San Leon Energy plc (LSE:SLE) Chief Operating Officer Joel Price caught up with DirectorsTalk for an exclusive interview to discuss their first commercial gas discovery and what effect this will have for their company and for Poland
Q1: Could you explain about your commercial gas announcement today. How is that going to pan out?
A1: I think very well. The results are certainly at the top end of our expectations so we’re very pleased with what we’ve seen in conjunction with our partner Palomar and we’re trying to give a fair amount of information in our press release to describe exactly what we’ve got, what is likely to come next and really what it means.
Q2: There’s a lot of private investors involved in your stock, they’ve been following the journey over the last couple of years. For those that are not fully aware of the company, it appears that you’re a sort of fracking company and you also have interests and you’re largely based in Poland, is that a decent appraisal of what you are or does this announcement today change that?
A2: I think it’s important to note that we have a recently balanced portfolio in terms of conventional; old school oil and gas that doesn’t require stipulations typically, and unconventional which is the likes of shale which often require some form of stipulation such as hydraulic tracking. We have a real core in Poland, we also have a number of assets in Morocco, which is probably our secondary area as well as other places such as Romania and Albania. Poland is very important for us, it’s a market that’s extremely keen to have indigenous gas production, they import something like 70% of their gas at the moment. There hasn’t been any substantial in the country for about 20 years so this is a really big deal. This is an important thing for us; if this is a commercial discovery, if commerciality gets declared which in our belief it’s likely to, this is our first commercial gas discovery, this is the first thing that’s going to bring in some cash flow. So for a company such as ours, which has historically been an exploration company, this transforms us into an E and P company where obviously the B-side is production.
Q3: Transformation sounds wonderful but is it a transformational event in terms of giving investors in your company the turnaround event that they were looking for, especially since over the last six months, we’ve had the pounding that the whole sector has had with the oil price?
A3: We, as a lot of companies, suffered with the oil price and AIM in general has had a rough time with the E and P companies for some time. What I believe is that hopefully this will start to distinguish us. The reason it can do that is because this is our first commercial discovery, if it is indeed declared as such, and it’s gas in a very high price environment, this hasn’t been hit significantly by the oil price and in fact of course costs are being driven down as a result of that as rigs are looking for work so there are actually some benefits there whilst the gas price is not really suffering a lot. This is in the right place, it’s the right type of hydro-carbon and it’s a first for us so we mentioned the word transformational and I think it ticks a lot of boxes.
Q4: So it’s good for you and its possibly good for Poland in terms of not being so vulnerable to our Russian friends every time there’s a cold winter, is that the sort of basic roundup of what’s happened today?
A4: Yes, I think so. The government are very very keen for gas. I would say locally around Rawicz, Palomar have done a very good job informing local people about what we’re doing and how we’re doing it and in fact, most evening you’ll see people driving along the tracks just outside of the well site to have a look. We take their hands and welcome them, obviously not onto the actual site but we welcome them, we inform people of what we’re doing and when we’re going to be doing it and how we’re going to be doing it and of course the development will also bring jobs with it which will be welcomed locally.
