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Resource
San Leon expands Polish acreage
14 June 2012
Job Langbroek
FACTS: San Leon has announced that the Rawicz and Winsko concessions have been merged and that the overall area covered by these licences has been expanded. The amended area includes the previously discovered but unproduced Rawicz gas field in the main Permian Basin. The new merged area is 742 km2.
ANALYSIS: The increase in acreage appears to meet two criteria of the group's strategy: firstly, the ongoing expansion of the portfolio to build-out its pre-eminent unconventional acreage position in Poland; secondly, to move away from the equity funding model for resource companies by building up a near-term production-based cash flow. The new acreage includes a discovered but undeveloped gas field that San Leon estimates could contain up to 17 BCF of gas. Seismic will follow in Q4 this year followed by a first appraisal well in Q2/Q3 next year. All going well, the company believes that it can initiate production in Q3 2013.
DAVY VIEW: The build-out of its unconventional acreage and the desire to build up a source of near-term cash flow make sense, but we suspect in the near term that the market will be particularly focussed on the expected results from the current Talisman farm-in well and also the outcome of the decision by Talisman to proceed with the next part of the programme.