San Leon Energy: could this be the One?

Tuesday, Mar 02 2010 by
14

San Leon Energy company news imageI'm still looking for the oil company that's going to make my fortune. It certainly wasn't Petrel Resources (phew, glad I sold that at 50p!) and it's not Petroceltic International, which seems to be going gently into that good night, judging by the oil price. Strangely, I've done better with BP and Royal Dutch Shell B, particularly when you consider the dividend income I've had over the last five years or so! But the oil stock that's going to make a real mark on my portfolio still hasn't appeared...

So, after yesterday's news of a JV deal with Talisman Energy on its gas shale assets in Poland, let's take a closer look at San Leon (LON:SLE): it has oil and gas exploration and production - some production in the US, and it's close to first production in the Netherlands and Italy. It has assets in Morocco and Poland, too - all relatively stable countries with strong existing licence and tax regimes.

In Morocco, it has a number of prospects: the Tarfaya basin, Tarfaya oil shales, and ZAG basin. Tarfaya is a lightly explored basin south of Agadir, with deep reservoirs in the Jurassic platform carbonates. Further 2D seismic is being acquired to derisk this play; the main risk here is not the presence of oil, but the reservoir characteristics.

A pilot programme is currently being carried out on the oil shales. Dr Jeremy Boak, a non-executive director of San Leon, is an oil shale expert and has acquired rights for a vapour extraction technology which should enable the company to break even at USD 70/bbl or above. There is a massive potential upside, and brokers don't appear to have attributed much value to these operations.

The Zag basin is part of a highly prolific trend which continues into Algeria. Again, it's a known oil-bearing area, but the main risk is reservoir quality. In particular, porosity and permeability can be very poor. Drilling will be carried out in Q2 2010 to firm up on this prospect.

The size of these assets could be significant. 13.7bn bbls of oil has been identified at Tarfaya, from 12 prospects, and Zag could hold 10-20 trillion cubic feet of gas and 500-800m barrels of oil [1] .

San Leon gained its Polish assets with the acquisition of…

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San Leon Energy Plc is an oil and gas company. The Company develops conventional and unconventional assets in Europe and North Africa, from exploration to monetization. Its segments include Poland, Morocco and Ireland. The Company holds participating interest in the Durresi Block, offshore Albania. The license area, which covers approximately 4,200 square kilometers, contains the A4-1X gas/condensate discovery and several undrilled oil and gas prospects. The Company holds over 2.4 million acres of licenses in France, which are under application. It holds a net profit interest (NPI) on the Barryroe License, which is located in the North Celtic Sea, offshore Ireland. The Company has interests in the Tarfaya and Zag license areas and offshore licenses, Foum Draa and Sidi Moussa. It holds approximately seven licenses in Poland. The Company holds approximately four licenses in Cantabrian-Pyrenees basin, five licenses in Ebro basin and one license in Duero. more »

LSE Price
35.66p
Change
0.7%
Mkt Cap (£m)
161.3
P/E (fwd)
n/a
Yield (fwd)
n/a



  Is LON:SLE fundamentally strong or weak? Find out More »


57 Comments on this Article show/hide all

REO100 16th Feb '11 38 of 57

In reply to post #53986

Id imagine that this could produce some strength in SLE as it slowly gets around.

Just waiting for BMD, to warm up to the task.

Reo

 

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djpreston 16th Feb '11 39 of 57
2

In reply to post #53991

Just waiting for BMD to warm up to the task.#

Reo

 

Indeed. 

He's probably been buying a few before putting out another "scoop".

Seriously though, that blog is getting dangerous and I would imagine that the FSA are watching (Id hope) closely. Look at what happened to SOU yday as an example. Up nicely on the day then he issues a "warning" and it ends down 10% on the day.

Fund Management: European Wealth
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RedTedsRoadshow 25th Feb '11 40 of 57
1

Encouraging news I think from Aurelian in Poland who's Poznan licenses aren't too far away and look similar to San Leon's in Western Poland...

http://www.aurelianoil.com/media/51478/operational_update%20_poland250211.pdf

Also tipped in Shares magazine today...

Invest in Emerging Shale Gas Story in Poland
Gas-Fired San Leon
Shares Magazine
24th February 2011
by Tom Sieber

Investors should buy oil and gas firm San Leon Energy as a play on mounting interest in Polish shale gas given its substantial acreage position in the country.

Earlier this month North American independant BBN Petroleum announced its Wytowno well had found significant amounts of gas in shale rock on its Slawno concession (15th Feb). This site is located to the west of San Leon's acreage in the Baltic basin, the area of Poland which is believed to have the most shale gas potential.

In the near term PGNIG, thr Polish state oil company, is drilling a well in another Baltic basin licence. If the results from that drilling prove similarly sucessful then shares in San Leon are likely to be re-rated.

