Operation Overview

Trinidad operation now comprise of two main assets, the Icacos Oilfield and the Goudron Field. The 1,900 acre Icacos Oilfield in which Leni Gas & Oil (LGO) has 50% interest is located on the Cedros Peninsula of South-western Trinidad and lies within the East Venezuelan Basin.

The Gourdon oilfield lies between the East Moruga and Beach Marcelle fields in south-eastern Trinidad and has direct access to the Petrotrin oil export pipeline to the Pointe-a-Pierre refinery in western Trinidad. The field was originally discovered by Trinidad Leaseholding Limited in 1927 and was developed in its current form by Texaco between 1956 and 1986 when it passed to Petrotrin. A field reactivation contract was signed in late 2009. LGO has acquired the rights to acquire the Incremental Production Service Contract (IPSC) and expects to take over operatorship in early 2012.

Goudron Field (anticipated 100% LGO, operator)

• The existing producing zones have reserves of proven 1.9 mmbbls and estimated 3P reserve of 21.8 mmbbls
• The concession covers a total of 2,875 acres (11.4 sq km)
• The current production comes from a small number of active wells out of a total of about 150
• Production potential has been estimated to be in the range 1,000 to 4,000 bopd
• Additional undeveloped reservoirs in the Gros Morne (Upper Cruse) and Lower Cruse formations provide considerable opportunities for future reserves growth
• Much of the concession is underexplored and significant exploration opportunities exist

Icacos Field, (LGO 50%)

• 1,960 acres, onshore producing since 1960’s
• No seismic and exploration limited to shallow horizons
• Gross average 2011 (YTD) production 36 bopd
• Additional development potential and deeper targets
• New 100% LGO owned 815 acre lease acquired in 2011
• Additional leases in the Cedros are being negotiated

Moruga North, (LGO 49%, operator)

LGO has signed a farm-in agreement with Advance Oil Company (Trinidad) Limited to participate in future production and exploration drilling in leases in the Moruga North area of the Southern Basin of Trinidad. The definite agreements and assignment of operatorship are expected to be completed in 2011 and the first exploration well will be drilled in 2012. Two existing production wells will also be reactivated as soon as practical and are expected to produce up to 120 bopd (gross) once the necessary workovers have been carried out.

Trinidad Growth Potential

The onshore oilfields of southern Trinidad perfectly fit LGO’s strategy of acquiring and redeveloping fields with unexploited reserves. Using new technology and making investments in workovers, new facilities and infill wells LGO expects to substantially increase the production from its acreage in Trinidad in the next few years. Additional opportunities exist to add further assets and there is untapped exploration potential associated with each of LGO’s fields.

Operation Overview

The Ayoluengo acreage has a long history of oil production, going back to the 1960s. A total of 54 wells were drilling within the field boundary north of Burgos, targeting reserves in Purbeck aged sandstone formations at between 900 and 1400 metres below surface. Peak production of was 5,900 bopd was achieved in 1969 however by the late 1980s production had fallen to 2,500 barrels of oil per day. Since that time a lack of investment has seen production levels decrease dramatically. Leni Gas & Oil (LGO) plans to invest in an enhanced oil recovery (EOR) project that has the potential to return the field to its 1980’s levels of production within the next 5 years.

When LGO’s Spanish subsidiary, CPS, took over full operations of the field at the end of 2007, no proven enhanced oil recovery methods had been used to energise the field (despite some successful trials) and no modern geological assessment had been conducted to identify enhancement opportunities. Having undertaken this assessment CPS have already identified a variety of proven recovery methods and scheduled an exploitation plan to prioritise developments to increase production to the 1980s levels.

CPS now operates the acreage as a fully self-sustainable production facility. Water produced on site is re-injected, gas generated from the site is either used directly for the oil heater and pump motors, or converted to electricity and used to run every aspect of the field (from the pumping systems to the office computers). The production facility enables the oil to be treated (removal of water) and safely stored before being transported to various industrial consumers in Northern Spain. Operating in this way ensures we can maximise oil production, whilst maintaining an awareness and safeguarding the environment.

Ayoluengo Oilfield (100% LGO)

Adjacent Exploration Acreage (100% LGO)

Ayoluengo Recoverable Reserves Estimation

A full field seismic and well re-interpretation identified recoverable reserves in four reservoir sands with 60% identified in the primary Ayoluengo (P90, P50, P10: 2.5, 4.0, 5.8 mmbo) and Sargentes sands (P90, P50, P10: 4.5, 5.4, 6.3 mmbo).

