3Legs Resources announce Operations and corporate update
3Legs Resources plc (‘3Legs’ or ‘the Company’), an independent oil and gas group focusing on the exploration and development of unconventional oil and gas resources in Poland, announces the following operations update.
Baltic Basin: Lublewo LEP-1ST1H lateral well
The well continues to flow natural gas and light oil in addition to frac fluid; a nitrogen lift was commenced on 20 August.
Over the period from 8 August to 17 September, the well has produced at an average rate of 396 mscf/d natural gas and 157 b/d of light oil.
The well is also continuing to flow back frac fluid and as at 17 September some 26.0% of the total amount of frac fluid originally injected had been recovered.
The well is producing higher amounts of oil than anticipated, whereas natural gas production is lower than had been hoped.
On the basis of the information presently available to it and reviewed with Netherland, Sewell & Associates, the Company does not feel confident that the flow rates from this well are likely to improve to a level that it would consider commercially viable.
The Company has a one-time option to cease participation in activity on its three western Baltic Basin concessions once its net share of expenditure reaches US$19 million; this limit has now been reached.
The Company has concluded that it would be in the best interests of its shareholders to exercise this option, thereby capping its financial liability in relation to the three concessions; it has now exercised this option.
3Legs estimates that it will have cash resources of approximately £17 million as at the end of September; it is actively considering its options to maximise cash returns to shareholders in the most efficient, timely and cost-effective manner.
A further announcement will be made on 30 September, when the Company’s interim results will also be published.