Leyshon Energy Advances Testing Program at China's Zijingshan Gas Project

Leyshon Energy Limited reported Monday that the Company is well advanced in the interim testing program at the Zijinshan gas project located in the Ordos Basin in central China and is actively progressing its interest in a number of acquisition opportunities in the region.

Zijinshan Gas Project - Interim Testing Program

Flow testing of three zones in Well ZJS7 is underway with each of the three zones flowing flammable gas with methane contents of up to 99 percent recorded.

Flows in all zones tested have so far been discontinuous and work is ongoing to establish more consistent gas flows. Results from ZJS7 indicate water production along with the gas production in the tested zones; this water production could be inhibiting gas flow and preventing us from establishing commercial flow rates. We are continuing to test the upper zone and evaluate the results.

In addition similar results are being achieved on one zone in Well ZJS5. This is the same zone as the upper zone being tested in Well ZJS7. Test work is ongoing and results are being evaluated.

There has been no test work so far on Well ZJS6. Testing of this well will be largely dependent on the results from individual zones in Wells 5&7.

These results so far are below our expectations for this area of the field. The results, along with our understanding of well performance in nearby fields, are however sufficiently encouraging to proceed with drilling an additional exploration well, ZJS8. Discussions on the location and design of this well with the Company's partner have commenced.

The interim testing program now has an estimated cost of around $4 million and, depending on the timing and results from Well ZJS8, is expected to be completed by the end of this year. The cost includes the drilling and testing of Well ZJS8.


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