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After five days of suspending trading, Leyshon Resources Limited (LSE:LRL) did not avert investors’ disappointment when it commenced today, following the release of the drilling results from the company’s first well dug within one of the world’s largest gas basins located in Central China.
Over eight million shares were traded at 9:30 AM GMT on the London Stock Exchange, driving the share price down of the ASX- and AIM-listed extraction company to as low as 18.12 pence, or nearly 29% less than its last closing share price of 25.50 pence on 23rd November 2012, as “scared” investors bailed out on the 56.4 metres of pay intervals the ZJS5 well encountered
Shares of Leyshon jumped over 70% on the Alternative Investment Market on 22nd November, in anticipation of a positive drilling result following a halt in trading on the Australian Stock Exchange pending release of the same.
In a statement, Leyshon said the well encountered high porosity zones that can potentially flow gas at commercial rates. Analysis of wireline logs and core samples are still ongoing, according to the company, whilst flow testing is underway to test potential pay zones set to be finished by the end of 2012.
ZJS5 is part of the three-well drilling programme by Leyshon’s wholly owned subsidiary, Pacific Asia Petroleum Limited (PAPL), drilled on the 708-square kilometre Zijinshan block situated at the Eastern portion of the Ordon Basin, China’s second largest source of oil and gas.
PAPL, acquired by Leyshon in August 2012 for US$2.5 million and 10 million new shares in the company, holds 100% interest in the exploration of the Zijinshan block through a Production Sharing Contract with PetroChina, the largest oil and gas firm in China.
Potential Domestic Sale
Leyshon plans to spud the second well right away as the company invests in the potential of the acreage, which lies adjacent to blocks bearing trillion cubic feet of gas.
If the play proves successful, Leyshon expects to flow gas through a recently commissioned pipeline located nearby and sell them to the Chinese domestic market.
“Any commercial gas discovery at Zijinshan will be hooked into one of the nearby pipelines and sold into one of the world’s fastest growing markets for gas,” Managing Director, Paul Atherley, commented.
“We are very much looking forward to the flow test results on the multiple prospective pay zones over the next few weeks.”
The market did not seem to agree as shares continued to lose their gains prior to the trading halt, at 20.50 pence by 10:30 AM GMT – still over 6 pence higher than its 14.12 pence close before the delayed drilling results were announced.
