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 Silurian and Ordovician 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.
Line contours indicate structure (metres) at top of Ordovician; colour contours map Ro, an estimation of thermal maturity.
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 recent licensing activity 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.
This was the first well in the Baltic Basin specifically targeting shale gas. The well was drilled to a total depth of 3,085 metres and encountered organic-rich lower Silurian shales at a depth of approximately 2,840 metres. Core was taken using a wireline retrieval system over an interval of approximately 217 metres in the Lower Silurian and Upper Ordovician intervals and sent to laboratories for analysis.
A single-stage hydraulic fracture stimulation in the Ordovician horizon was carried out towards the end of 2010, and gas was produced and brought to surface. Testing was carried out and included some flaring.
This well was drilled to a total depth of 3,430 metres and organically rich, lower Silurian shales were encountered at a depth of 3,234 metres. Core was taken over an interval of approximately 251 metres in the lower Silurian and Upper Ordovician intervals and removed for laboratory analysis, as with Łebień LE1.
We are currently considering the well logs, core data and results of tests carried out before deciding on next steps in this location.
We are drilling our third, horizontal well, Łebień LE-2H, on the smae location as our first vertical test well and is expected to be drilled to a vertical depth of approximately 3,000 metres with a lateral section of approximately 1,000 metres. The well will then be completed and stimulated with a multi-stage fracture stimulation, and then flow tested.
Following drilling of this well, we plan to drill a further test well, this time in the Damnica Concession. This well will be drilled initially as a vertical well and cored and logged. The well will then be plugged back and a horizontal section will be drilled, following which the well will be completed, fracced, with a multi-stage frac, and flow tested.
The results form these two wells should enable us to better evaluate potential flow rates, as a precursor to a pilot development programme.
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 has agreed to provide funding for seismic and 3 wells, in return for a right to acquire a 70% interest in the Baltic concessions. ConocoPhillips has until March 2012 to give 180 days' notice to exercise such right, and until then, the 3 Legs Resources Group remain the operator of the Baltic Concession.
Based on the seismic data that we have acquired over our Baltic concessions and the well data from the Łebień LE1 and Łęgowo LE1 wells, our independent technical consultants Netherland. Sewell & Associates Inc (“NSAI”) have ascribed a gross best estimate OGIP for the Baltic Concessions of 169,585 BCF, comprised of 83,926 BCF (25,178 BCF, net to our Group) in respect of the western Baltic concessions and 85,659 BCF (25,698 BCF, net to our Group) in respect of the eastern Baltic Concessions, with a geological risking of 100 per cent.
Due to the limited nature of the data available to date, including the fact that no extended production test has yet been carried out on our wells, we do not have enough data to generate a recoverable resource estimate at this stage.