Poland

San Leon has sold certain assets, including interests in the Prusice and Kotlarka concessions to Horizon Petroleum Ltd, a Calgary based company listed on the TSX Venture Exchange. San Leon has retained a 6% Net Profit Interest on these two concessions.

The Company has also disposed of the Nowa Sol and Gora concessions to Gemini Resources Ltd, a UK registered company. San Leon has retained a 5% Net Profit Interest on these two concessions.

Kotlarka and Prusice

Lying within the Fore Sudetic Monocline, in the Permian Basin, these concessions are located in the prolific Permian Rotliegendes province which contains a large number of existing gas discoveries (both developed and undeveloped) collectively with several TCF of reserves. A significant number of wells have been drilled on these concessions over the years, for mining as well as for hydrocarbons, and there is a reasonable amount of 2D (and 3D) seismic coverage, including fairly recent 3D surveys shot across several of the neighbouring concessions. Together these data provide an excellent reference database from which to evaluate existing discoveries, define new prospects and optimise future data acquisition strategies.

The Rotliegendes reservoirs in this region have good credentials; a dominance of high quality aeolian (desert) sediments, relatively shallow (~2km) burial depths and a reasonable porosity range. Additional prospectivity is also present at the Zechstein (‘Main Dolomite’) level presenting significant upside. These reservoirs are locally prolific and our concessions in this region lie on trend with some of the biggest and most productive fields in Poland and have access to an extensive gas production and pipeline infrastructure network. Nearby gas fields include; Zuchlow (850 BCF), Zalecze (760 BCF), Rawicz (92 BCF) and within the concessions themselves; Borzecin (188 BCF), Bogdaj – Uciechow (635 BCF) and Wierzchowice (422 BCF) fields (all excluded cut outs within the concession currently under application).

These reservoirs are drilled and evaluated using the same techniques as have been used for several decades and the opportunity to test and evaluate newer/revised drilling practices, widely employed in the Rotliegendes Basin in the Netherlands, Germany and Southern North Sea, could assist in enhancing the reservoir productivity and improving ultimate recovery.

Nowa Sol and Gora

In addition to the conventional potential of the Permian reservoirs, the organic rich Carboniferous shales and coal measures (well known source rocks for Permian Rotliegendes sandstone reservoirs in Poland, Germany, the Netherlands and the Southern North Sea) offer additional unconventional prospectivity. In Poland, several stratigraphic wells, drilled in the 1960’s and 1970’s, have provided data on the Carboniferous sequence. Although these well data are old, when combined with the legacy seismic and gravimetric data they provide positive indications of the unconventional potential in the SW Carboniferous Basin in Poland.

Analysis suggests the potential for at least three 100 – 150 m thick shale zones characterized by a Total Organic Carbon content in excess of 2%, and with 2 – 4% porosity. There are also indications of several deeper, thick, tight gas sands within a package of more than 2km of Carboniferous sediments. Within the Fore-Sudetic Monocline the general dip of the beds is to the North, with the Sudetic Mountains south of the concessions. To the north of the concessions the Carboniferous section becomes very deep, as it plunges into the centre of the basin. These concessions are optimally located, indeed a report on the prospectivity of tight sandstones in Poland, published by the Polish Geological Institute in March 2015, places these concessions in the best part of the Carboniferous tight sandstone play.

Technical evaluation of the concessions in 2010-2011 indicated the potential for shale gas and tight gas within several prospective Carboniferous zones. This ultimately culminated in the acquisition of 535km² of 3D and 580km of 2D seismic data (on these and other neighbouring concessions) and the drilling of the Siciny–2 well (now suspended) in April 2012. The well was designed as a stratigraphic test with the initial goal of collecting core and modern downhole petrophysical data to evaluate the potential of the shales and tight gas sands. In addition to providing these data, the well encountered in excess of a kilometre of Carboniferous section as well as four previously-unseen shale sections and more than 400 m of fractured tight gas sandstones with continuous gas shows (C1-C3). The well was cased in anticipation of further operations and in 2013 a DFIT test was performed, in partnership with Halliburton. Subsequently, data gathered during drilling and the DFIT were used to create a simulation of the potential flow rate from a two-stage hydraulic frac in the existing wellbore. Indications were that an initial gas rate of 2 MMcf/day could be achievable.

SanLeon

San Leon has sold certain assets, including interests in the Cieszyn and Bielsko-Biala concessions in the west Carpathian Basin, Poland, to  Horizon Petroleum Ltd, a Calgary based company listed on the TSX Venture Exchange. San Leon has retained a 6% Net Profit Interest on these two concessions.

Bielsko-Biala

Located within the Carpathian thrust – fold belt in southern Poland, the Bielsko – Biala Concession occupies an area of 804.6km². In 1984, the Polish Oil & Gas Company (POGC) drilled the Lachowice-1 well in the southern part of the concession and encountered 184m of Devonian gas bearing carbonates (no water column). By the mid 90’s, a further seven wells had been drilled on the highly compartmentalised structure and of the five that reached the fractured Devonian carbonates and sandstones, all encountered gas columns/shows.

The Lachowice field is at a late stage of the appraisal/early stage of the development life cycle. Lachowice-1, Lachowice-7 and Stryszawa-2K are the primary wells of interest on the field and, despite being essentially vertical in their design, showed test rates of up to 5.8mmcf/d, 8.9mmcf/d and 2.5mmcf/d respectively (90-95% methane). Some years after completion the wells were re-tested and despite not having being remediated or acidised, they still flowed economic rates even through completions sub-optimal for this type of reservoir (cemented and perforated liners).

Indicative volumetric calculations suggest commercially attractive levels of proven resource with the potential for significant exploration upside. The geology of the structure provides the opportunity for development wells to potentially assess some of the upside in neighbouring fault blocks without the need for dedicated exploration wells. A range of scaleable development options exist for Lachowice, from re-entry to the existing suspended well (Lachowice 7) through to a programme of multiple highly inclined wells and/or sidetracks.

The Tertiary belt of prospectivity (associated with nappes and thrust belt positions) trends eastwards from Cieszyn, into the northern part of the Bielsko-Biala concession, where this interval is significantly under-explored relative to the Czech side. It therefore presents an additional opportunity to focus an exploration programme on the identification and testing of seismic amplitude anomalies in the shallow Miocene section, already proven to the west, within the Bielsko-Biala concession.

Cieszyn

Neighbouring the Bielsko-Biala concession, the Cieszyn concession occupies a 325km² area of the Carpathian thrust – fold belt in southern Poland. This concession has seen significant historic exploration and whilst prospectivity exists at both Palaezoic and Tertiary levels, much of the activity has focussed on the relatively shallow (400 – 800m) Miocene clastics trapped in thrust belt structures.

Numerous Miocene gas discoveries have been made in and around the concession (Debowiec-Slaski, Kowale, Pogorz) with even more along trend on the Czech Republic side (Horni Zukov, Bruzovice -Frydek, Pribor, Choryne). The quality of seismic imaging, and low exploration well cost, presents an attractive opportunity to define a future work programme to fully evaluate this concession.