Leyshon Energy Advances Interim Testing Program at China Gas Project

Leyshon Energy Limited announced Tuesday that it will advance the interim testing program at the Zijinshan gas project located in the Ordos Basin in central China.

The company is also actively progressing its interest in a number of acquisition opportunities in the region.

Zijinshan Gas Project - Interim Testing Program

Flow testing of three zones in Well ZJS7 is underway with each of the three zones flowing flammable gas with methane contents of up to 99% recorded, the company said.

“There has been no test work so far on Well ZJS6. Testing of this well will be largely dependent on the results from individual zones in Wells 5&7. These results so far are below our expectations for this area of the field. The results, along with our understanding of well performance in nearby fields, are however sufficiently encouraging to proceed with drilling an additional exploration well, ZJS8,” Leyshon said.

The company has commenced discussions on the location and design of this well with its partners.

The interim testing program now has an estimated cost of around $4 million and, depending on the timing and results from Well ZJS8, is expected to be completed by the end of this year. The cost includes the drilling and testing of Well ZJS8.

The purpose of the interim testing program is to evaluate the project with a view to making a decision whether to commit to the $17 million main exploration and appraisal program which is scheduled to commence in 2015, the company stated.

The number of wells to be drilled will be determined based on results progressively achieved and will to a large extent determine the overall expenditure on the program.

Acquisition of Oil and Gas Assets in China

Leyshon said is in active discussions with potential vendors of assets in the region in line with the acquisition strategy previously outlined and in the normal course of business. However, the company said there is no indication whether these discussions will lead to a commercially binding transaction.