3Legs Resources Operational Update

11 December 2012
3Legs Resources Operational Update

3Legs Resources plc - Operations on Baltic Basin concessions in northern Poland

3Legs Resources plc (the "Company"), an independent oil and gas group focusing on the exploration and development of unconventional oil and gas resources, announces the following operational update.

Highlights

  • Substantially improved performance achieved on the further testing of Lebien LE-2H horizontal well
  • Drilling of the Strzeszewo LE-1 vertical well, the Company's fifth well in the Baltic Basin, completed; extensive suite of logs has been run on the well, data now undergoing processing and analysis
  • Preparations continuing for the Company's previously-announced 2013 drilling programme

Operational update

Further testing of Lebien LE-2H horizontal well

  • During further testing, the Lebien LE-2H horizontal well flowed natural gas from the Ordovician horizon for a 21-day natural flow test, without any artificial lift, flowing at an average rate of 550 mscf/d through 3½ inch tubing from 31 October to 21 November 2012, when testing was suspended.
  • Immediately prior to suspension of the test, the well was flowing natural gas at a rate of 470 mscf/d. A total of 12 mmscf of natural gas was produced over the test period.
  • The well continued to clean up throughout the test period; by the end of the test, approximately 29.4% of the water used during the hydraulic fracturing operation on the well in 2011 had been recovered.
  • The results of this further testing represent a significant improvement on the result achieved when the well was first tested in 2011. On that occasion, the well flowed with the assistance of a nitrogen lift at a rate of between 450 and 520 mscf/d over an 8-day period, prior to being shut in.
  • The well is now in a planned shut in period to record pressure build-up using surface and downhole pressure gauges; this pressure build up data will further enhance understanding of the longer term flow potential of the Ordovician interval.
  • The plan is to continue to gather additional data on well performance, with a view to making a decision on any future operations on the well in Q1 2013 following recovery of the pressure gauges.

Strzeszewo LE-1 vertical well

  • Drilling of the Strzeszewo LE-1 vertical well has now been completed; the well was drilled to 3060 metres true vertical depth into the Middle Cambrian interval.
  • Some 220 metres of whole core have been recovered from the well over the Lower Silurian, Ordovician, and Cambrian intervals, for analysis.
  • An extensive suite of logs has also been run on the well, and these are now undergoing processing and analysis.
  • Preliminary log analysis indicates that the well encountered a thicker Ordovician section as compared with the Lebien LE-1 and Warblino LE-1 vertical wells. The precise thickness will be determined following final processing and analysis of the logs over the coming weeks, but the preliminary data confirm the Company's earlier modelling of the development of the Ordovician interval across the northern portions of its western Baltic Basin concessions.
  • Preliminary log analysis also indicates that the thickness of the Upper Cambrian interval is similar to that encountered at the Warblino LE-1 vertical well. Again, exact figures will be confirmed once final log processing and analysis is completed over the next few weeks. As the Lebien LE-1 well only targeted shallower zones, Upper Cambrian data were not taken from this well.
  • The Strzeszewo LE-1 well has now been cased and cemented, and the rig has been released. A diagnostic formation injection test ("DFIT") is currently being planned, with expected execution in early 2013.
  • Options being considered for further testing of this well include DFITs and/or hydraulic frac testing.
  • Further announcements will be made in due course.

Further wells in 2013

 

  • Preparations are continuing for the Company's previously-announced drilling programme for 2013, involving the drilling, coring and logging of two or more vertical wells on the Company's high graded acreage on its western Baltic Basin concessions.
  • As previously announced, these wells will be designed with the option to drill and test horizontal sections at a later stage.
  • The 2013 drilling programme is expected to result in a significant further de-risking of the Company's western Baltic Basin acreage.

Kamlesh Parmar, Chief Executive of 3Legs Resources,said:

"The substantially improved performance achieved on the further testing of the Lebien LE-2H horizontal well is very encouraging. The well has succeeded in flowing unassisted and at a sustained rate for a three-week period, while continuing to clean up; and early indications are that our target formation may have additional reservoir potential. An average rate of 550 mmscf/d over a 21-day period is a big step in the right direction, given that the lateral section on the well is no more than 1,000 metres in length and comprised 13 frac stages, whereas it will be quite possible to drill future horizontal wells with significantly longer lateral sections and more frac stages. We will continue to analyse the results of the well test and the pressure data so as to consider any additional steps which may potentially improve performance both from this well and future wells.

We are also very pleased that our fifth well in the Baltic Basin, the Strzeszewo LE-1 vertical well, has now been drilled, cased and cemented. Preliminary results from the well indicate an increasing thickness in the Ordovician section as one moves north in our western Baltic Basin concessions. This further validates our geological model for the basin as a whole, and confirms our modelling of our high-graded area across the northern part of our western Baltic Basin concessions. The well has yielded a wealth of additional core and log data which will enable us, after analysis, to determine the optimum programme for further evaluation of individual target intervals. With the first DFIT being planned for the New Year, we expect the remainder of the testing programme for this well to take shape in early 2013."