Palomar Natural Resources to Develop the Siekierki and Rawicz Gas Fields
San Leon Energy, the AIM listed company focused on oil and gas exploration in Europe and North Africa, is delighted to announce that it has signed a joint venture agreement with Palomar Natural Resources (“PNR”) across seven Concessions in Poland’s Permian Basin initially focused on developing the discovered, unproduced Siekierki and Rawicz gas fields. In return for a 65% working interest in the Southern Permian Basin and Northern Permian Basin Concessions, PNR has paid upfront to San Leon $5 million and $15 million, respectively, in cash and will carry San Leon for a defined initial work programme aimed at bringing the Rawicz and Siekierki fields into production as soon as possible. PNR will become the operator of all of the Concessions.
The Joint Venture (“JV”) is divided into two core areas across seven exploration concessions including the Rawicz (39/2009/p), Wschowa (8/2009/p), Gora (30/2008/p) and Nowa Sol (5/2009/p) concessions (“Southern Permian Basin”); and the Poznan North (26/2008/p), Poznan East (4/2003/p), Poznan East (5/2003/p) concessions (“Northern Permian Basin”).
Southern Permian Basin – Rawicz Gas Field:
PNR has received a 65% equity interest and operatorship in the Southern Permian Basin concessions, including the Rawicz field. The Company has retained a 35% equity interest. In consideration for this farm-out:
1. PNR has provided San Leon with $5 million in cash up-front; and
2. PNR will carry San Leon’s participating interest in the first two development wells on the Rawicz gas field including drilling, evaluation, completion and testing of each well in the Permian Rotliegendes formation.
The carry, plus a 10% return, will be repaid to PNR from half of San Leon’s production revenues from the Rawicz field. In the event that there are no production revenues, the carry will not be repaid.
PNR intends to start permitting, operational planning, and well design immediately pending final approvals and permits from the Polish regulatory authorities. The first well is planned to be drilled in Q3/Q4 2014 including completion and testing.
Northern Permian Basin – Siekierki Gas Field
PNR will receive 65% equity interest and Operatorship in the Northern Permian Basin concessions, including the Siekierki field. The Company has retained a 35% equity interest. In consideration for this farm-out::
1. PNR has provided San Leon with $15 million in cash up-front; and
2. PNR will fully carry the work over, recompletion and testing of three existing wells (Trzek-1, Trzek-2H and Trzek-3H) in the Permian Rotliegendes formation.
3. There is no cost recovery by PNR for the carry.
The goal of recompleting the three wells is to focus on higher quality reservoir intervals, and for the work overs to begin during late Q3/early Q4 2014. These wells produced an average of approximately 3 mmscf/d during previous testing, and the work overs will target additional reservoir zones and improved flow rates and ultimate recoveries from the significant resource potential of the Siekierki field.
Further Development Of Assets
On both the Rawicz and the Siekierki fields, the above work programmes aim to provide the justification to construct production facilities and pipelines and to achieve near-term production. If PNR decides to proceed with the development of either or both assets after the above well work, it will include San Leon in seeking project finance.
This completed deal replaces the existing Letter of Intents (“LOIs)” on the concession in these areas.
Oisin Fanning, San Leon Chairman, commented:
“I am delighted to be working again with John Buggenhagen, former Exploration Director of San Leon, who knows these assets as well as anybody. PNR bring a team of US based industry experts who have the expertise to maximize production and ultimate recovery from these significant gas fields. The receipt of the up-front cash payments, and the execution of work programmes on Rawicz and Siekierki to target early production, put San Leon on a strong footing and will provide a basis for continued production growth throughout the Company’s portfolio.”
John Buggenhagen, Palomar Natural Resources CEO, commented:
“I am very excited to be returning to Poland and once again to work with San Leon, but this time as a partner. I truly believe in these production based assets and the significant exploration upside that exists across all seven concessions. PNR is owned by the management and the Palomar Group, which is fully capitalised to execute its development plans for all of its assets including this joint venture. With PNR’s technical expertise and strong financial position, and San Leon’s long experience in Poland we expect significant production and strong revenue growth over the next 18 months.”
Source: San Leon Energy plc