The Baltic Concessions are situated in the coastal part of the Gdańsk region in Northern Poland and held through our wholly owned subsidiary company Lane Energy Poland Sp. zo.o.
The Baltic Concessions comprise six licence areas. The Damnica, Lębork and Karwia Concessions are situated in a contiguous block to the west of Gdańsk comprising approximately 2,049 sq. km (506,000 acres) and the Cedry Wielkie, Stegna and Godkowo Concessions are situated in a contiguous block to the east of Gdańsk comprising approximately 2,338 sq. km (578,000 acres).
Our targeted shales are a package of very thick, laterally extensive, dark grey to black organic-rich rocks, containing marine (type II/III) kerogen and are situated in a tectonically quiet geological setting. In the area of our concessions, the shales are over 1,500 metres thick, of which we consider 178 to 200 metres, at a depth of approximately 2,500 to 3,500 metres, to be gas-bearing.
Prior to acquiring our acreage position, we were able to review available archive data for the likely prospective areas in the Baltic Basin, and take a choice of open acreage in 2007.
Our choice of acreage has been validated by licensing activity since our arrival in the basin, in which the open blocks closest to the Group's concessions were the first to be applied for by other operators entering the area. In a report issued by the US Energy Information Agency in April 2011, our Baltic concessions are identified as being in the prospective part of the basin.
This commenced in 2009. Since then, we have completed 3D seismic acquisition programmes of 125 sq. km (approximately 30,900 acres) on the Lębork Concession, 51 sq. km (approximately 12,600 acres) on the Cedry Wielkie Concession and a third programme of 54 sq. km (13,300 acres) on the Damnica Concession.
Our drilling activity commenced in the basin in 2010 – with 2 vertical test wells – Lebien LE1 and Legowo LE1.These were the first wells in the Baltic Basin specifically targeting shale gas and extensive cores were taken from each well, using a wireline retrieval system.
A single-stage hydraulic fracture stimulation in the Ordovician horizon was carried out towards the end of 2010 in the Lebien LE1 well, and gas was produced and brought to surface. Testing was carried out and included some flaring.
In 2011, 2 further exploration wells were drilled, Lebien LE-2H and Warblino LE-1H. Both of these wells were drilled with lateral sections and completed with multi-stage lateral fracture stimulation, and flow tested. Our Lebien LE-2H well delivered the first sustained shale gas production in Poland.
Our program for 2012 is being prepared.
Our partner in the Baltic Concessions is integrated energy company ConocoPhillips. ConocoPhillips has extensive experience in a number of shale gas plays in North America (including the Barnett, Bakken and Eagle Ford shales), and consequently the Group's relationship with them significantly enhances our capabilities in the appraisal and development of the Baltic concessions.
Under the terms of the agreement with ConocoPhilips, ConocoPhilips provided funding for seismic and 3 wells, in return for a right to acquire a 70% interest in the Baltic concessions. Until it acquires this interest, the 3 Legs Resources Group remain the operator of the Baltic Concession.