On Monday, the Dublin-based San Leon announced that it had agreed key commercial terms with Baker Hughes Poland for work on the Siekierki gas field development in Poland.
The drilling will consist of three phases which will test the viability of the drill sites. The decision about further exploration will be taken by Baker Hughes and will depend on the initial drilling results.
Baker Hughes will fund all operations in return for a full recovery of costs plus a commercial margin out of 75% of initial cash flows, after which it will earn a 10% net profit interest.
“We expect a joint press release will be issued in the near future when final documents are signed. In the meantime, technical and operational teams from both companies are putting plans in place for Phase 1 testing and completion,” San Leon Chairman Oisin Fanning said in a statement.
“The duration of the net profit interest is expected to constitute the large majority of the wells’ production period. The companies will explore cost-effective solutions for funding Phase 3, which may include Baker funding the facilities,” San Leon added.
Test drilling has shown the Siekierki tight gas deposits to yield 56-86 cubic metres of gas per day.
San Leon obtained the permission to explore the site as a result of a merger with Aurelian Oil, finalised in January this year.
Earlier this month, San Leon decided against buying a majority stake in Turkey’s Alpay Energi AS, opting to focus on shale gas production in Poland instead. The decision came after a new round of successful deals bringing in companies including Baker Hughes Inc and TransAtlantic Petroleum Ltd to drill for shale gas in the Polish region.
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