Further to the announcements made by Leni Gas & Oil PLC in April 2008, in relation to the conditional investment of 7.27% interest in gas developments in Hungary operated by Ascent Resources plc, the Company has confirmed that all conditions precedent in the Investment Agreement have now been completed.
The Investment Agreement provides the Company with a 7.27% interest in PetroHungaria kft and a 14.54% interest in ZalaGasCo kft. PetroHungaria owns a 100% interest in the Peneszlek gas development project in the Nyirseg permits in eastern Hungary, and ZalaGasCo has a 50:50 joint development agreement with MOL Hungarian Oil & Gas for the re-development of fields in western Hungary.
Under the terms of the Acquisition Agreement, the Company has:
-Issued the remaining € 1 million cash consideration, being the balance of the € 2 million consideration payable on completion of the Investment Agreement.
-Been notified by PetroHungaria, the commissioning of the Peneszlek gas production facilities is due to be completed by the end of July 2008, the production permit is due to be awarded by the end of July 2008, with scheduled first gas production of 3mmscfd due to commence in the coming weeks.
The Peneszlek gas development is centred on the development of the PEN-104 gas discovery that was drilled and tested by PetroHungaria in 2006. Post first gas production, it is planned to tie-in the PEN-9 and PEN-12 wells to increase production to near 7mmscfd.
Further appraisal of the Peneszlek development area is planned at start 2009 with the acquisition of approximately 100 sq km of 3-D seismic in order to identify further prospects to be developed and connected to the production infrastructure.
ZalaGasCo is currently finalising the development program for the Bajcsa gas re-development, which is one of three fields covered by the 50:50 joint venture with MOL. Permitting for the re-entry and horizontal re-completions of the identified existing wells is in progress, and various well productivity enhancement programs are being executed during Q3 2008 to improve the performance of current production wells. A total of 13 bcf recoverable reserves has been identified by ZalaGasCo, with the final sand targets currently being finalized for well entry in Q4 2008.
David Lenigas, Executive Chairman, commented: 'The completion of our Investment Agreement in Hungary is another significant milestone for the Company, adding both immediate and near term gas production, and a third Country of operation in addition to our existing oil production in Spain and Trinidad.
The two Hungarian assets both have significant production enhancement potential and demonstrate our continued strategy of delivering growth through the acquisition of proven reserves and the enhancement of producing assets.