LGO Makes Continued Progress Across All Production Operations


Ayouluengo Field
(Click to Enlarge)

Leni Gas & Oil has provided its corporate update for the six week period commencing August 1, 2009 and a production update for August.

Corporate

  • During August the Company's direct and indirect monthly production totalled 16,103 boe (average 534 boepd) which was similar to July (16,392 boe)
  • Due to ongoing production development programs in Spain and production restrictions in the Gulf of Mexico 32% of company production was deferred (15% planned developments and 17% production restrictions) against a base monthly production schedule of 23,800 boe (793 boped) as of 2009 start.
  • The Company appointed Eclipse Petroleum Technology Ltd and Equipoise Solutions Ltd, the international oil & gas consultancy companies, as production engineering and geosciences services suppliers to support LGO worldwide operations.

Spain

  • The Ayoluengo Oilfield (100% LGO) in northern Spain, through LGO's 100% ownership of Compañia Petrolifera de Sedano, S.L. produced net to LGO 5,477 bbls of oil and 1.144 mmscf of gas during August. Net LGO production in barrels of oil equivalent totalled 5,668 (189 boepd).
  • Oil volumes were over 10% higher than July with continuation of the production system modification program, subsequent to well clean-out, to implement sand and water handling controls and stabilise production above 400 bopd.
  • The results of the well clean-out and production system modification program has identified the need to modify all current well completions and re-configure both surface and downhole production facilities to maximise incremental production from the planned development programs. Through these re-completion and re-confguration programs, the Company is aiming to free flow production from the highest producing wells for the first time in over 20 years. These programs are currently being finalised by Eclipse for execution in Q4 2009 with details to be announced in the next corporate update.
  • Re-processing of the original 3D seismic survey conducted by Chevron in 1990 was completed with update of the Ayoluengo geological model in progress by Equipoise to revise recoverable reserves estimates and optimise future depletion and infill drilling plans. The revision of reserves and resources shall also include the potential for unconventional gas prospectivity within the Spanish acreage.
  • Negotiations for new oil sales agreements are continuing to identify multiple off-take points to increase sales volumes and commodity pricing, with modification of the production separation system underway to improve oil specification.
  • · The Hontomin extended well test is planned to commence imminently at end September on conclusion of the current Ayoluengo production system modifications.

US Gulf of Mexico & Gulf Coast

  • The interests held by Byron Energy (28.94% LGO) in the US Gulf of Mexico and Gulf Coast is producing at a restricted rate of 4,044 boepd gross (58% gas and 42% oil) from the Eugene Island field as announced by the joint venture operator on 23 July 2009. LGO's indirect interest in the Eugene Island field through Byron Energy approximates to an effective net LGO monthly production in barrels of oil equivalent totalling 8,796 (293 boepd).
  • Production volumes from Eugene Island are currently affected by various well performance issues due to gas compressor constraints and the onset of water production from the A-8 well. It is planned to continue production of the A-8 well from the current reservoir and augment compression facilities to re-establish production from the low pressure oil wells.
  • As announced on 07 September, Transcontinental Gas Pipeline Company, LLC ("Transco") has informed the joint venture that it will be performing facility modifications on line "C" of the Southeast Louisiana Lateral Pipeline near Gibson, Louisiana. These modifications are being made in order to facilitate future routine in-line inspections. The modification work will require that Transco shut in numerous production facilities on its pipeline system for an estimated 11 days from 8 September 2009, including the pipeline network serving the Eugene Island field. Accordingly Eugene Island field production will be completely shut in during the repair period. The joint venture will take advantage of the situation to perform a production enhancing procedure on the A-6 well and will return the field to full production immediately upon the completion of the well and pipeline operations.
  • LGO and Byron Energy are nearing completion of the conversion agreement as announced on 08 April 2009 to transfer the Company's shareholding in Byron Energy to direct ownership of its US Gulf of Mexico and Gulf Coast assets. Under terms of the conversion LGO shall retain 7.25% share of Eugene Island Field production, the ability to acquire up to 29% of Byron Energy's interest in all option properties with Leed Petroleum and an option to acquire a 20% direct working interest in properties acquired by Byron Energy outwith of the Leed Petroleum agreement. This conversion agreement is expected to complete shortly.

