With the acquisition, Leyshon will have a 100% interest in the Zijinshan production sharing contract (PSC) which lies on the eastern fringe of the Ordos Gas Basin in Central China, 500km west of Beijing.
Leyshon said the Zijinshan PSC is with one of China’s major oil and gas companies which has the right to acquire a 40% participating interest in the contract on completion of the exploration phase and to jointly fund all costs associated with placing the project into production.
The Zijinshan Gas Project is identified to have gross prospective resources that are potentially large due to the confirmation of the presence of unconventional gas, with in place estimates between 1 and 3.8 trillion cubic feet.
PAP has already completed four wells on the prospect, of which two were cased, and acquired 160km of 2D seismic data which was used to identify several major gas exploration targets.
Leyshon said its initial exploration focus will target spudding various new wells to test extensions to adjacent major shale gas discoveries and production testing the cased wells.
The company expects that the acquisition and potential development of shale gas assets in the Ordos Basin would complement its potential energy coal acquisition in Xinjiang.
The transaction is expected to close by 27 July.
