Yesterday, San Leon Energy informed that it has started spuding at the Rawicz-15 well using a rig from Poland’s Exalo Drilling. The well is operated and funded by Palomar Natural Resources, and expects to take 35 days to reach a depth of around 1,600m, and would be followed by completion and a full well testing programme.
Beaufort Securities view on San Leon Energy: The aforementioned update is encouraging for San Leon as it commences with spuding at the Rawicz-15 well. The Rawicz well is estimated to have more than 50 Bcf (Billions of standard cubic feet) of 2P reserves and is expected to be the largest gas development in Poland for 20 years. Recently, the company has initiated asset optimization and cost reduction strategy resulting in relinquishing certain non-core Polish licences. San Leon’s move supports its long-term strategy to focus on development and production. The company is likely to save on the annual license fees on the relinquished Polish license while remaining committed to the remaining acreage in Poland including the Baltic Basin shale licence and the Rawicz field. Furthermore, the company remains fully funded for development of projects as it raised £29m through issue of new shares. We believe the company is moving in the right direction and is comfortably placed to face the difficult trading conditions. Therefore, we retain a Speculative Buy rating on the stock.
