Leyshon Energy Limited Chairman's Address For Annual General Meeting (3518J)

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RNS Number : 3518J

Leyshon Energy Limited

12 June 2014

12 June 2014

Chairman's Address For Annual General Meeting

It gives me great pleasure to report to Shareholders on the progress the Company has made since the successful demerger and the Admission to AIM in January of this year.

Firstly let me say that the starting point for any young Company is its management and in that regard I believe we are building a great team.

The experience of the Board I think speaks for itself, and it's a great pleasure for me to be working with my fellow Directors who bring a wealth of experience in the oil and gas business, which complements the expertise of the team in China

We are pleased that Tony Meggs has agreed to join us as an Executive Director. He is in Beijing every month and more recently has been on site in Shanxi. Under his guidance we continue to strengthen the technical team and we will be looking to make further appointments in due course.

Secondly our strategy is China. China is short of energy. It is increasingly dependent on imports for both gas and oil and is under intense environmental pressure to reduce its reliance on coal.

As you will hear from Paul, we believe that the policy response means that China is now entering a Golden Age of Gas - and is seeking to increase its consumption of gas from all sources.

In addition we identified early on the reforms which will provide us with the opportunities to participate in this exciting investment phase of China's energy development.

These reforms are best characterized by Premier Li Ke Qiang's encouraging statements on mixed ownership, both private and foreign, which is resulting in the progressive opening up of the state owned Energy sector.

I am pleased to say that we have positioned ourselves on the front line of these reforms and have already been offered opportunities to work with the major state owned energy Companies CNOOC, Sinopec and of course we already have a close co-operation with CNPC on our Zijinshan gas project in the Ordos Basin.

These reforms are now being implemented at an increasing pace and we are witnessing rising gas prices, additional financial incentives to invest in unconventional gas and more clarity in the underlying regulatory framework. All of which are encouraging for future investment in the sector.

Zijinshan Gas Project

After a detailed review of the three well programme which completed last year an agreement has been reached with our partner to undertake the previously announced Interim Testing Programme at a cost of US$4 million, before committing to the main US$17 million programme.

The main focus of the Interim Testing Programme is the flow testing of well ZJS7 and the drilling and testing of the fourth well ZJS8, which is to be located in the northern part of the licence. Paul Atherley will discuss this in more detail in his presentation a little later.

The Zijinshan project has a lot of potential. Our resource consultants RISC have reported that the project has a best estimate prospective resource of over 1 tcf gas.

We have excellent PSC terms under which we hold a minimum 60% interest, a pipeline with local tie-in points straddles the project and there is very strong local demand with rising gas prices.

Our appraisal program will help us confirm the productive capacity of the licence, and if we can demonstrate to ourselves that it is commercial, I am confident we can fund and develop the project.

Acquisitions

As we have stated publicly - we are actively looking for acquisition opportunities in China to grow the company, and I am delighted that we have received very strong indications of financial support should we find the right opportunity.

There are a number of divestment processes underway currently, and we have been in a number of conversations to assess whether the assets in question would fit our criteria.

While there are several discussions active today, there is no indication that they will lead to a commercially binding transaction.

Our Objective

Whilst our strategy is clear, we want to invest in China's energy future, we need the right team to achieve this. I have referred to the steps we have taken to build both the Board and the executive team, and I am confident we have the right blend of skills to be successful.

What we bring to China is investment capital, technical expertise and a professional approach to our business. We have implemented policies on Health, Safety and Environment and put procedures in place to deal with potential corrupt practices.

The team on the ground in China has excellent government and corporate relationships which they have established and built over nearly a decade in China.

It is this combination of an experienced Board and management team, with very strong relationships in China which is the key to our future success.

Our objective is to build the Company's business through both development and acquisition, and I believe we have some exciting opportunities in our sights.

Each of the resolutions being put to shareholders today is firmly in line with these objectives and we encourage you to support them.

These are exciting times for a young Company and I very much look forward to keeping you regularly updated on our progress throughout the year.

John Manzoni

Chairman

London 12 June 2014

This information is provided by RNS

The company news service from the London Stock Exchange

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