Nowa Sol Operations Update

RNS Number : 4112U

San Leon Energy PLC

28 December 2012

 



28 December 2012

San Leon Energy Plc

("San Leon" or the "Company")

Nowa Sol Operations Update

San Leon is pleased to announce a year end update on its Nowa Sol operations. The Nowa Sol exploration program is designed to test both the conventional potential and significant unconventional potential of the self-sourcing Permian Main Dolomite (Ca2). The Main Dolomite, the primary oil-producing reservoir in Poland, is a high potential, underexplored play that San Leon is focusing on for  near term oil production while the Company's large scale assets develop. Due to the self-sourcing and naturally fractured nature of the Ca2, San Leon is evaluating the unconventional potential of the interval as a significant oil producer. Initial core results indicate the formation is an ideal fracturing (frac) candidate based upon the highly brittle nature of the Main Dolomite, which is encased in perfect frac barriers in the Zechstein salts and anhydrites. The Company is looking at potential analogues in the United States including the Mississippian Limestone and the Bakken Formation to understand drilling and completion techniques to unlock the huge upside potential of the play including long offset horizontals and hydraulic fracturing. Potential analogue production for the unconventional potential of the play is also present in older completions in the Main Dolomite of Eastern Germany.

Czasław SL-1

The Czasław SL-1 well has reached a total depth of 1,558 meters Measured Depth (1,229 meters TVD) just below the target Permian Main Dolomite reservoir. The well has been completed for future production testing and is currently shut-in for future operations. The well penetrated 43 meters of the targeted Permian Main Dolomite.  Image logs show moderate fracturing of the Main Dolomite within an estimated 29 meters of fractured reservoir interval. A full suite of wireline logs were acquired across the interval including a high quality FMI (Image) log. Fifty rotary sidewall cores were extracted and sent to Weatherford's laboratory in the US to evaluate reservoir properties and fluid saturations. Live oil shows were present on 90% of the extracted cores and detailed petrophysical analysis indicates moveable oil in the Main Dolomite reservoir. The entire Main Dolomite interval shows high fluoresce suggesting both moveable and residual oil. Results suggest the well is a good candidate for artificial stimulation to enhance the natural fractures in the reservoir. There were no indications of water encountered during drilling. Testing is expected to occur in Q1 2013 dependent on permitting for cleanup, stimulation, and testing plans.

Potential stimulation options including acid treatments and fracing are being examined to extract the unconventional oil potential of the interval which exists in the matrix of the formation over a large regional area. The key to the play is finding potential "sweet spots" where reservoir properties are favorable for horizontal completions and artificial stimulation. After evaluating the results the Company will make a decision regarding stimulation in the existing completion and a potential horizontal section off the existing well.

Lelechow SL-1

The Lelechow SL-1 well has been shut-in after an extended well testing program was carried out to examine if oil could be flowed with the current completion design at commercial rates. Significant natural fracturing has been encountered in the well, which is considered to be a "thief zone;" this fracturing is bringing in significant surrounding formation water preferentially over the oil saturation in the matrix. Analysis indicates lifting the formation water off the reservoir section could create sufficient pressure draw down to flow oil in the matrix at commercial rates. Due to the high costs of short term water disposal, the well has been shut-in whilst the Company evaluates more cost effective long term options.

The Company is now considering several potential future options including sidetracking the well up-dip to access a predicted free oil leg within the fracture system, as well as examining other options to stimulate the interval including drilling a possible horizontal section off the existing well. A decision will be taken following results from the Czasław SL-1 test of the same reservoir.

The self-sourcing, highly fractured Main Dolomite reservoir encountered good oil shows while drilling with matrix oil saturations up to 70% confirmed by detailed core analysis of whole core and rotary sidewall cores recovered from the well.  The analysis was carried out by Weatherford in the US.

Executive Chairman, Oisin Fanning commented:

"We continue to be excited by the potential of the Main Dolomite oil play in our expansive Permian Basin acreage in Poland.  Our first two wells have helped us to better understand the potential of the play and the challenges.  We look forward to testing the Czasław well as soon as our engineering and permitting efforts are completed.  We have found oil in the Main Dolomite and are working on ways to economically produce from these wells as well as extend our results to the significant upside that exists across our acreage."

For further information contact:

San Leon Energy Plc	Tel: [phone]
Oisin Fanning, Executive Chairman
John Buggenhagen, Exploration Director
Macquarie Capital (Europe) Limited	Tel: [phone]
John Dwyer
Fox Davies Capital	Tel: [phone]
Daniel Fox-Davies
Richard Hail
FirstEnergy Capital LLP	Tel: [phone]
Hugh R. Sanderson
David Van Erp
Westhouse Securities (Nominated Advisor)	Tel: [phone]
Richard Johnson
Antonio Bossi
College Hill Associates	Tel: [phone]
Rupert Trefgarne
Alexandra Roper

www.sanleonenergy.com

Qualified person

John Buggenhagen, who has reviewed this update, has over 15 years experience in the oil & gas industry. He has a Ph.D. and M.Sc. in Geophysics from the University of Wyoming and a B.Sc. in Geophysics from the University of Arizona. He is currently the Director of Exploration for the San Leon Energy Group and based in San Leon's Warsaw office in Poland.

 

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