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Leyshon Resources Strikes Gas with ZJS6 Well, Onshore Ordos Basin

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Leyshon Resources, a company focused on coal seam gas (CSG) exploration in China's prolific onshore Ordos Basin, revealed Wednesday its second exploration well – ZJS6 – has returned encouraging initial results.

Leyshon Resources said in a statement that while the analysis of the log and the samples is still ongoing, preliminary findings have indicated that around 262 feet (80 meters) of cumulative pay potential has been intersected across 15 potential pay zones.

Target formations were intersected at shallower depths than predicted and as a result, the total depth was less than the design 7,612 feet (2,320 meters). China Oilfield Services Limited (COSL) undertook wireline logging and the collection of 57 side wall core samples.

Leyshon Resources added that production casing has been installed, providing multiple opportunities to conduct flow tests on selected pay potential zones.

ZJS6 is sited four miles (seven kilometers) from ZJS5 and close to the southern boundary of the 273 square miles (708 square kilometers) Zijinshan Production Sharing Contract (PSC). Both of the wells are part of an initial well program designed to explore and test the potential for commercial gas production in an unexplored 119 square miles (308 square kilometers) central depression area that appears to show good continuity with the neighboring Sanjiaobei PSC.

Leyshon Resources aims to perform hydraulic fracturing works in ZJS5. The company will mobilize the crew during the Spring Festival Holiday and testing will start once weather conditions allow.

The Ordos Basin, the second largest sedimentary basin in China, is the eighth largest gas play in the world. According to data from Argonaut Securities Research, the basin currently accounts for more than 30 percent of Chinese domestic gas production and also hosts major resources of coal, petroleum, natural gas and CSG. Developing the Ordos Basin is high up on China's National Energy Administration (NEA) agenda as the basin is recognized for its competitive well costs relatively to its large resource potential and recoverability.

The NEA said in a statement released in December last year that the Chinese government will focus its developmental efforts on two commercial CBM bases moving towards 2015: the Qinshui Basin and the Ordos Basin. The NEA projected that the production capacity of CBM in the Qinshui Basin and the Eastern Ordos Basin should reach 16 billion cubic feet by 2015.

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