LNG Energy's Subsidiary Begins Drilling 1st Polish Shale Well

LNG Energy announced that its 20% owned Polish subsidiary, Saponis, has spudded its 1st shale gas exploration well, Wytowno S-1, in Poland. As of Sunday, January 9, 2011, intermediate casing has been landed at 1205 mKB, and cemented in place, with drilling operations about to resume towards the Ordovician/Silurian primary objective.

The Wytowno well is the 1st exploration well that will be drilled to meet investment commitments for Saponis' three concession areas; Slawno, Slupsk and Starogard. The Wytowno S-1 wellbore is located within the Slawno concession area.

Saponis is using the same drilling contractor crews and equipment that drilled both ConocoPhillips/Lane Energy wells, with the 1st well being located less than 60 kilometers (37 miles) from LNG's Wytowno S-1 wellbore. The primary target objective for all wells has been the Ordovician/Silurian Shales within the Baltic Basin. The Wytowno S-1 well, with a TVD of 3315 m, is anticipated to be drilled within 45 days, with an AFE cost of US $10MM to drill, case, hydraulic fracture complete and test the Ordovician/Silurian gas shale formation deliverability. The Wytowno well is also located close to the existing Polish natural gas distribution pipeline system. This proximity to the local pipeline distribution grid should provide rapid and relatively inexpensive access to the lucrative Polish gas market, where the 2010 natural gas prices have recently averaged approximately $9.00 per thousand cubic feet (Mscf).

"The spudding of the first well is an important milestone for our Company in exploring the large natural gas potential for Poland where natural gas markets and prices remain robust. We look forward to Saponis successfully completing this well and drilling two more wells on Saponis' other two concessions in Poland in 2011," commented Dave Afseth, President & CEO of LNG.