Leni Gas & Oil Cites Increased Oil Resources in Spain

Leni Gas & Oil plc

Leni Gas & Oil has reported the results of the re-interpretation of the Company's exploration acreage in northwest Spain by Tracs International Limited (Tracs) as announced previously on May 12, 2008.

In total 10 prospects (of which two are historical oil discoveries and one a gas discovery not previously assessed) are identified across the acreage with a total unrisked mean STOIIP ("stock tank oil initially in place") of 74 mmb and GIIP ("gas initially in place") of 4bcf. The total mean contingent oil resources is 1.76 mmbo, mean contingent gas resources is 2.9 bcf and mean unrisked prospective oil resources is 10.6 mmbo.

The recoverable prospective and contingent resources across the 10 prospects have a total unrisked mean volume of 12.8 mmboe. These prospective and contingent resources are in addition to the recoverable reserves target from Ayoluengo of 10.4 mmboe.

LGO has an 85% interest in all the Spain Exploration Permits including the Basconcillos H, Huermeces and Valderredible acreage, with Tethys Oil Spain retaining the remaining 15% equity. The Exploration Permits cover 554 sq.km and surround the producing Ayoluengo oilfield in the La Lora production concession (100% LGO), which is currently undergoing multiple phase production enhancement programs.

Tracs executed a full technical assessment of the historical seismic and well data from the three Exploration Permits, as well as the La Lora production concession to the east of the producing Ayoluengo oilfield to identify all prospects and associated volumetrics.

The technical assessment included three main activities:

  • Review and assess all available area seismic, well information and existing discoveries to develop an integrated geoscience and reservoir model of all acreage.
  • Identify all exploration and development prospects with relative chance of success and probable volumetrics.
  • Based on similar analysis for Ayoluengo, develop a superset of exploitation options for the total acreage to both validate exploration prospectivity and propose near term developments for incremental production.

It is now recommended to commence the next phase of work which is to define and implement multiple programs until end Q2 2009 to test some of the identified prospects and execute detailed geological and fluid surveys to reduce the uncertainty on the recoverable resources estimates. These programs will identify those prospects with the highest chance of success for near term development in late 2009 and 2010.

All reserves and resources definitions used are per the Society of Petroleum Engineers 2005 classification. Contingent Resources are those quantities of petroleum which are estimated, on a given date, to be potentially recoverable from known accumulations but which are not currently considered to be commercially recoverable. Prospective Resources are those quantities of petroleum which are estimated, on a given date, to be potentially recoverable from undiscovered accumulations

David Lenigas, Executive Chairman, commented, "This full re-evaluation of the exploration and near term development potential of our acreage surrounding the producing Ayoluengo oilfield validates the potential of the area.

"An additional unrisked mean prospective and contingent resources of 13 mmboe, which is similar in size to our incremental recovery target on Ayoluengo, re-inforces Spain as one of the main production vehicles of LGO.

"These halo incremental prospective resources could add to the Ayoluengo recoverable reserves which we shall report in coming weeks to launch the next few phases of enhanced production from Ayoluengo.

"On the basis of these findings, we shall now be undertaking various exploration activities on these prospects in parallel with the multiple Ayoluengo production enhancement programs, in order to identify the highest potential prospects for fast-track development and thus accelerate production from Spain."