped that a definitive agreement will be signed in the second-quarter 2011 and field operations to test the effectiveness of nitrogen injection will commence in the third-quarter 2011, after the planned well recompletion operations have been carried out. The injection operations will be targeted in the western flank of the field where historic recovery rates have been extremely low (approximately 5%) and where conditions are believed to be suitable for piloting EOR techniques. 

The Company has evaluated the potential to deepen at least one well to the unproduced Liassic reservoir which is known to be oil bearing and lies below the main Jurassic reservoirs of the Ayoluengo Field. A sidetrack of the Hontomin-2 well into a separate fault compartment observed on the new 3D seismic data is also under consideration. Options have been secured on a suitable drilling rig and a final decision will be taken during the second-quarter 2011 as to the viability of these projects. 

In support of its long term aspirations to explore for additional satellite fields the Company has recently made a number of applications for exploration permits in the vicinity of its existing acreage. Most recently an application was made for the Urraca License which covers an area of 94,815 hectares north-east of the La Lora License, which contains the Ayoluengo Field. The Company has also extended its permit on the Basconcillos Licence area until June 2013 and has applied for the conversion of the Huermeces Licence, which contains the Hontomin Field, from an exploration to a production permit. Further permit applications for additional exploration areas are planned to be filed in March 2011. 

Unconventional Gas Agreement

Further to the Company's announcement on the 5th November 2010 of an Unconventional Gas Venture in Spain with Sorgenia and RAG, the co-venture partners have now successfully completed their initial technical assessment. The parties have extended the term of the non-binding Commercial Terms Agreement and are continuing active discussions on a potential long-term agreement. 


Pending a final decision by PriceWaterhouseCoopers and Primera Oil and Gas Limited ("Primera") on the sale of the 50% working interest in Icacos held by Primera the new 20 year operating license has yet to be signed. Field operations have continued under the existing arrangements and only limited well intervention work has been undertaken. Gross field production during 2011 has averaged 34 bopd. 

The Company is continuing to seek additional opportunities to participate in field development, reactivation and exploration projects onshore in Trinidad and has active discussions with several groups to acquire and operate several existing and new leases. 

Neil Ritson, Chief Executive commented, "Although it has taken slightly longer than expected to prepare for this year's activity, LGO is now set for an active and productive period in Spain. I look forward to reporting further as our work program proceeds. We are confident that the program we have in place will achieve our target of increasing production to 500 bopd from our Spanish oilfields. Longer term expectations remain high given the presence of considerable untapped resources in the existing fields and surrounding areas and the Company sees 2011 as a turning point in its efforts to exploit that potential. Progress in Trinidad is also picking up and we hope to have additional news on this in the next few months."


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