Market Movers: Leyshon Resources, Northcote Energy, Archipelago...

Market Movers: Leyshon Resources, Northcote Energy, Archipelago Resources, Anglo Asian Mining, Orosur Mining
By Jamie Nimmo
May 28 2013, 8:46am

A better-than-expected set of flow test results propelled Leyshon Resources (LON:LRL, ASX:LRL) to the summit of AIM as investors got back into the swing of things after the Bank Holiday.

There were no signs of a hangover for the unconventional gas specialist, which today revealed its first well, ZJS5, on the eastern fringe of China’s prolific Ordos gas basin produced at a free gas flow rate of 160,000 cubic feet a day. This was over eight hours of stable flow at a pressure of 200 pounds per square inch (psi).

It follows fracking of just one of the zones being targeted by the Leyshon crew. Management’s target for commercial production was 125,000 standard cubic feet a day. Analysis suggests it may be possible to flow gas from untested potential pay zones, thereby boosting the initial output figure.

The market hailed the results, sending shares up as much as 30% in early trading.

ZJS5 is one of three drills earmarked as part of an ambitious plan to unlock the unconventional gas potential of the People’s Republic.

It sister well, ZJS6, is currently being tested (results will be released “when they come to hand", Leyshon said), while a 318-kilometre 2D-seismic programme will determine the location of ZJS7.

The wells and seismic form part of a US$20mln accelerated exploration and appraisal project on the company’s Zijinshan gas project.

Managing Director Paul Atherley said: “We are delighted to report that one of the two first wells drilled has recorded commercial flow from a single pay zone with further production possible from additional zones.

“Well ZJS5 is located in the heart of the target area and this positive result is a very encouraging early step in de-risking the project.”