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Dually-listed extraction firm, Leyshon Resources Limited, said its gas well in China flowed commercial rates five months after the firm encountered multiple potential pay zones, pushing the share price up earlier today on the Alternative Investment Market in London.
In a statement, the China-focused firm which also has mineral mining business in Australia said a rate of 160,000 standard cubic feet a day flowed from ZJS5 well – a result that exceeded management expectation with a promise of a further flow from the other untested potential pay zones.
“We are delighted to report that one of the two first wells drilled has recorded commercial flow from a single pay zone with further production possible from additional zones,” Leyshon’s Managing Director, Paul Atherley, stated.
Last December 2012, the ZJS5 and the ZJS6 wells encountered nine potential pay zones with an estimated thickness of 56 metres and 15 potential pay zones with 80 metres of total thickness, respectively.
The said wells were part of the US$20 million exploration and appraisal programme for the Zijinshan Gas Project located in the eastern portion of Central China’s Ordos Basin, a 380,000 square kilometre of proven petroleum, natural, and coal bed methane being tapped by a number of oil and gas fields.
Leyshon, which has a 100% interest in the exploration phase through a local subsidiary, has a commitment to drill three wells and three more depending on the results of the first three as part of the Production Sharing Contract the firm has with state-owned PetroChina.
Flow testing of the second well, ZJS6, is still ongoing, according to the company, whilst the location of ZJS7, the third well, is yet to be determined following the interpretation of the results of the 2D seismic programme.
Leyshon is using the unconventional method of hydraulic fraccing to drill for gas in its acreage with the view to share in the lucrative gas supply business in the world’s second largest economy, where demand outpaces supply and shooting up the prices of gas.
The news was welcomed with a rise in Leyshon’s share price to as much as 25% in early morning trading in London. At 12:00 GMT, shares were up 21.8% to 18.875 pence at a volume of over 10 million.
