The Boleslaw #1 well was spudded earlier this week and is anticipated to take 24 days to drill.
The entry cost for GGE, which includes its share of drilling the 1,500 metre deep well is $600,000, which is able to be funded through ample cash reserves.
GGE will also have a 20.4% interest in the Kolo licence which covers 1,150 square kilometres and hosts the Boleslaw #1 well.
Poland is strategically located in Europe to provide a ready market for gas at competitive prices.
The Kolo licence, which hosts the Boleslaw gas prospect, is owned by:
Ownership is through equity in the single entity that holds the Kolo licence, which has also applied for the Kolo West licence and Wielun licence.
The Boleslaw prospect was defined on the Kolo licence following interpretation of 2D seismic data and is targeting the santonian (900 metres depth) and deep cretaceous (1,400 metres depth) sandstones.
The well spud on 11 December 2016 and is expected to take 24 days to drill to a total depth of 1,500 metres.
The Kolo licence is located in the Lodz Trough within the Polish Central Lowlands, 120 kilometres west from the city of Warsaw, with the region well serviced by oil and gas surface facilities as well as the national electricity grid and sits on major European transport arteries.
The Kolo licence is 1,150 square kilometres in area and is elongated along the strike of the Lodz Trough, a well-known mesozoic sedimentary basin, which is known in Poland by its salt mines and also by important manifestations of oil and gas in shallow water wells.
The joint venture owns 1,400 kilometres of vintage 2D seismic over the license area and shot a further 250 kilometres of 2D proprietary seismic data in 2014.
Recent geological studies and interpretation of geophysical data indicates that the Lodz Trough has the potential to contain commercial oil and gas accumulations at deeper and shallow levels.
It shows similarities with hydrocarbon provinces like the North Sea and the Baltic region.
The acquisition of the Kolo licence represents a value-add transaction for GGE.
The London listed joint venture partner, Prospex, which owns 49% of the well has a market cap of circa £6.22 million.
This places a see through indicative value of A$4.37 million for GGE’s 20.4% equity stake.
Given GGE’s market cap is only $5.25 million which includes net cash of circa $2.2 million, this would infer that GGE is undervalued relative to Prospex.
With the spudding of the Boleslaw-1 well, which is targeting an independently assessed 87 billion cubic feet gas prospect, this is an opportune time for stakeholders.
The operator has planned the well for success and pre-ordered a number of items that would enable the well to go onto a long term test if the drilling results are in line with the pre-drill prognosis.
Further updates on the well's progress are expected to be highly anticipated by the market.