LGO's Spain Production to Increase with Hontomin Extended Well Test

Leni Gas & Oil (LGO) has confirmed that all regulatory permits and approvals have been issued to commence the planned extended well test on the Hontomin-2 well in Northern Spain.

The objective of the extended well test is to appraise the long term production potential of the well and determine the optimum exploitation plan for the Hontomin field which currently is to maximize production by a side-track of Hontomin-2 in the second quarter 2010 during the Ayoluengo infill well drilling campaign.

The Hontomin structure is formed in a highly faulted thrusted anticline and covers a maximum area of 2.9 km2 with mean STOIIP of 2.40 mmbo. Hontomin-2 was originally drilled by Chevron in the 1960s and discovered oil in the lower Lias calcarenite which has a gross thickness of 80m. The discovery well produced an average of 113 bopd during a short production test with 50% water cut.

LGO will utilize the data gathered from the extended well test together with the license area re-interpretation results, which were previously announced on October 21, 2008 to determine the most effective exploitation plan for the Hontomin structure. All production from Hontomin will be transported 38km to the production facilities at the Ayoluengo oilfield for processing and oil sales.

The extended well test is targeted to commence in July 2009 at conclusion of the Ayoluengo Phase 1 Stimulation Program and completion of all Hontomin site preparation works.

The Hontomin exploitation plan will also include tertiary enhanced oil recovery work programs under the joint development agreement with CIUDEN as announced on March 10, 2009. The Hontomin enhanced oil recovery program shall aim to acquire 3D seismic on areas of the Hontomin structure to determine the optimum approach for CO2 sequestration and enhanced oil recovery.

The combination of the proposed side-track and tertiary oil recovery shall aim to exceed reserves recovery above 50% from the Hontomin structure.

The Company has an 85% interest in the Huermeces exploration permit, with Tethys Oil A.B. retaining the remaining 15% equity.

David Lenigas, Executive Chairman, commented, "Commencement of our extended well test on Hontomin will bring on production the first of four possible incremental reserves in our Spain acreage from total unrisked mean prospective and contingent resources of 13 mmboe. The other three incremental reserve locations are also scheduled to undergo appraisal during the second half of 2009."

"The Hontomin-2 extended well test may add about 100 bopd to our current daily production in Spain of 300 bopd, however the focus of the well test and the additional tertiary recovery programs with CIUDEN during 2009 will be to plan the optimal approach to maximize recovery from the field in 2010. The Company's target is to recover about 1 million barrels of oil from the Hontomin structure."