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Leni Gas & Oil announces plans for additional drilling at Eugene Island Field in US Gulf of Mexico

02 Dec 2011

Leni Gas & Oil plc announces plans for additional drilling at the Eugene Island Field in the US Gulf of Mexico.

The Company has approved the first of a number of projects designed to tap into undeveloped reserves within the Eugene Island-184 leases operated by Marlin Energy LLC ("Marlin") where LGO holds a 7.25% working interest.


· Two well sidetracks are planned to access new reserves

· Potential pay zones have been identified in the Tex-X2 and X3 reservoirs

· Drilling operations will commence by early 2012

· Successful completions will lead to an immediate increase in production

A program of two sidetracks targeting reserves in the Tex-X2 and Tex-X3 reservoirs has been proposed by Marlin, commencing with a sidetrack of the A#2 well to the Cranberry Creek prospect. This will be followed by a sidetrack to a separate proven undeveloped attic oil reserve in the Tex-X3 reservoir which will most likely be conducted from the A#3 well.

Work will start almost immediately with preparatory operations in the A#2 well to abandon the existing well below 7,600 feet ahead of the arrival of a drilling rig, Ocean Columbia. The rig is scheduled to be on site by early January 2012.

The A#2 sidetrack is targeted to reach a downthrown fault block which Marlin considers to have good seismic amplitude support on the available 3D seismic data. The fault block has an estimated mean recoverable reserve of 0.5 million barrels of oil within the primary, Tex-X2, target level at a depth of approximately 13,000 feet subsea. The slightly deeper Tex-X3 reservoir will also be tested by the well. Both reservoirs are productive in other wells throughout the field.

The cost of drilling, logging and evaluating the A#2 sidetrack is estimated to be $280,000 net to LGO's interest. Additional costs will arise for production completion of the well if successful.

Neil Ritson, Chief Executive Officer, commented:

"We are delighted to participate in these opportunities which were deferred from 2010. We feel confident that Marlin has the expertise to successfully bring these additional reservoirs on-stream. The incremental production is expected to be realised quickly with a short payback period on the investment."

Competent Person's Statement:

The information contained in this announcement has been reviewed and approved by Neil Ritson, Chief Executive Officer and Director for Leni Gas & Oil Plc, who has 35 years of relevant experience in the oil industry. Mr Ritson is a member of the Society of Petroleum Engineers, an Active Member of the American Association of Petroleum Geologists and is a Fellow of the Geological Society of London.


Source: Leni Gas & Oil plc