Operation Overview

LGO have been increasing both its assets and investment in its interests in the Gulf of Mexico over the past four years. Production and revenue come from the Eugene Island-184 field and the Ship Shoals development.

The Eugene Island Field is located 50 miles offshore Louisiana in approximately 80 feet of water, and is operated by Marlin Energy LLP on behalf of the joint venture with Byron and LGO. The Ship Shoal development encompasses parts of blocks 197, 201 and 202 and is located 125 miles offshore Louisiana in approximately 100 feet of water. The South Marsh Island development lies in South Marsh Island block 8 and in Eugene Island block 177. That development is located 90 miles offshore Louisiana in approximately 60 feet of water, was initially developed by Chevron and produced from numerous sands from 10,000 to 15,000 feet.

LGO originally acquired its GOM interests through a 29% participation in Byron Energy LLC, a private E&P company, but has subsequently converted its interest in Byron into a 7.25% direct participating interest in the leases. Net revenue interests vary from block to block in the range 2.5 to 6.0%.

The Company also holds a number of options through a Strategic Scouting Agreement to acquire further interests in Marlin and Byron leases should development activities be undertaken.

Current Production & Development

Total 2010 production net to LGO’s interest was 6,617 bbls of oil and 37.8 mmscf of gas (12,913 boe). Additional potential exists at Eugene Island to recomplete existing wells or to sidetrack wells to undepleted zones. LGO and its partners are actively studying these options. Further development wells in a number of the leases are also possible and could give attractive rates of return on additional investment. 

Malta Southern Offshore (10% LGO)

• High potential exploration play in highly prospective oil and gas basin in proximity to Tunisia and Libya active petroleum basins
• Major seismic interpretation executed on the 5700 sq km PSC area
• Identified four prospects and five leads with gross mean 2P STOIIP of 5 billion barrels and recoverable reserves of 1.475 billion barrels
• PSC signed with the Maltese Government to drill well on Area 4 (South Offshore Malta) to depth of 2500m. Currently targeting high chance of success drilling locations

Natural gas produced with crude oil from the same reservoir.

A unit of measure for oil and petroleum products that is equivalent to 42 U.S. gallons.

The uncontrolled flow of gas, oil or other fluids from a well.

The equipment installed at the wellhead to control pressures in the annular space between the casing and drill pipe or tubing during drilling, completion, and workover operations. See also Christmas tree.

See produced water

A measure of the heating value of a fuel.

Metal pipe inserted into a wellbore and cemented in place to protect both subsurface formations (such as groundwater) and the wellbore. A surface casing is set first to protect groundwater. The production casing is the last one set. The production tubing (through which hydrocarbons flow to the surface) will be suspended inside the production casing.

The assembly of valves, pipes, and fittings used to control the flow of oil and gas from a well.

Along, small diameter pipe flexible enough to be stored on and deployed from a large, truck-mounted roll. Used to replace jointed pipe in certain types of drilling, completion, and workover operations.

An engine used to increase the pressure of natural gas so that it will flow more easily through a pipeline.

Awell drilled within the proved area of an oil or gas reservoir to the depth of a stratigraphic horizon known to be productive; a well drilled in a proven field for the purpose of completing the desired spacing pattern of production. Downhole – a term used to describe tools, equipment, and instruments used in the wellbore, or conditions or techniques applying to the wellbore.

When referring to the oil and gas industry, this term indicates the refining and marketing sectors of the industry. More generically, the term can be used to refer to any step further along in the process.

When referring to the oil and gas industry, this term indicates the refining and marketing sectors of the industry. More generically, the term can be used to refer to any step further along in the process.

The small pieces of rock created as a drill bit moves through underground formations while drilling.

The small pieces of rock created as a drill bit moves through underground formations while drilling.

The volume of gas remaining after all water and natural gas liquids have been removed.

Any exploratory or development well that does not find commercial quantities of hydrocarbons.

The "upstream" sector of the oil and gas industry.

Refers to a variety of processes to increase the amount of oil removed from a reservoir, typically by injecting a liquid (e.g., water, surfactant) or gas (e.g., nitrogen, carbon dioxide).

A hole drilled: a) to find and produce oil or gas in an area previously considered unproductive area; b) to find a new reservoir in a known field, i.e., one previously producing oil and gas from another reservoir, or c) to extend the limit of a known oil or gas reservoir.

