3Legs Resources (LSE:3Leg) Lublewo LEP-1ST1H lateral well, Game Changer &
Major Value Kicker for Poland’s Shale Gas Sector.
Incredible news out this morning by AIM
listed Polish shale gas exploration company 3Legs Resources (LSE:3Leg) who have
reported the results of their Baltic Basin, Lublewo LEP-1ST1H well stimulation.
In partnership with US Major ConocoPhillips, 3Legs have successfully completed
stimulation over 25 stages of their Lublewo well, in what is a landmark
technical achievement.
For investors in Poland’s shale gas sector,
this news is of major significance as 3Legs and ConocoPhillips have not only
completed a successful stimulation but have worked out the right fluid
combination to penetrate the Baltic Basin shale structure.
Getting the fluid combination right is the
Holy Grail for a successful fracture and major issue to date in Poland has been
working to discover just what is the right fluid combination to deliver a
successful frack and one that will be able to unlock Poland’s huge shale gas
reserves.
Cross-Linked
Gel
On the Lublewo well, 3Legs have used a
cross-linked gel a step back from the slickwater fluid that was used on the
Lebien LE-2H well in 2011. The use of a cross-linked gel was designed to
reduce the amount of fluid required per stage, while maximising proppant
delivery. It appears that this hybrid fluid systems has been able to control
fluid loss to increase the fluid efficiency, provide good fracture
conductivity, keep polymer concentration to a low level and help eliminate
proppant flowback ensuring the frack can be stabilized.
Poland’s
Largest Successful Multi Stage Simulation
3Legs, ConocoPhilips & Lane Energy have
conducted what is Poland’s largest multi-stage shale simulation. By identifying
the correct fluid combination, it appears 3Legs have found a way to keep the
proppant in suspension and thus ensuring more proppant gets into the rock
structure and penetrates much further (Lublewo delivered 7.7 million lbs of
proppant over the 25 stages executed across 1,469 metres out of the available
1,495 metres of lateral section) By using the hybrid gel combination, they have
used less water, a factor that is significant in that it reduces costs by
making clean up much quicker.
Raises
Investment Interest in San Leon’s Lewino-1G2
The other reason why this news is so
significant is the Baltic Basin concession owner Lane Energy Poland Sp. Zoo
where 3Legs and ConocoPhilips hold a 30% and 70% interest respectively, contracted
the Polish company United Oilfield
Services (UOS) to drill and frack the Lublewo well. This is important as it
means the on the ground experience in Poland’s drilling sector is now gathering
pace and where these experiences will certainly be transferred to other
companies like San Leon Energy (LSE:SLE).
Indeed this news by 3Legs puts a real spotlight on San Leon’s Lewino-1G2 well,
which successfully flow tested in January and is now ready for a horizontal
well to be spud and where I understand UOS will likely be contracted to spud Lewino
(UOS did the successful flow test). I would suspect that San Leon would be
approached by a major who off the back of this news by 3Legs would want to have
access to one of Poland’s most advanced shale gas wells, where it too could
employ similar techniques to bring Lewino into production pretty quickly.
Raising
Valuations
On a final note, surely the news out today
significantly raises the valuations of Poland’s shale gas acreage. It has been
as high as $500 per acre and is today valued at $50 an acre but where a more
reasonable valuation after this latest news must be ranging from $1,000 to
$2,000, in contrast US shale gas acreage is valued at circa $38,000 an acre. San Leon has interests in nearly 5 million
acres of land in Poland of which 1.2 million acres is pure play shale gas.
Shares in both 3Legs and San Leon are up this morning on the back of this great
news.
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