Leyshon Resources (LON:LRL) is understood to be close to finalising the acquisition of a company which holds a 100% interest in the Zijinshan Production Sharing Contract located on the eastern fringe of the prolific Ordos Gas Basin in Central China.
Respected industry advisor RISC has advised that in its view the Zijinshan Gas Project contains gross prospective resources that are potentially large due to the confirmation of the presence of unconventional gas, with in place estimates in the range 1 to 3.8 trillion cubic feet. The Ordos basin generally offers one of the highest potential IRR’s in China.
RISC does however caution that whilst the opportunity appears attractive it contains significant risk which must be mitigated via the acquisition of appropriate data and completion of a pilot plan. Leyshon plans to retain RISC as its advisor in the exploration and development phase of the project.
Under the proposal Leyshon will acquire a 100% interest in Hong Kong Company Pacific Asia Petroleum Limited (PAPL) from Houston based CAMAC Energy Inc. Leyshon is currently undertaking final due diligence and the parties are expecting to finalise a Share and Purchase Agreement to complete the transaction by the 27th July.
Leyshon said that PAPL is well established in the oil and gas exploration sector in China and under the proposed terms of the acquisition its experienced technical team will be retained. The team has already completed four wells under the Zijinshan Production Sharing Contract, two of which have been cased, and acquired 160 kilometres of 2D seismic data which has been used to identify several major gas exploration targets.
The initial exploration focus will be on drilling several new wells to test extensions to nearby major shale gas discoveries and production testing the cased wells.
The Zijinshan Production Sharing Contract is with one of China’s major oil and gas companies which has retained the right to buy back a 40% interest in the contract at the completion of the exploration phase and to jointly fund the project into production.