The £289 million market cap Company has three blocks in the Baltic basin, Braniewo, Gdansk and Szczawno, covering more than 2,400 square kilometeres. It agreed a deal last March with large Canadian natural gas specialist Talisman Energy which will see the latter fund up to six wells, at a cost of $150 million, to earn 60% of San Leon's current 100% interest in the concessions. The first of these wells is due to be spudded in the third quarter of this year.

Producing gas fromn shale is relatively proven in North America but remains in its infancy in Europe. In addition to the activity discussed above, the group can benifit from planned investment in the region by major US oil and gas companies - such as ConocoPhilips and ExxonMobil. This could add credibillty to shale gas as a concept in the country.

Shares says:

Newsflow from other shale gas operators can lift San Leon ahead of its own drilling. BUY at 36p


http://www.advfn.com/cmn/fbb/thread.php3?id=23400712&from=1123

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RadDad 26th Feb '11 41 of 57

It's a shame we are getting tarnished by the Libyan factor along with most other oil companies. I can't wait for the next few RNS's from Mr Fanning as the over due new regarding the oil shale extraction at the pilot plant will move us along very nicely indeed when it comes. Poland is looking very good as well as the Irish assets.
Exciting times at SLE and a medium term hold until atleast the end of the year.
Come on Mr F. give up the Moroccan news....

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djpreston 18th Mar '11 42 of 57
3

Just a reminder that SLE isnt just about Poland (and Morocco):

Seismic campaign on the Durresi block offshore Albania has commenced.

Excerpts:

San Leon, through a subsidiary, holds a 75% interest in the block and is the operator. Beach Energy holds the remaining 25% interest. Beach Energy has agreed to pay 50% of the seismic programme costs, rather than their 25% working interest requirement, in exchange for an option which, if exercised, will allow them to hold a 50% working interest in the licence going forward.

 

The Durresi Block contains the undeveloped A4-1X gas condensate field, which was discovered in 1993, 30 km off the southern coast of Albania. The discovery indicated circa 38 mmbbls of circa 51 API condensate and 150 BCF of gas. The Company is also exploring significant potential multiple plays adjacent to A4-1X targeting both oil and gas. This underexplored, highly prospective, area is situated on the proven Apulian Margin, which extends from Italy into Albania. Southern Albania contains a highly prolific petroleum system including one of the largest onshore oil accumulations in Europe, the Patos-Marinza field, which is estimated to contain up to 5.7 billion barrels of OOIP.

 

Fund Management: European Wealth
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RedTedsRoadshow 22nd Mar '11 43 of 57
2

...as if San Leon didn't have enough to do!!!

http://www.investegate.co.uk/Article.aspx?id=201103220700223488D

Joint Participation Agreement

San Leon Energy and its Joint Venture Partner in Iraq Al Meinaa Oil Services Company ("Al Meinaa"), as per our announcement in January 2010, have signed a Joint Participation Agreement with the Governorate Council of Karbala in Central Iraq

 

Perhaps in recognition that this is already a massively busy year for SLE, Oisin Fanning Chairman of San Leon Energy commented:

"We do not believe that this project will in any way impinge on our ability to deliver on our current operational timetable in Poland, Morocco and Albania and look forward to providing updates on these programmes shortly"


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djpreston 29th Mar '11 44 of 57
6

A long and comprehensive operational Update RNs issued this morning.

Nothing that we didnt really know but serves to illustrate just how much SLE has going on in the ocming year and the constant newsflow that we can expect. Id imagine that the price will move up on the back of it though.

Fund Management: European Wealth
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djpreston 26th Apr '11 45 of 57
3

Interesting little tidbit from Poland.

BNK petroleum has annunced that the Lebork S-1 well has been compted at TD.

Numerous gas shows over 285m of the Lower Silurian, Ordovician and Cambrian shales. Thicker here than in their Wytowno-1 well

Core analysis results expected back in Q3 (Wytowno core analysis still awaited)

Fund Management: European Wealth
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wistman 8th Jun '11 46 of 57

Article in Bloomberg about Polandand others targeting shale gas:

http://www.bloomberg.com/news/2011-06-07/poland-targeting-shale-gas-with-exxon-to-end-russian-dominance.html

Central Europeas generally( pretty keen to break the Russian gas supply dominance, and not worried apparently about fraccing etc, so little risk of a regulatory "about turn", it would seem.

Relevant for San Leon, Aurelian, Bankers...who else?

w

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djpreston 24th Jun '11 47 of 57
2

Operational update issued yesterday.

It didnt go down well with the stock coming back sharpish and now c24p or the level at the startof the year vs a high of 38p (?) just over 2 months ago.

I do wish that some companies would think about Investor Relations and how RNS's actually read to the investors.

Overall a pretty solid update but having the first para indicating a delay on just one licence, especially in these markets, is just going to cause the "sell first, ask questions later" reaction, which is what we saw.

