Baker Hughes Signs LOI to Fully Fund Production Strategy

Source: www.gulfoilandgas.com 2/12/2014, Location: Europe

San Leon Energy plc has signed a Letter of Intent (“LOI”) with Baker Hughes Poland Sp. z o.o. (“Baker”) to jointly begin to develop the Siekierki Gas Field1 in Poland, including Polish Concessions 206, 207 and 208. The Companies plan to start gas production from four existing wells, namely Trzek-1, Trzek-2ZH and Trzek-3H on the Siekierki structure, and the nearby Krzesinki-1 well (the “Wells”).

Under the proposed agreement, it is envisaged that Baker will provide all funding necessary to recomplete and bring into production the Wells. Subject to finalisation of the funding mechanism, Baker’s funding may be in the form of cash, in-kind oilfield services, or a combination of both. Baker services will be provided at their standard prices and based upon a Master Service Agreement to be agreed between the Companies.

In return for fully funding the startup of production, Baker will receive a to-be-agreed portion of the profits generated from production until Baker’s investment has been fully recovered. Baker will then receive a to-be-agreed net profit interest from the Wells.

The Companies have now entered an exclusivity period during which the final work scope and commercial terms will be negotiated and agreed.

Oisin Fanning, San Leon Executive Chairman, commented:
“We welcome Baker Hughes’ involvement in Siekierki. This is a real milestone for San Leon and could lead to the Company’s first significant production in Poland. Production from the first four wells in Siekierki will allow San Leon to understand the potential that may exist in the Siekierki complex of fields. During testing, the Trzek wells produced between 2.0-3.0 mmcfd each, and permissions are already in place for various elements of the infrastructure and export systems required to get the gas to market.”


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Related Articles: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 


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