TIDMSLE
RNS Number : 7803F
San Leon Energy PLC
25 February 2015
25 February 2015
San Leon Energy plc
Rawicz Commercial Gas Discovery
San Leon Energy plc ("the Company" or "San Leon"), the AIM
listed company focused on oil and gas exploration in Europe and
North Africa, announces highly positive well test results for
Rawicz-12, which the Company expects will form its first commercial
gas discovery.
The Rawicz-12 appraisal well, located in south-western Poland,
commenced flow testing on 5 February 2015 and has to date flowed at
an increasing rate of up to 4.1 mmscf (million standard cubic feet)
per day. No significant amounts of water have been encountered and
gas quality matches expectations. Well productivity, gas production
rate and surface flowing pressure continually increased during the
long high-rate flow period.
The Company anticipates that an additional three to five wells
will be drilled to develop the field, with the second well on
Rawicz already in planning and being at no up-front cost to the
Company. Gas prices in Poland are amongst the highest in
Europe.
Rawicz-12 Well Testing Details
The Rawicz-12 appraisal well, drilled to appraise the
previously-discovered, unproduced Rawicz gas field, was opened up
to flow on 5 February 2015. Since then, apart from a short pressure
build-up performed to gain technical data, the well has been
continuously flowed to flare.
The well flow rate and flowing wellhead pressure steadily
increased (indicating a progressive clean-up of the well) and by
the morning of 16 February 2015 the gas production rate was
approximately 4.1 mmscf/d, and increasing, at a flowing wellhead
pressure of 205 psig (pounds per square inch) on a fixed choke of
80/64". The reservoir volume tested is determined largely by the
length of the flow period, and is relatively insensitive to flow
rate. Therefore on 16 February 2015, and with flow rate and
pressure still increasing, the decision was taken in conjunction
with Baker Hughes (the well testing advisors) to choke the well
back to limit the flaring of gas for the remainder of the flow
period. It should be stressed that the choking back of the well was
solely to reduce wasted reserves.
No material water has been produced, and no hydrogen sulphide
gas (H(2) S) has been recorded. Gas quality matches expectations
and samples from previous wells in the field, at around 70%
methane.
Preliminary evaluation of the data received so far indicates a
permeability to gas of around 2mD, confirming the success case
assumption that the field can be developed as a "conventional"
resource.
The process of cleaning up of the well involves the removal of
reservoir "skin" from the drilling and completion process. Skin is
an engineering measure of how much the rock near the wellbore is
affected by that process, with higher values indicating more
restriction to production. The skin value is currently estimated to
be around 7 - a relatively high figure - although flowing the well
has already significantly reduced it to 7 from initial values.
Calculations suggest that a much lower skin factor could increase
the gas flow rate at these flowing conditions by around a half.
Such a material flow rate upside could be achieved under several
scenarios whereby the skin is reduced or bypassed, including:
1) Continued cleaning up of the well
2) Performing stimulation (deep penetrating perforating, or
hydraulic fracture) on the well to bypass remaining skin as much as
possible
3) Reducing skin in future wells through modification of the drilling and completion programme.
Rawicz-12 has been flowed only over the upper half of the
gas-bearing interval, in order to minimise water production during
the test. The absence of water production could enable future wells
to be completed to a greater depth (where water saturation
increases), increasing the flowing interval thickness and therefore
the gas production rate. The existing well is vertical through the
reservoir, meaning that deviated or horizontal wells during a
development could be used to target still higher production
rates.
It is expected that the well will complete its flow testing on
28 February 2015, following which pressure build-up data will be
acquired for several weeks. This data measures the shut-in pressure
response of the well, enabling reservoir characteristics such as
permeability and volumetrics to be refined.
The Rawicz project is operated by Palomar Natural Resources
("Palomar") with 65% equity, and San Leon has no up-front drilling
costs for its 35% equity share of the first two wells.
Oisin Fanning, San Leon Executive Chairman, commented:
"This is the well we have been waiting for - a significant gas
discovery in one of the highest-priced gas markets in Europe. The
Rawicz field has existing gas infrastructure nearby and a
development feasibility project has already been completed.
This well is transformational for the Company, a step towards
energy independence for Poland, and the first of what we anticipate
will be a series of such wells for San Leon in the Rawicz field and
elsewhere in Poland. These results are gratifying for the
management and staff of San Leon Energy and are expected to be
beneficial for our shareholders. I would like to thank our
investors for their patience, and congratulate the on-site team for
a job well done. We look forward to updating the market on the full
interpreted results of Rawicz-12, and the next steps for the Rawicz
field."
Joel Price, San Leon Chief Operating Officer, commented:
"The preliminary results of the well test are extremely
encouraging, showing good permeability to gas and no water
production. The data quality is high, as downhole shut in is being
used (improving the ability to interpret pressure build up data in
a gas well), and this gives confidence in the technical
interpretation so far. The high flow rate of over 4 mmscf per day
has been achieved even in the presence of what is believed to be a
significant (and reducing) remaining reservoir skin, and without
flowing the lower part of the reservoir, highlighting the flow rate
upside in Rawicz. Once the full test and the final pressure
build-up data have been acquired, the interpretation will be
completed and will be used as input to defining the next steps for
the Rawicz field."
Qualified person
Joel Price, who has reviewed this update, has 20 years'
experience in the oil & gas industry and is a member of the
Society of Petroleum Engineers. He holds a BA in Natural Sciences
from Cambridge University, an MEng from Heriot-Watt University, and
an MBA from Durham University. Joel is Chief Operating Officer for
San Leon Energy and is based in San Leon's London office.
For further information contact:
San Leon Energy plc
Oisin Fanning, Executive
Chairman +353 1291 6292
finnCap Ltd
Corporate Finance
Matt Goode
Christopher Raggett
Corporate Broking +44 (0) 20 7220
Joanna Weaving 0500
Brandon Hill Capital
Oliver Stansfield +44 (0) 20 3463
Jonathan Evans 5000
Macquarie Capital (Europe)
Limited
Jon Fitzpatrick +44 (0) 20 3037
Nicholas Harland 2000
Westhouse Securities Ltd
Nominated Adviser
Richard Johnson +44 (0) 20 7601
Antonio Bossi 6100
Vigo Communications
Financial Public Relations
Chris McMahon +44 (0) 20 7016
Alexandra Roper 9572
Plunkett Public Relations
Sharon Plunkett +353 (0) 1 280 7873
www.sanleonenergy.com
This information is provided by RNS
The company news service from the London Stock Exchange
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