San Leon Energy has reported a significant discovery of natural gas in the Palo Pinto County, Regular (Gas) Field, District 07B, Texas, which will produce at commercial rates. San Leon holds a 25% interest in the first well, Nichols # 1, which is operated by McCown Engineering and will have an 80% interest in the remaining three wells to be drilled in this field. Mr. Larry McCown will hold the remaining 20%. The Nichols # 1 well has been drilled to a depth (TD) of 3386ft with additional pay zones at 3104ft and 3126ft. The well was flowed and volumetric calculations indicate it will produce 1.2 billion cuft at up to 1.3 mmcf per day. A gas purchase contract has been agreed and a 3in pipeline will be installed in the coming weeks. This will require installation of a sales line 2000m long at no additional cost to San Leon. The Nichols # 1 is the first of a four well programme in the field. Following geological investigation, McCown Engineering calculate that each well-site is expected to produce reserves of 1.2 billion cuft or a total field size of 5 billion cuft of natural gas at a completion cost of USD 230,000 per well.