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Neon Energy discovers multiple hydrocarbon bearing zones at Paloma Deep well

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Neon Energy (ASX: NEN) has completed the drilling phase of the Paloma Deep well and discovered multiple hydrocarbon bearing zones at the prospect in the San Joaquin Basin, onshore California.

The company sees potential in the hydrocarbon indications of some of the deeper zones and now intends to commence production testing, aiming to confirm significant commercial potential of the well and surrounding acreage.

The well reached total depth of 13,320 feet (4,036 metres) on 26 November 2011. Wireline logging has been completed and the well is presently being prepared for production testing. The well has continued to encounter extended zones of oil and gas shows since the last update.

Analysis of wireline logging data has confirmed the presence of oil and/or gas in eight zones, including three unconventional oil shale zones, which represent about 1,000 feet (333 metres) of potential hydrocarbon pay.

The Lower Stevens sand encountered a column of more than 200 feet (60 metres) of continuous potential oil pay, with a high reservoir net to gross ratio.

The company is aiming for the reservoir to have sufficient permeability to allow an economic flow rate, and the company believes that this potential pay zone could extend over at least 740 acres of Neon’s gross 2,500 acre lease holding.

The Lower Stevens alone could represent a significant resource if production testing confirms the economic producibility of the formation.

Neon is operating the well with a 75% working interest, while partner Solimar Energy (ASX: SGY) is participating with a 25% working interest.

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