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A pair of leading foreign investors in the Polish shale gas push announced a merger on November 12. The deal, which sees Aurelian Oil & Gas acquired by San Leon Energy, provoked a sharp drop in the latter's share price, illustrating the continued struggle to locate any of the huge commercial reserves that Warsaw claims lie in the ground.

San Leon Energy bought Aurelian with an issue of new shares to create the biggest foreign holder of shale licenses in Poland, according to a statement. It will pay the equivalent of £61.6m (€76.8m) in stock for Aurelian, a 13% premium to last week's closing price, the Dublin-based company said in a statement.

Aurelian investors will hold 34%, with San Leon shareholders holding the remainder. The deal did little to impress them, however. Far from creating a buzz, the news sent the company's stock sliding 16% to its lowest in almost five months, reports Bloomberg.

The merger links companies focused on different aspects of the unconventional gas market, points out the Financial Times. Aurelian has both conventional gas and tight gas assets, where the extraction techniques are slightly better understood than for shale. However, its unconventional wells are tainted, making them costly to exploit.

San Leon, meanwhile, has been acting according to the wishes of Warsaw by aggressively hunting for shale gas, and holds 17 concessions. Yet, like others, it has yet to find gas in commercial quantities, despite the government's continued hope that the country contains enough gas to make it independent for decades.

Last year, the US Energy Information Administration (EIA) estimated Poland might have 5.3 trillion cubic metres (cm) of recoverable shale gas. With Warsaw dreaming of changing the global gas business on a similar level to the US, majors from that country began arriving. However, amidst reports of disappointing test drillings, Poland's state geological institute trimmed the estimate by around 90%.

That still leaves a lot of gas potentially, but not enough for some. Exxon Mobil upped and left earlier this year. US peers Chevron and ConocoPhillips have felt the need to insist they are committed to the cause. The upper limit of 768bn cubic cm on the new estimate is also enough to tempt the government to push state-controlled companies from across the sectors to invest heavily in exploration to replace the dwindling interest from overseas.

The deal announced today offers both San Leon and Aurelian a diversification of risk and a bit more time to find commercial deposits. However, the reaction of shareholders illustrates that investors are becoming increasingly nervous as prospectors continue to fail to find sufficient gas flows.

"A merger with Aurelian makes perfect sense for the shareholders," said San Leon Executive Chairman Oisin Fanning in the statement. "The combination of cash resources and the Polish asset base alone creates an obvious and exciting opportunity to realise substantial growth. The combined entity offers shareholders material conventional and unconventional plays in stable and highly import-dependent countries."