LNG Energy Performs Hydraulic Stimulations on Lebork S-1 Well

LNG Energy is pleased to announce that hydraulic stimulations were performed on both the Cambrian and Ordovician intervals in the Lebork S-1 well following LNG's Performanced Based Reservoir Characterization Plan.

The stimulations and subsequent flowback resulted in gas being flared from each interval, although only a small percentage of the designed proppant quantity and concentration was placed. Approximately 43% and 50% of the stimulation fluid was eventually recovered from the Alum (Cambrian) and Ordovician shales respectively.

The reduced amount of proppant placed in each zone was not enough to provide effective conductivity, allow conclusive production tests, or provide the assessment of meaningful reservoir parameters. As predicted, the reservoir was over pressured but will require higher pressures to hydraulically stimulate the shales than initially designed. It appears that both the Ordovician and Alum shales have complex fracture matrices, which were predominantly responsible for the reduced amount of proppant placed. It is expected that this complex matrix will be a positive characteristic to the development of this shale play, as it will provide a larger contact area to increase recoveries and overall production. Significant data was acquired from the stimulations on both zones that will aid in the re-stimulation designs for future Lebork operations and further development within the other concessions.

Although a comprehensive test of each zone was not realized at this time, LNG is encouraged by the flared volumes and presence of methane, ethane and propane in the gas samples.

In addition to the Saponis review, LNG initiated a comprehensive review of the stimulation results by leading industry consultants Robert Jackson of BOE Solutions Inc. and Dr. David Craig of RDC Consulting to interpret the input parameters and results. In order to properly test the shales in the Lebork S-1 well, an optimized hydraulic stimulation program design across the same intervals is underway and may require a higher pressure stimulation utilizing a high pressure tubing string.

A suitable stimulation string cannot be delivered to the location before cold weather sets in, postponing the re-stimulation and testing of the well until spring 2012. Consequently, through the winter, additional testing and simulation will be undertaken with in-house and industry specialists to design a stimulation program that will further refine the stimulation parameters to provide effective conductivity, unlocking the productivity potential of this shale play. In addition, due to similar cold weather concerns, it has decided to postpone the Wytowno S-1 and Starogard S-1 hydraulic stimulations to the spring of 2012. LNG is looking forward to effectively testing of all three wells next year and continuing their Performanced Based Reservoir Characterization Plan.

The acquisition of the previously announced 2D seismic program, which consists of about 407 km on the concessions started on October 8th, 2011. The objective of the seismic program is to further define basin structure and burial history as well as to aid in the selection of future well locations.

"The stimulations confirmed the presence of burnable gas in both the Cambrian and Ordovician sections as planned. While we did not complete the stimulations as planned, we are very encouraged by the gas quality and look forward to the results of our current review and proposals for the next stage of the development of our acreage in Poland." commented Dave Afseth, President and CEO of LNG.