News

Well Fracturing Agreement Signed

08 May 2013

8 May 2013 

San Leon Energy Plc
("San Leon" or the "Company")

United Oilfield Services ("UOS") Well Fracturing Agreement and Memorandum of Understanding Signed ("MOU")

Highlights

  • Fracturing Lewino-1G2 well (Gdansk W concession) in late Q2/early Q3 2013
  • Option to frack up to six additional wells in the Baltic Basin shale gas, Carboniferous Basin tight gas, Permian Rotliegendes tight gas, and Main Dolomite oil plays in the future
  • Favourable rates being provided to San Leon for certain services with payment in cash and/or San Leon Plc equity
  • MOU includes additional fracturing work in existing and future San Leon wells, together with options for future drilling services
  • UOS drilling rig to be available in Q3 2013

San Leon is pleased to announce it has signed a framework agreement (the "Agreement") with UOS to provide hydraulic well fracturing services for its Baltic Basin wells in Poland.  Under the Agreement UOS can provide drilling, completion and stimulation services and San Leon can pay for certain UOS services in cash or a combination of cash (minimum one-third) and San Leon ordinary shares, at the Company's discretion.

Following today's announcement of San Leon's acquisition of Talisman Polska, the Company has immediate plans to begin the process of fracking and testing its wells in the Baltic Basin. The Agreement also covers the use of UOS's drilling rig for the future, which is expected to arrive into the country in Q3 2013.

San Leon plans to fracture its Lewino-1G2 well in the Gdansk W concession as soon as possible and, following this, the Szymkowo-1 well in the Szczawno concession Q4 2013.  Two vertical fracks are planned in both wells to prove the unconventional gas potential of the Lower Silurian and Ordovician shales in the Baltic Basin.  Following the successful testing of each well the Company is preparing follow-up exploration wells in each concession, including long offset horizontals, multi-staged frack and long term flow testing. Operations will begin as soon as permitting and regulatory approval is granted which is expected in June/July 2013.

Furthermore, San Leon may also use the Agreement with UOS to carry out two fracture stages in up to four additional wells in Poland.  The parties have agreed that, subject to performance, UOS will be considered the preferred frack provider for San Leon in Poland.

United Oilfield Services ("UOS") has brought the latest technology in unconventional shale development to Poland. UOS has a new state-of-the-art fleet of 60,000 hydraulic horsepower backed by the most experienced unconventional crew in Europe. The UOS frack team spent several months being trained by a Texas based crew focused on some of the most complex North American shale fields. With first-hand experience gained from several hundred successful completions in the US, the UOS frack team has the operational expertise required to overcome the unusual challenges of the European shales. Additionally, the UOS management team brings over 20 years of combined experience in unconventional completions and is dedicated to developing Europe's most promising shale plays. (for more information go to www.uos.pl)

Executive Chairman, Oisin Fanning commented:
"UOS brings unique capabilities and experience to Poland and this Agreement shows their belief in the potential of our portfolio. Further UOS brings the pioneering spirit and expertise that proved the first unconventional plays in North America and we believe will prove the potential in Poland.
Allowing San Leon to use shares to pay for certain services maintains San Leon's ability to carry out operations in its high impact Polish plays while having the option to preserve cash for future exploration drilling. We believe that Gdansk W is in the sweet spot in the Baltic Basin, and we are excited to be able to test this potential in the near term. This Agreement increases San Leon options to realise the huge upside value in our Polish portfolio."

President/CEO, United Oilfield Services, Dennis McKee commented:
"United Oilfield Services is proud to bring Europe's first full scale fracturing fleet consisting of 60,000 high pressure, hydraulic horsepower which was custom designed from the ground up to service the unconventional and tight oil and gas markets in Poland. Our partnership with San Leon will provide the opportunity to determine the potential of commercial shale and tight gas in Poland."

For further information contact:

San Leon Energy Plc
Tel: +353 1291 6292
Oisin Fanning, Executive Chairman
John Buggenhagen, Exploration Director

Macquarie Capital (Europe) Limited
Tel: +44 (0) 20 3037 2000
John Dwyer

Fox Davies Capital
Tel: +44 (0) 20 3463 5000
Daniel Fox-Davies
Richard Hail

FirstEnergy Capital LLP
Tel: +44 (0) 20 7448 0200
Hugh R. Sanderson
David van Erp

Westhouse Securities (Nominated Advisor)
Tel: +44 (0) 20 7601 6100
Richard Johnson
Antonio Bossi

College Hill Associates
Tel: +44 (0) 20 7457 2020
David Simonson
Alexandra Roper

www.sanleonenergy.com


 

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