Regulatory Story
Go to market news section View chart   Print
Leyshon Resources Limited  -  LRL   

$20 million Accelerated Exploration and Appraisal

Released 07:00 25-Feb-2013

RNS Number : 4971Y
Leyshon Resources Limited
25 February 2013




25 February 2013


Commences $20 million Accelerated Exploration and Appraisal Programme

Leyshon Resources Limited (AIM/ASX:LRL) ("Leyshon" or the "Company") is pleased to announce that its wholly owned subsidiary, Pacific Asia Petroleum Limited (PAPL), has commenced the previously announced $20 million accelerated exploration and appraisal programme on its Zijinshan Gas Project, located on the eastern fringe of the prolific Ordos Gas Basin in Central China ahead of schedule.


Following the positive results from drilling at both ZJS5 and ZJS6, which intersected multiple potential pay zones, the contractors were mobilized to the project and all necessary approvals obtained prior to the Spring Festival enabling an immediate start to operations on return. As a result the programme is currently two weeks ahead of schedule with over 150 kilometres of the planned 300 km seismic lines already surveyed.


As previously announced drilling at both ZJS5 and ZJS6 had intersected multiple potential pay zones, with strong initial results indicating that ZJS5 encountered nine potential pay zones with a total thickness of 56 metres and ZJS6 encountering 15 potential pay zones with a total thickness of 80 metres.


Flow tests to determine whether commercial flow rates can be established from selected pay zones are expected to commence mid-March as planned, depending on the weather.


Both wells ZJS5 and ZJS6 are part of an initial programme designed to explore and test the potential for commercial gas production in a highly prospective and unexplored 380 km2 central depression area that appears to demonstrate good continuity with the neighbouring Sanjiaobei discovery.


2013 Exploration and Appraisal Programme


Following the encouraging results from the programme to date the PSC partners have accelerated the 2013 exploration and appraisal programme, with a total estimated cost of up to US$20 million, with the main objective to define a resource sufficient to delineate and submit a Chinese Reserve Report (CRR).


The main components of the accelerated 2013 programme comprise:


- Drilling up to six wells. Three of which are committed wells and the additional three subject to results and PSC partner agreement. (It should be noted that drilling of these additional wells will be dependent on favourable results from both the testing and seismic programmes.)


- Flow testing of wells ZJS 5 & 6 and wells ZJS 7-12 as they are completed. The duration of testing will be dependent on the success of the tests and in particular whether long term flow testing will be required.


- Acquisition of 300 km 2D seismic to identify additional well sites and generate data for the CRR report submission.


PAPL has a 100% interest in the exploration phase of the Production Sharing Contract (PSC) with PetroChina, which has the right to buy back a 40% interest at the development stage.


All three wells in the current programme are ideally located within approximately 10 kilometres of a tie-in point on the recently commissioned Lin-Lin pipeline which supplies the growing demand in Shanxi Province. Recent discussions with potential off-take partners suggest that local well head prices are continuing to rise with prices expected to exceed US$9 mscf within the next few years.


The Shanxi Provincial Government has recently reported that gas demand in 2012 increased by 38% and was the fastest gas consumption increase in China. Its regional gasification programme is designed to increase demand by over 2.5 times current levels and is one of the most advanced in China. Installed gas pipelines now total over 3,000 kilometres with a total capacity of over 10 bcm per year.


The Company is well placed to carry out its 2013 exploration and appraisal programme with a strong cash position of U$45 million (unaudited). With 249 million ordinary shares on issue this represents approximately A$17 cents per share and 12 pence per share. The cash position does not take into account interest due nor all of the liabilities for the first two wells.


Managing Director Paul Atherley commented:


"We are very pleased with the rapid progress we have made to date which is due in large part to experience and relationships of our operational team who have given us a flying start to a busy six or seven months.


We are fully funded with a solid base in place following the positive results from JS5 and ZJS6. Following these encouraging results we've brought forward the 2014 exploration and appraisal programme and will be reporting on the flow testing of the first two wells, the results from the six new wells along with the interpretation of 300 kilometres of seismic data.


With pipelines sitting on the surface within 10 kilometres that access one of the fastest growing gas markets in the world, rising gas prices and a strongly supportive government policy we very much look forward to reporting on our progress in transforming a compelling project located in the beating heart of China's energy demand."



Paul Atherley will be presenting at the following events in London:




Feb 28th

One2One Investor Forum

Chesterfield Mayfair Hotel, 35 Charles Street, Mayfair.

Apr 13th

UK Investor Show

ExCel London - One Western Gateway, Royal Victoria Dock.

Apr 25th

MRQ Investor Event

Novotel Hotel- Tower Bridge.

Apr 27th

Master Investor Show

Room A of Business Design Centre of London.


For further informationplease contact:

Leyshon Resources Limited 

Paul Atherley - Managing Director 

Tel: +86 137 1800 1914


Seymour Pierce

David Porter/Stewart Dickson (Nominated adviser)

Richard Redmayne (Corporate broking)

Tel: +44 (0)207 107 8000


Pelham Bell Pottinger

Charles Vivian/James MacFarlane

Tel:+44 (0)20 7861 3232




Leyshon was on the ground in 2003 when China opened its mining sector to foreign investment. It has been fully engaged in China since then and has its main operating office located in Beijing.


China overtook the United States as the world's largest energy consumer in 2010, however on a per capita basis it still only consumes about 25% of the energy of the most developed nations. The government has recently described the country's increasing dependence on foreign energy sources as one of the "Grave challenges to energy security".


Its main policy response to this challenge is the rapid development of domestic unconventional gas resources, with a particularly focus on the Eastern Flank of the Ordos Basin. The aim is to rapidly increase the output of unconventional gas from the currently very low levels to an annual production of 6.5 billion cubic metres by 2015.

Leyshon, along with its partner PetroChina, is one of small number of companies exploring for and looking to develop unconventional gas production in the Eastern Flank of the Ordos Basin.

Managing Director Paul Atherley is an Executive Committee member of the China Britain Business Council and serves on the European Union Chamber Energy Working Group.

This information is provided by RNS
The company news service from the London Stock Exchange

London Stock Exchange plc is not responsible for and does not check content on this Website. Website users are responsible for checking content. Any news item (including any prospectus) which is addressed solely to the persons and countries specified therein should not be relied upon other than by such persons and/or outside the specified countries. Terms and conditions, including restrictions on use and distribution apply.


$20 million Accelerated Exploration and Appraisal - RNS