Lasmo gas discovery doubles in size

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The Independent Online
LASMO is close to announcing that a big gas find in Pakistan could turn out to be twice the size initially expected, making it the biggest gas field in Asia.

Britain's second-biggest independent oil exploration company is in the final stages of evaluating results from its third test bore in the Kirthar region, north of Karachi. Early indications from the well and from two others drilled since 1996 show that the field could yield 3,000 billion cubic feet of gas. That is significantly more than the 1,000 billion to 2,000 billion cubic feet the company forecast earlier this year.

"It would be very good news for Lasmo and I am sure the shares would react very positively," said Simon Champion, analyst with Charterhouse Tilney Securities.

Mr Champion said other UK oil companies exploring in Pakistan, such as Hardy Oil & Gas and Premier Oil and Monument Oil & Gas, may also benefit from larger-than-expected reserves.

A Lasmo spokesman said it was "premature" to speculate about the extent of the gas find, since results are still being assessed. The company plans an announcement within several weeks about discoveries in Pakistan and possibly others in Libya, two promising growth areas for a company that generates most of its revenue from the North Sea and Indonesia.

Analysts said the Pakistan find could have important long-term implications for Lasmo, which drilled the wells with the Royal Dutch/Shell Group, its 40 per cent partner. Before full production begins, however, the company must drill several more wells to further assess the extent of the find.

Lasmo started drilling in the Kirthar region in 1996. By the time it had finished the second test well in the first half of 1997, Lasmo knew it had a big find, and predicted that the field could contain up to 2,000 bcf. It promptly acquired additional site licences from the government of Pakistan for exploration, including offshore plots, in which the government retains a 5 per cent stake.

"We have built a substantial holding of acreage in areas which offer the potential for large new gas reserves," the company said last year. The Pakistan finds add to what it said were "substantial" discoveries in Libya and Algeria.

After an assessment is completed, Lasmo will put together a development plan for Pakistan, which could include piping the gas to Karachi or developing a power plant, the company spokesman said. Production is expected to begin in 2001.

Lasmo successfully fought off a pounds 1.6bn hostile bid from Enterprise Oil in 1994, saying it has a brighter future on its own. Investors apparently agreed, pushing its shares from a five-year low of 99.85p in December 1993 to close at 267p on Friday.

Joseph Darby, the chief executive, bought 11,000 shares in his company last week.