San Leon adds to Polish shale portfolio
San Leon Energy, the second-largest licence holder in Poland behind state-run PGNiG, has added another block to its unconventional gas portfolio
The company remains upbeat on Poland’s shale prospects, though market sentiment has turned sharply against Polish shale explorers in recent months.
San Leon won exploration rights to the onshore shale-gas prospective Praszka concession. The new licence, which covers nearly 300,000 acres, takes the company’s holding in the Southern Permian/SW Carboniferous unconventional basin to more than 1.2 million acres.
“We are very excited to continue to expand out prospective acreage in Poland... San Leon is now the dominant player in the basin,” the company’s chairman Oisin Fanning said.
San Leon has drilled two exploration wells at the play – Siciny-1 and Siciny-2. The company said that those wells saw continuous gas shows across four separate prospective shale intervals and showed “real promise for gas production”. Production testing will be carried out later this year.
Early movers into Polish shale exploration, such as San Leon, have seen their share prices hit hard over the past year as initial exploration wells have failed to show commercial potential. San Leon’s share price has fallen by more than 70% from its 52-week high of 33.50 pence ($0.53) a share last June to just 8 pence a share on 21 May. 3Legs Resources, another Poland-focused shale explorer, has seen its share price fall by around 80% from its 52-week high in July last year of 265 pence a share to around 55 pence a share on 21 May.
The companies, though, have argued that it needs more time prove Poland’s shale potential. “This is a pure exploration play. We are trying to figure out where the sweet spot in the play is and we believe we are best positioned to be part of at least one if not two of those sweet spots,” San Leon’s exploration director John Buggenhagen said last week at the First Energy Capital Global Energy conference.
“We’re not going to let the market drive what we do. We’re going to do what the rocks tell us to do,” Buggenhagen said, arguing that exploration in Poland has been more successful than the market and media have recognised.
Meanwhile, San Leon is pressing ahead on its projects outside Poland. The company has been in talks with a number of majors and large independents for its unconventional acreage in Spain, Buggenhagen said. The company holds 2.2 million net acres across three basins in the country.
San Leon has also seen strong interest in its unconventional acreage in Albania, where the company expects to close a farm-out deal by the end of the year. The company is aiming to seal a deal that will see it sell a 60-70% stake in the project in exchange for a fully funded two-well commitment plus around $20 million to cover costs already incurred, according to Buggenhagen.