Trinidad

  • The Icacos Oilfield (50% LGO rights) located on the Cedros Peninsula of Trinidad through LGO's 100% ownership of Eastern Petroleum (Australia) Pty Ltd produced gross 900 bbls during August. The Oilfield produces no gas. Net LGO production in barrels of oil equivalent totalled 450 (15 bopd).
  • Production deferment of 25% was reported for August as a result of planned well intervention for 10 days.
  • Formal discussions with the Ministry of Energy were undertaken to finalise new minimum licence commitments to increase production from the existing reservoir, exploit the undepleted acreage and undertake subsurface surveys to fully evaluate the reserves and resources. It is expected these commitments will commence during early Q4 2009.
  • Negotiations are near conclusion with the joint venture partner (50% rights) to effect change in control of the Oilfield and acquire majority rights. The Company has commenced the preparation of an Operations Management System with an in-country Oilfield Services company to ensure a seamless transition to LGO as Operator.

Hungary

  • The Penészlek Gasfield (7.27% LGO) in eastern Hungary, through LGO's 7.27% ownership of PetroHungaria Kft produced net to LGO 5.376 mmscf of gas and no condensate during August. The Gasfield produces no oil. Net LGO production in barrels of oil equivalent totalled 896 (30 boepd)
  • Production was lower than July as the current producing well, Pen-104a, approaches maximum depletion with recovery versus mean contingent reserves of 0.6 bcf over 70%. The remaining recoverable reserves from Pen-104a are currently being targeted through production optimisation and the joint venture are finalising plans to maximise the remaining reserves in the Pen-104 prospect.
  • The joint venture completed and tested the next Penészlek development well, Pen-105, on 15 September which targeted gas resources in two Miocene reservoirs. The gas rates achieved and the reserves associated with Pen-105 were substantially higher than pre-drill estimates of 1.46 bcf. The production pipeline has been planned with the construction permit expected by the end of November.
  • The joint venture in western Hungary, ZalaGasCo Kft (14.74% LGO), is currently in dispute with Ascent Resources plc, the majority owner and operator of the joint venture. The Company is currently in process of resolving the matter with Ascent Resources failing which the matter will be resolved in accordance with the provisions of the joint venture agreement.

Malta

  • LGO retains 10% in Area 4 Blocks 4, 5, 6 and 7 of Southern Offshore Malta with Mediterranean Oil & Gas ("MOG") retaining the balance. The Area is governed by a Production Sharing Contract with the Maltese Ministry of Natural Resources with a commitment to drill by July 2011.

David Lenigas, Executive Chairman, commented, "We are pleased to report continued progress across all of our production operations over the last six weeks. In Spain, production optimization works continue to stabilize production with further upgrades planned to ready the field for the next step change in production. In the Gulf of Mexico we now anticipate increasing production with upgrades to the Eugene Island facilities. In Trinidad production enhancement programs shall shortly commence to step change production with the conclusion of the new licencing commitments, and in Hungary we anticipate announcing the next stage of development to maximize recovery from the existing production operations."

"As forecast, August saw an increase in production with an increase in Spain despite production depletion, intervention or restrictions in all other countries. A total of 32% of the base production schedule was deferred during the period due to continuing production enhancement projects in Spain, and production deferment in the Gulf of Mexico and Trinidad. Looking ahead, the Company forecasts the September production schedule to show continuing production improvements in Spain, though reduction in GoM and Hungary due to planned infrastructure modifications and reserves depletion respectively. We also expect to report a timetable to upgrade Spain in preparation for the next stage of production enhancement, outline the plan to commence production expansion in Trinidad and Hungary and potentially announce completion of the interest conversion agreement in the Gulf of Mexico."
 

Events  SUBSCRIBE TO OUR NEWSLETTER

Our Privacy Pledge
SUBSCRIBE


Most Popular Articles


From the Career Center
Jobs that may interest you
United States Broussard: Senior Field Engineer - MWD/LWD
Expertise: Field Development
Location: Broussard, LA
 
Senior Well Engineer
Expertise: Drilling Engineering|Well Control
Location: United States
 
Brinefield Operations Engineer
Expertise: Field Service Tech|Pipeline Engineering|Production Engineering
Location: Magnolia, AR
 
search for more jobs

Brent Crude Oil : $54.94/BBL 0.88%
Light Crude Oil : $51.79/BBL 0.21%
Natural Gas : $3.65/MMBtu 6.10%
Updated in last 24 hours