Leyshon Resources confirms fracking needed at ZJS5 well; shares plunge

published 18 December 2012

The share price of Leyshon Resources plummeted 22.73 per cent to 14.88p at 08:44 on Tuesday morning following an update from the AIM-listed mining company.

The company announced that its wholly-owned subsidiary Pacific Asia Petroleum Limited had completed flow tests on two of the previously identified potential pay zones in well ZJS5 in China.

The company confirmed that tests had shown that: "stimulation will be required to produce commercial flows."

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Previously, the two zones had been identified as having the potential to flow without stimulation and the opportunity was taken to flow test them ahead of the planned frack testing in the spring.

Leyshon Resources stated that the local practice was not to conduct frack testing during the coldest of the winter months. As neither of the zones recorded sufficient gas flows, accordingly frack testing will proceed as originally planned.

Well ZJS6 is currently at approximately 800 metres depth with a target depth of 2,320 metres and wireline logging scheduled for mid-to-late January.

The plan is to test any zones that have the potential to flow without stimulation in ZJS6 and then conduct frack tests on both wells following Chinese New Year.

Well ZJS6 is located seven kilometres from ZJS5, close to southern the boundary of the 708 km2 Zijinshan Production Sharing Contract.

Wells ZJS5 and ZJS6 are part of a three well program designed to test for gas in formations in an unexplored 380 km2 central depression area that appear to show good continuity with the neighbouring Sanjiaobei discovery.