San Leon is preparing to spud a two well exploration program to test the conventional oil potential of the Main Dolomite in the Southern Permian Basin on its Nowa Sol Concession (San Leon 100%) (the "Concession"). The wells will be drilled by Diament Oil Exploration Ltd from Zielona Góra in Poland. The first well, Lelechow-SL-1, is planned to spud mid- to late July. The second well, Czaslaw-1, which will spud immediately after, will also test the Main Dolomite in a separate, but similar structure.
The wells are being drilling based upon the Company's 2010 Nowa Sol 3D seismic survey, which has redefined the potential of the area being the first 3D survey ever shot on the Concession. The significantly improved imaging provided by the new 3D data has given the Company greater insight into the complex structural fabric of the area.
San Leon has conducted extensive geological analysis of the Southern Permian/SW Carboniferous Basin of Poland over the past two years; and is therefore pleased to announce a joint venture with Celtique Energie Poland Sp z o.o. ("Celtique") with a view to jointly developing the existing Celtique concessions which are on trend with the Company's significant acreage position in the area.
The concession areas to be jointly developed with Celtique are:
Block 243 - 236,480 acres
Laski - 60,047 acres
San Leon will acquire a 50% working interest in the two Polish concessions for a committed work program including acquiring two new 3D seismic surveys (~280 km2) on the concessions, plus committing to drilling a well in Block 243 targeting the Permian Main Dolomite. San Leon will become the operating partner on Block 243. On the Laski concession following acquisition of the 3D seismic survey; San Leon has the option to participate in a 50% share of the proposed well costs to retain its interest in that concession, otherwise the Company will relinquish its interest in Laski. The proposed joint venture is conditional on receiving regulatory approval and signature of definitive agreements with Celtique.
Oisin Fanning, Chairman of San Leon, commented:
"In conjunction with drilling the two exploration wells in Nowa Sol this is a great deal for both San Leon and Celtique. It exposes San Leon to additional high quality exploration acreage in Poland on trend with upcoming projects, and gives Celtique access to San Leon's proven operating capabilities, including NovaSeis in Poland. This deal further solidifies San Leon's commitment to developing significant oil and gas reserves in Poland in the near term."
The company is in the process of acquiring the necessary permits for the drilling of its initial well, the RK-22, on Cub's 100% owned and operated Rusko-Komarovske licence.
Gross production from the Olgovskoye Licence averaged 11.42MMcf/d to KUB-Gas (3.5 MMcf/d net to Cub) during the month of February, representing approximately 40% of total production from all of Cub's licences.