For me, its now looking like a very good buying level.

 

Fund Management: European Wealth
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djpreston 29th Jun '11 48 of 57
4

Very interesting article on the Polish Shale play covering the operators there such as BNK Petroleum (Not bankers), SLE, Three Legs etc.

http://www.nohotair.co.uk/2011/63-shale-gas/2012-polish-acti

Fund Management: European Wealth
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djpreston 26th Aug '11 49 of 57
2

Well now, theres interesting (sorry for the accent been too long down at Mother in Law's)

San Leon Energy (LON:SLE) has agreed to buy Realm Energy (RLM:CVE) for C$1.30 vs a close yday of 89c - so a 46% premium. Offer in cash or shares or combo thereof with a max of $17.7m of cash to be paid. (RLM has $24m in cash on bal sheet).

Seems a very very sensible deal, adding together the two companies' Polish Baltic Basin acreages making a very large (leading?) acreage holder in some of the most prospective territory. Note also that Realm has applied for Shale licences in Spain and France.

Fund Management: European Wealth
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djpreston 1st Sep '11 50 of 57
4

Finally, SLE have started drilling (or will do next week)

Okay, so its not the uncoventional Polish play but should/could bring about some very useful short term successes and cashflows - all very useful for the future.

Also worth noting the Investor Presentation that the company released yesterday on the Realm acquisition.

Pages 7 onwards gives the best impression of the scale that the combined gorup will have (Largest Polish shale holder). Also note the activity chart that shows how things should be speeding up on the newsflow front from now through to the end of Q1 2012.

With the shares having come a long way back, SLE is startign to look very interesting IMO.

Fund Management: European Wealth
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djpreston 5th Sep '11 51 of 57
5

Further to my post above, SLE has now cnfirmed that a well has spudded today.

However, it is no tthe Belvedere-1 well but Chopin-1

Belvedere-1 will follow Chopin-1.

TD of 1000m testing multiple targets on trend with the plowice and Grobla oil fields.

Still plan the two wells this month.

Fund Management: European Wealth
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tiswas 27th Sep '11 52 of 57

Hi Darron

SLE seems to be getting cheaper and cheaper, as the market rallies.

Have you seen/heard anything? Various comments that I have read elsewhere reckon they substantially overpaid for Realm but I have no idea if those comments are warranted.

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djpreston 27th Sep '11 53 of 57
2

Hi Tis

Have to say I'm a bit surprised by the pullback.

The Realm deal was very much a strategic deal to boost their unconventional acreage very substantially.

Obv Poland was to the fore but they've also expanded into additional territories too - see the recent news on that front (and more to come).

The deal was dilutive initially but not that diltive. If the SP was to have reflected that then it would have happened before now. Plenty of time has gone by since the deal.

Oddly SLE's just entering the period of big activity. Conventional wells under way, Talisman have spudded the first of the JV wells, Providence are due to start on Barryroe...from now on news will come thick and fast. The scale of acreage, countries and play types is incredible.

As always with SLE you either believe in conventional or you don't. Soros does (witness his stake).

3Legs' wells reported yday (iirc) not great news but not bad - perhaps that's something to do with the price fall?

Fund Management: European Wealth
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djpreston 29th Sep '11 54 of 57
1

The company has announced that Chopin-1 is dry and will be plugged.

Important to note that total costs for the well were a "massive" 700,000 Euros - so not to bad.

Drilled to TD, hit several reservoirs with gas shows and high quality sandstones with gas shows.

Rig will complete the plugging then off to Belvedere-1

Remember that these shallow wells were conventional prospects aiming for cheap and low cost, cashflow generators, not a major reserve play.

Fund Management: European Wealth
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djpreston 14th Nov '11 55 of 57
1

Little article from Natural Gas Europe on SLE post Realm acquisition.

Fund Management: European Wealth
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snaj 20th Dec '11 56 of 57

Is anybody else still following San Leon? There has been disappointing news at the end of both June and September and a (short term) dilutive acquisition, but altogether they don't seem to justify the trashing that this company's share price has taken (although it is far from unique in this regard) - I'd be grateful to understand if anybody else is thinking this is now a better risk-reward than before the operational update at end June?

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deucetoace 17th Jan '12 57 of 57
2

Positive news today re Albania & what looks like a general recovery from an oversold position is moving this nicely at the moment.

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 Are LON:SLE's fundamentals sound as an investment? Find out More »



About monkeynuts

Monkeynuts

I'm a business journalist and spend quite a lot of my time checking out interesting commodity stories - oil and gas, metals, agricultural plays, and most recently alternative energy investments. I know 'picks and shovels' made a lot of people money in the Internet boom years, but I prefer real physical picks and shovels, or drilling platforms and combine harvesters. But I do bear in mind that the price of my stocks is always going to be set by the supply and demand for the end product - so I am not a gold bug. Not at current prices, anyway! more »



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