LGO Gets Green Light for Ayoluengo Field Stimulation Program

Leni Gas & Oil confirmed that all regulatory permits and approvals have been issued to commence the well stimulation program on the Ayoluengo Oilfield in the La Lora production concession, as was provisionally announced on June 12, 2008.

The well stimulation program is intended to improve the productivity of individual wells with the macro goal of increasing total field production rates. It is expected that there will be a substantial increase in production observed following the conclusion of the program. There will be two phases to the well stimulation program, with the first phase commencing at start Q4 2008 and concluding by the end of Q4 2008, and the second phase of stimulation provisionally planned for early Q2 2009.

The stimulation program has multiple objectives including, re-configuring the water injection wells to maximize injectivity, re-perforating existing production zones in three wells, perforating new production zones in five wells, de-scaling the well bore close to existing production zones in all active wells, surveying all wells to optimize the pumping efficiency of the production equipment, and implementing a long term regime to maximize well bore integrity and remove well fluid impurities, thereby improving the oil specification.

As announced on June 12, 2008, LGO has begun a full field enhanced recovery program, through multiple phases of water injection, stimulation and potentially infill drilling on the Ayoluengo field to substantially increase production towards an incremental recoverable reserves target of at least 10% (P90 9.3mmbo, P50 10.4 mmbo). The long term field development plan for Ayoluengo shall be defined at end 2008 on completion of the field technical studies currently being finalised by Tracs International Ltd.

The Company has a 100% interest in the La Lora production concession, with the Ayoluengo field located in the western part of the concession.

David Lenigas, Executive Chairman, said, "The enhanced recovery program for the Ayoluengo field is the key focus of our operations in Spain, and the first phase of well stimulation, together with the first phase of water injection, will act as the foundation to substantially increase production from the field over the next six months. This well stimulation program will significantly raise the production efficiency of the Ayoluengo wells, allowing us to maximize production rates and deliver another step change in production."