San Leon Hits Gas in Morocco amid Buyout Speculation

San Leon Energy announced Wednesday that the Laayoune-4 well, located on the Tarfaya conventional license onshore Morocco, has discovered gas.

The well, which encountered gas shows within its reservoir section, was drilled on time, within budget and with no incidents. Laayoune-4 has now been suspended, pending further studies, and to allow future re-entry. San Leon Energy and Office National des Hydrocarbures et des Mines (ONHYM) intend to jointly apply for a new eight year exploration license in the area. During the first period of the new license San Leon plans to acquire a 3D seismic survey across the multiple channels of the Tertiary play, one channel of which was drilled by the Laayoune-4 well. Based upon the results of the seismic, San Leon stated that it would consider “the option of re-entering the Laayoune-4 well (including testing), drilling an additional well, or both”.

Oisin Fanning, San Leon executive chairman, commented in a company statement:

“We are very pleased with the results of the Laayoune-4 well. Confirming the presence of gas shows and good reservoir quality is encouraging for the potential of the block and leads naturally to applying for a new eight year license in the area, which would allow for seismic acquisition to be performed over the full channel complex. It would also enable additional data to be acquired over the deeper Jurassic and Triassic prospects. We are grateful to the operational team and to the local workers who together ensured that the well was drilled efficiently and safely.”

The latest development follows an announcement by San Leon on August 24, 2015 that it had received a bid approach that could lead to an offer being made for the company. San Leon confirmed the approach in its half year results statement, also released Wednesday, but stated that it’s unknown what type of offer, if any, would be made:

“There can be no certainty that an offer will be made or as to the terms on which any offer might be made. As a result, the board has decided not to make any forward-looking statements.”

San Leon reported an operating loss of $4.89 million in the first half of 2015, compared to an operating loss of $7.04 million during the same period last year. The company announced on June 1, 2015 that it had conditionally agreed to raise $44.1 million from existing and new shareholders, which will be used to fund the firm’s development. This fundraising program was completed in July 2015. San Leon holds a 75 percent interest in the Tarfaya license with ONHYM holding 25 percent.