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Leni Gas & Oil plc (LGO), the AIM listed International Oil and Gas Exploration, Development and Production Company, today gives its corporate update for the six week period commencing October 1, 2009 and production update for October:
- During October the Company's direct and indirect monthly production totalled 11,342 boe (average 371 boepd).
- The Spain production schedule was impacted by oil production restrictions due to upgrade and testing works to handle the high gas production in advance of running re-completions to maximize oil and gas production from the multiple reservoirs. These works shall maximize current oil production and optimize the wells in advance of the next capital programs.
- GOM work programs to increase Eugene Island production are continuing with third party mainline works completed. The production schedule has returned to near capacity and shall be reported at end 2009 as per the joint venture operator quarterly reports. The next stage of GOM capital programs is expected to be announced shortly.
- Trinidad production expansion plans are currently being finalised in anticipation of new license commitments commencing shortly.
David Lenigas, Executive Chairman, commented, "In Spain we have embarked upon a program of upgrading to re-commission the gas processing facilities and run re-completions to handle differential increased oil, gas and water production. Although high gas production is currently limiting oil production, these upgrades and re-completions will maximize production of each reservoir, and prepare the field for the next major increase in production from the perforation and drilling programs.
"In the Gulf of Mexico the gas export maintenance and well interventions have been completed, and the compression upgrades are continuing to return Eugene Island to production capacity. The production schedule has increased considerably since the last reporting period and we look forward to reporting this increase before end 2009 as well as the completion of the Byron equity conversion agreement.
"In Trinidad preparations are continuing to commence the new licence commitments and effect the Operator change in control, and in Hungary the Company has decided to exercise its option for participation in the Lovászi with MOL.
"Looking ahead, the Company forecasts the November production schedule to be similar to October with ongoing programs in Spain and the Gulf of Mexico. We also expect to report the program of activities for all countries for the next 6 months."
- The Ayoluengo Oilfield (100% LGO) in northern Spain, through LGO's 100% ownership of Compañia Petrolifera de Sedano, S.L. produced net to LGO 5,945 bbls of oil and 1.709 mmscf of gas during October. Net LGO production in barrels of oil equivalent totalled 6,230 (208 boepd). Peak production reported during the month was 253 boepd.
- Oil volumes were similar to September with high gas production restricting oil production due to co-mingling of fluids from all four producing reservoirs which have all been opened as a result of the various 2009 capital programs.
- In order to maximize liquids production, re-commissioning and re-configuration works have commenced on the gas processing facilities to handle high gas production. In parallel a series of reservoir isolation programs are underway to determine the differential oil, gas and water production from all four producing reservoirs prior to running re-completions to maximize production from each producing zone. These works are also necessary to maximize production increases from the future perforation programs.
- Negotiations for new oil sales agreements with refineries and bunkering agents in Spain and Portugal are progressing to identify multiple off-take points for increasing sales volumes and commodity pricing.
- A major review of the Spain acreage potential and capital programs continues by Eclipse and Equipoise to identify further potential for reserves recovery and to optimise the planned capital projects.
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 2,155 boepd gross (61% gas and 38% oil) from the Eugene Island field as announced by the joint venture operator on October 16, 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 4,663 (156 boepd).
- Production volumes from the Eugene Island field increased in early November with completion of wireline operations on the A-7 well to resume production capacity. Well tests indicated a gross production rate of 3.1 mmscfd, 458 bopd (combined 977 boepd) and zero water production through a 15/64" choke with a flowing tubing pressure of 7,500 psi.
- Preparations continue to enhance production at Eugene Island, including reviewing gas lift efficiencies in the field, and installing a new gas compressor with significantly increased capacity, which is expected to enable additional gas and oil production.
- The increased volumes from the works on Eugene Island shall be reported at year end by the joint venture operator.
- In relation to the conversion agreement to transfer the Company's shareholding in Byron Energy to direct ownership of its US Gulf of Mexico and Gulf Coast assets, the majority of pre-closeout actions have been completed, with full completion expected in the short term.
- 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 898 bbls during October. The Oilfield produces no gas. Net LGO production in barrels of oil equivalent totalled 449 (15 bopd).
- Production deferment of 25% was reported for October as a result of power supply repairs.
- The new licence commitments to expand production investment of the acreage are in the final stage of legal review and are expected to complete shortly. These commitments shall also include a change in operator control to LGO.
- Negotiations to acquire the remaining 50% of the Oilfield are continuing with the joint venture partner parent company.
- The Penészlek Gasfield (7.27% LGO) in eastern Hungary, through LGO's 7.27% ownership of PetroHungaria Kft is currently shut-in pending testing of the Pen-104aa and Pen-105 wells which were recently drilled.
- The PetroHungaria joint venture operator completed the drilling of Pen-104aa on 02 November which targeted a deeper Miocene reservoir at the depth forecast from seismic interpretation. The well drilled through 65m of Miocene reservoir formation, equivalent to a vertical thickness of 34m, to a total depth of 1,872m (TVD 1,322m). The well was completed with a slotted liner and external casing packers and is currently under test.
- The ZalaGasCo joint venture (14.54% LGO) reported no activity during the period.
- The Company notified Ascent Resources plc on November 18th of the intention to exercise the option to become a 14.54% shareholder in the joint venture with Ascent Hungary Limited which holds a joint development agreement with MOL Hungarian Oil & Gas for joint operations in south west Hungary including the Lovászi and Ujfalu oil and gas fields.
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. The joint venture is currently undertaking various geoscience studies and data acquisition surveys in accordance with the work program to firm the drill target and well plan.