San Leon Energy and Baker Hughes have signed a letter of intent (LoI) to jointly develop the Siekierki shale gas field in Poland.
The companies, which will also begin to develop Polish Concessions 206, 207 and 208, plan to start gas production on the Siekierki structure from four existing wells, namely Trzek-1, Trzek-2ZH and Trzek-3H and the nearby Krzesinki-1 well.
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Baker is expected to provide all funding necessary to recomplete and bring the wells into production.
According to San Leon, Baker’s funding may be in the form of cash, in-kind oilfield services, or a combination of both and is subject to finalisation of the funding mechanism.
Baker will receive a to-be-agreed portion of the profits generated from production until its investment has been fully recovered and will also receive a net profit interest from the wells, in return for completely funding the startup of production.
During the exclusivity period entered by the companies the final work scope and commercial terms will be negotiated and agreed.
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By GlobalDataSan Leon Energy executive chairman Oisin Fanning said the deal with Baker Hughes is a milestone for the company and could lead to its first significant production in Poland.
"Production from the first four wells in Siekierki will allow San Leon to understand the potential that may exist in the Siekierki complex of fields," Fanning added.
The Trzek wells produced between 2.0-3.0 mmcfd each during testing, and permissions are already in place for various elements of the infrastructure and export systems required to get the gas to market.
The Siekierki gas field was acquired in January 2013 on completion of the merger of San Leon and Aurelian Oil & Gas.
