San Leon (LON:SLE) assured investors it still believes in the potential of its Gdansk W shale gas concession in Poland.
The company issued a statement in response to the decision, announced earlier in the day, by 3Legs Resources (LON:3LEG) to pull out of its Polish venture.
3Legs, having spent more than US$19mln for its share of the project costs, told investors it now has a one-time opportunity to end its participation in the project and it believes it is in best interest of shareholders it to do so.
San Leon conceded it is disappointing that commerciality has still to be proven in a Polish horizontal shale well, but noted that the hydrocarbon liquid:gas ratio in the Lublewo LEP-1ST1H well drilled by 3Legs appears to be in excess of 10 times that in the Lewino-1G2 well drilled by San Leon.
Since finishing testing Lewino-1G2 in January 2014, San Leon has believed that its liquid:gas ratio was at a desirable level, providing liquid sales potential while minimising any adverse effects on gas production.
Shares in San Leon Energy closed 19.4% lower at 2.5p, which Westhouse Securities suggested represents a buying opportunity.
“We suggest that there is limited technical read-across from the disappointing 3Legs well to SLE’s Gdansk West concession and that a farm-out deal should soon be announced, as potential partners have been most concerned about the enactment of new shale tax legislation. SLE has interesting catalysts in the next three months,” the broker added, reiterating its ‘bu’ recommendation and 7.6p price target.