LNG Energy Ltd.
TSX VENTURE : LNG

LNG Energy Ltd.

September 06, 2011 08:00 ET

LNG Energy Announces Additional Lebork S-1 Well Core Analysis and Update of Third Well in Poland

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Sept. 6, 2011) - LNG Energy Ltd. ("LNG") (TSX VENTURE:LNG) is pleased to announce that it has received additional data from the Lebork S-1 and Wytowno S-1 wells drilled on the adjacent Polish Slawno and Slupsk concessions in which LNG has an indirect 20% interest through its ownership of Saponis Investments Sp z.o.o ("Saponis").

The new data from Saponis' third party contractors consists of the total organic carbons ("TOCs") for the three target intervals in the Lebork S-1 well and partial mineralogy for the target intervals in both the Lebork S-1 and Wytowno S-1 wells. The TOCs in the Lebork S-1 well ranged from 0.14 to 1.50, averaging 0.8 by percent weight for the Lower Silurian, 0.04 to 6.04, averaging 2.2 by percent weight for the Ordovician and 5.0 to 9.2, averaging 7.2 by percent weight for the Cambrian. The mineralogy breakdown for the different zones is as follows:

LEBORK S-1 WELL WYTOWNO S-1 Well
Lower
Silurian

Ordovician

Cambrian
Lower
Silurian
Shallower
Silurian
Silica In Lab 56% 25% 28% 49%
Carbonate & Other In Lab 10% 36%* 27% 26%
Clay In Lab 34% 39% 45% 25%
* 26% Pyrite, 4% Carbonate, 6% other

Porosity values of the 148 meter thick Lower Silurian interval ranged from 1.0 to 9.6, averaging 3.9%. The brittleness tests run on selected target intervals indicate that these intervals have similar brittleness values to producing US shales. Completion activity for the Lebork S-1 well is scheduled to begin in mid-September which is anticipated to be followed by the Wytowno S-1 well completion. Saponis is also reviewing the possibility of performing the completion of the Starogard S-1 well in conjunction with the two other wells. Further well analysis and equipment availability will determine the timing.

Additionally, the Starogard S-1 well on the Starogard concession in Poland, in which LNG also has an indirect 20% interest, has been successfully drilled, cased and cemented to its total measured depth of 3,524 meters. During drilling, numerous gas shows were recorded over 250 meters of the Lower Silurian, Ordovician and Cambrian shales. The gas shows consisted methane, ethane, propane, butane, and pentane. The presence of heavier hydrocarbons is consistent with Saponis' thermal maturity mapping of the Baltic basin, which indicates that the Starogard S-1 well has a reduced thermal maturity profile as compared to the Lebork S-1 and Wytowno S-1 wells (these two wells have an Ro equivalence of 1.8 which is in the dry gas window). For Starogard S-1, a thermal maturity profile will be established by utilizing Ro equivalence from both the Thermal Alteration Index and organic reflectance measurements. These are the same techniques used in Wytowno S-1 and Lebork S-1 well analysis.

There were 107 meters of whole core recovered from the well and a full suite of logs was run. 100 sidewall cores were taken above the whole cored interval where good gas shows and preliminary log analysis indicate potential. The whole core and sidewall cores were taken to fully evaluate the physical parameters of the rock. These analyses will provide, among other data: porosity, permeability, total organic carbon, rock eval pyrolysis, thermal maturity, gas composition, micropaleontology, mineralogy, and mechanical properties.

Consistent with projections, the Lower Silurian was 147 meters thick, similar to the 148 meters observed in Lebork S-1 and the prospective Ordovician shale section was 24 meters thick, in line with the Lebork S-1 well. The Cambrian shale thinned to 6 meters from what was found in the Lebork S-1 well, again consistent with Saponis' regional geologic model. LNG anticipates receiving the majority of core analysis for the Starogard S-1 well by the end of the 4th quarter 2011.

As previously indicated, best industry practices for drilling and testing of the wells are being utlized, including utilizing bladders to hold the fresh water for fracture stimulating the well instead of digging a large pit. The bladders ensure complete isolation from surface soil and water, reduce truck traffic to and from the site and increase safety. The flowback fluids are flowed directly into self-contained steel tanks on location. The most environmentally friendly additives currently available from Schlumberger are utilized in Poland for fracture stimulation.

Permitting for the previously announced 407 km Saponis 2D seismic program is underway. An agreement has been signed with a seismic contractor and acquisition is scheduled to commence in the 4th quarter of 2011. The objective of the seismic program is to further define basin structure and burial history as well as aid in the selection of individual well locations. In addition to the seismic program, LNG anticipates that its previously announced depth to crystalline basement study will be complete in the fourth quarter of 2011. The study covers a large portion of northeast Poland and encompasses the Saponis and Joyce/Maryani owned acreage. Interpretation of the study is expected to provide a better understanding of general basin geometry, identify sub basins and locate significant basement related faulting.

"We are very pleased with these results from the Lebork well and the initial gas shows in the Starogard drilling and look forward to completing and flow testing all three wells over the coming quarter," commented Dave Afseth, President and CEO of LNG. "This compliments our drilling and completion of the proposed Peshtene R11 shale gas well in Bulgaria over the same period, pending the closing of our recently announced transaction with TransAtlantic Worldwide Ltd."

LNG is a Canadian exploration and development company focused on developing material oil and gas reserves in Papua New Guinea, Poland and Bulgaria. LNG holds a 100% interest in approximately 5.5 million acres of prospective oil and gas properties in Papua New Guinea. LNG also holds a 50% net interest in approximately 360,000 gross acres of prospective shales in Poland together with Realm Energy (BVI). LNG also has a 20% net interest in approximately 734,000 gross acres of prospective shales in Poland together with BNK Petroleum Inc., Sorgenia E&P S.p.A., and Rohol-Aufsuchungs Aktiengesellschaft through its interest in Saponis Investments Sp z.o.o. LNG recently agreed to farm in for a 50% interest to approximately 405,000 gross acres of prospective Etropole shales in Bulgaria with Direct Petroleum Bulgaria EOOD. LNG shares trade on the TSX Venture Exchange under the symbol "LNG".

LNG ENERGY LTD.

Dave Afseth, President & CEO

Cautionary Note Regarding Forward-Looking Statements

Certain statements contained in this news release constitute "forward-looking information" as such term is used in applicable Canadian securities laws, including information LNG's current plans and expectations regarding the Wytowno S-1, Lebork S-1 and Starogard S-1 wells, and expected timing of commencement of the planned frac programs. Forward-looking information is based on plans and estimates of management at the date the information is provided and certain factors and assumptions of management. Forward looking information is subject to a variety of risks and uncertainties and other factors that could cause plans, estimates and actual results to vary materially from those projected in such forward-looking information. Factors that could cause the forward-looking information in this news release to change or to be inaccurate include, but are not limited to, the risks related to unsatisfactory results of due diligence, international operations and doing business in foreign jurisdictions, risks associated with the oil and gas industry and exploratory and development activities generally (e.g., operational risks in development, exploration and production, delays or changes in plans with respect to exploration or development projects or capital expenditures, risks associated with equipment procurement and equipment failure), the risk of commodity price and foreign exchange rate fluctuations, risks related to future royalty rate changes, and risks and uncertainties associated with securing and maintaining necessary regulatory approvals, and counterparty risk related to the stability and viability of the Company's joint venture participants.

Shares Outstanding: 258,059,365

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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