An area consisting of a single reservoir or multiple reservoirs all grouped on, or related to, the same individual geological structural feature or stratigraphic condition. The field name refers to the surface area, although it may refer to both the surface and the underground productive formations.

The reduction in permeability in reservoir rock due to the infiltration of drilling or treating fluids into the area adjacent to the wellbore.

The application of hydraulic pressure to the reservoir formation to create fractures through which oil or gas may move to the wellbore.

The conversion of natural gas to a liquid form so that it can be transported easily. Typically, the liquid is converted back to natural gas prior to consumption.

A standard adopted by the American Petroleum Institute for measuring the density of a liquid. Gravity is expressed in degrees with lower numbers indicating heavier liquids and higher numbers indicating lighter liquids.

When applied to an oil company, it indicates a firm that operates in both the upstream and downstream sectors (from exploration through refining and marketing)

A legal document conveying the right to drill for oil and gas, or the tract of land on which a lease has been obtained where the producing wells and production equipment are located.

A legal document conveying the right to drill for oil and gas, or the tract of land on which a lease has been obtained where the producing wells and production equipment are located.

The cost of producing oil from a well or lease.

To conduct a survey inside a borehole to gather information about the subsurface formations; the results of such a survey. Logs typically consist of several curves on a long grid that describe properties within the wellbore or surrounding formations that can be interpreted to provide information about the location of oil, gas, and water. Also called well logs, borehole logs, wireline logs.

A term sometimes used to refer to those industry activities that fall between exploration and production (upstream) and refining and marketing (downstream). The term is most often applied to pipeline transportation of crude oil and natural gas.

The portions of gas from a reservoir that are liquified at the surface in separators, field facilities, or gas processing plants. NGL from gas processing plants is also called liquified petroleum gas (LPG).

Natural gas produced from a reservoir that does not contain significant quantities of crude oil.

Outer Continental Shelf, a term used primarily in the U.S. for the offshore areas under federal jurisdiction.

A depleted well or dry hole that has been (typically) filled with cement and marked, with all surface equipment removed.

A measure of the ability of a rock to transmit fluid through pore spaces.

A ratio between the volume of the pore space in reservoir rock and the total bulk volume of the rock. The pore space determines the amount of space available for storage of fluids.

The water extracted from the subsurface with oil and gas. It may include water from the reservoir, water that has been injected into the formation, and any chemicals added during the production/treatment process. Produced water is also called “brine” (and may contain high mineral or salt content) or “formation water.” Some produced water is quite fresh and may be used for livestock watering or irrigation (where allowed by law).

A percentage interest in the value of production from a lease that is retained and paid to the mineral rights owner.

The process of separating liquid and gas hydrocarbons and water. This is typically accomplished in a pressure vessel at the surface, but newer technologies allow separation to occur in the wellbore under certain conditions.

To close valves on a well so that it stops production, or a well on which the valves have been closed.

Oil containing free sulfur or other sulfur compounds whose total sulfur content is in excess of 1 percent.

Natural gas containing hydrogen sulfide.

The distance between wells producing from the same reservoir. Spacing is often expressed in terms of acres, e.g., 40-acre spacing, and is often established by regulatory agencies.

The term used for several processes to enlarge old channels, or create new ones, in the producing formation of a well designed to enhance production. Examples include acidizing and fracturing.

Drilling under conditions where the pressure being exerted inside the wellbore (from the drilling fluids) is less than the pressure of the oil or gas in the formation.

The placement of gases or fluids into an underground reservoir through a wellbore. May be used as part of enhanced oil recovery or waterflooding processes or for disposal of produced water.

The exploration and production portions of the oil and gas industry.

The injection of water into an oil reservoir to “push” additional oil out of the reservoir rock and into the wellbores of producing wells.

The equipment at the surface of a well used to control the pressure; the point at which the hydrocarbons and water exit the ground.

Maintenance work performed on an oil or gas well to improve or maintain the production.

Natural gas containing significant amounts of liquifiable hydrocarbons.

A well drilled in an area where no current oil or gas production exists. Also called a “rank wildcat.”

Operations on a producing well to restore or increase production. A workover may be performed to stimulate the well, remove sand or wax from the wellbore, to mechanically repair the well, or for other reasons.

West Texas Intermediate, a type of crude oil commonly used as a price benchmark.