Leni Gas & Oil has commenced a seismic survey and investigation program at the Hontomin oilfield location as part of the CIUDEN joint development program.

As announced in March 2009, the Company completed a joint development agreement with the Fundación Ciudad de la Energia (CIUDEN) for the research, testing and implementation of carbon dioxide (CO2) sequestration pilot sites within LGO's Spain acreage.

The seismic program at Hontomin is the first program to be executed under the agreement. The program shall conduct both ultra-sensitive and 3D seismic surveys over an area of approximately 10 sqkm centred on the Hontomin reservoir and shall continue until August 2010. The cost of the survey is approximately 3 million Euro which is wholly funded by CIUDEN.

The terms of the joint development agreement with CIUDEN provide for the full bi-lateral sharing of results and data from all programs executed by the Company and CIUDEN.

The Company anticipates mobilising to Hontomin 2 in July to drill out the well cement plugs and prepare the well for a extended well test programme to assess the production potential of the Hontomin reservoir. All the necessary permits have been granted by the Spanish Government authorities and the majority of the site works have been completed for the programme. Hontomin has mean contingent oil resources of 0.36 mmbo. The oil production from Hontomin 2 will be transported 38km to the Company's central processing and sales facility at Ayoluengo and will provide additional revenues to the Spanish operations.

The results of the extended well test program and CIUDEN seismic survey shall input to the Company's exploitation strategy for Hontomin, for either conducing further appraisal or converting the exploration permit to a production concession.

David Lenigas, Executive Chairman, commented,"The joint development agreement with CIUDEN has considerable scope for investigating the potential of carbon capture and storage, and related enhanced oil recovery opportunities within our acreage."

"The seismic program on Hontomin is the practical start of this agreement to realise this potential and increase the value of this prospect within our Spain acreage. We look forward to working closely with CIUDEN to maximise the value of Hontomin from this program and our imminent extended well test on Hontomin 2."

Tags: Leni Gas & Oil Plc