Leni Reinstates Production at Hontomin Well

Leni Gas announced the reinstatement of production at the Hontomin-2 well in Northern Spain, and its immediate plans for further production enhancement at the Ayoluengo Field.

During the last few weeks, operations at Hontomin have focused on cleaning the well and the perforating of an additional reservoir zone shallower than the previously producing interval. These operations were successfully concluded and the well was returned to production on the evening of the July 29, 2011.

A total of 13.5 meters of perforations were opened between 1349.5 and 1365 meters including 7.5 meters in new reservoir zones which were identified on wireline logs run earlier in July. The well continues to clean-up with water cut reducing and oil production increasing. The well is producing approximately 180 bfpd and the water cut has been falling over the last 4 days. During the last 24 hour period the well produced 15 barrels of oil and production is expected to continue to rise significantly as the static fluid level in the well is reduced and the new perforations contribute to oil flow. In October 2010, Hontomin-2 reached a production rate of over 85 bopd which was achieved without the 7.5 meters of newly opened perforations.

The Company-owned Cardwell rig has now been returned from Hontomin to the main Ayoluengo field 30 kilometres away where several wells from the recent well intervention program will be returned to production. Wells Ayo-22 and Ayo-32 are expected to be brought back on production within the next few weeks. Further routine maintenance work to other producing wells, including Ayo-18 and Ayo-40, also requiring the use of the Company's Cardwell service rig, will be undertaken and this is expected to lead to further improvements in overall production rates which have been performing as expected.

Design work for chemical stimulation in order to treat the scale and wax found in wells during the recent work-overs and further enhance production is progressing and field trials are planned for the autumn.

Neil Ritson, LGO's Chief Executive, commented, "Hontomin-2 is an important well and we firmly expect further improvements in production as it cleans up. The return of the rig to Ayoluengo will allow us to consolidate the gains made during the recent interventions and therefore production from Spain is expected to exceed 400 bopd in the next few months. We are happy with the recent progress made in Spain and intend to update shareholders on further developments as soon as possible."