Leyshon Resources Limited provides the following update from its Zijinshan Gas Project, located on the eastern fringe of the prolific Ordos Gas Basin in Central China.
Its wholly owned subsidiary Pacific Asia Petroleum Limited (PAPL) has discontinued the testing of well ZJS6, the second well drilled in the current programme, located on the southern boundary of the licencedue to technical problems.
The well has a total depth of 2,320 metres with 80 metres of cumulative potential pay interval intersected across 15 potential pay zones. Several of the zones tested, which elsewhere in the field are dry, have produced water.
It has not been possible to isolate or to accurately define the source of the water nor to determine whether these are issues specific to well ZJS6 or more general to this area of the licence. Accordingly the decision has been made to discontinue testing on the well for the time being and to focus exploration and appraisal efforts on the upcoming programme.
It is possible that the well may be revisited at later date to attempt to isolate the water and to test different zones. However very useful information on the target zones has been gathered which will be valuable for testing future well.
Following the successful flow test on well ZJS5, located more centrally in the licence, where one of the target zones recorded a free gas flow rate of 160,000 scf/day, formation pressure testing is ongoing with results expected in the next few weeks. Several additional zones have been identified for flow testing later in the year as part of the overall appraisal programme.
Interpretation of the recently acquired 318 kilometres of 2D seismic data has been completed and the location for well ZJS7 has been selected as approximately three kilometres to the north of well ZJS5.
Negotiations on access, farmer compensation and local approvals are underway and it is expected that the rig will be mobilized shortly and the well spudded during the first or second week of July, subject to unexpected delays, with approximately a four week drilling time.
Well ZJS7 is the first of three wells committed to be drilled as part of this year's accelerated exploration and appraisal programme. A further three wells are planned to be drilled based on favourable results.
An additional rig will be mobilized to enable all six wells to be completed by the end of the year. All wells are expected to be flow tested in the event they intersect zones that warrant testing.
Managing Director Paul Atherley commented " ZJS6 was the second well in an 8 well programme, with not every well to be successful. We are however confident in the full potential of our project, particularly following the positive results from well ZJS5, and in the ability of our team to unlock value from the license area going forward."
We remain focused on the outcome at the end of the accelerated exploration and appraisal programme.
Accordingly the attention now turns to well ZJS7 and subsequent wells as we progressively gain a better understanding of the potential and as we work to de-risk the project."
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