TIDMEDR
RNS Number : 8277N
Egdon Resources PLC
14 August 2017
14 August 2017
EGDON RESOURCES PLC
("Egdon" or "the Company")
Operational Update
Egdon Resources plc (AIM:EDR) the UK-based exploration and
production company with a focus on the hydrocarbon-producing basins
of the onshore UK is pleased to provide shareholders with an update
on the Company's licence portfolio and operations.
The Company has a broad and extensive portfolio of projects and
the last quarter has seen progress on a number of our strategic
objectives. Of note are;
-- Acquisition of a 50% interest in PEDL278 containing the Kirk
Smeaton tight gas discovery and further unconventional resources
potential
-- Acquisition of an additional 20% interest in PEDL209 (deep)
and signature of a new option agreement with Total with, when
exercised, a carried work programme valued at up to GBP4.85 million
to Egdon
-- Progress with the consents for the Springs Road wells with
drilling now expected later in 2017
-- Acquisition of the Fiskerton Airfield (EXL294) producing oil
field in the East Midlands which adds production from the effective
date of 1(st) January 2017
-- Issue of the Wressle Environmental Permit variations and
submission of the appeals against the January and July planning
refusals which have been co-joined and will be considered at an
appeal hearing expected in November 2017
-- Completion of the Company's exit from France with the
relinquishment of the Pontenx permit and withdrawal from the Mairy
permit.
Commenting on the update and outlook, Mark Abbott, Managing
Director of Egdon Resources plc, said:
"We are pleased to provide shareholders with this operational
update ahead of a potentially transformational period for the
Company and the onshore UK E&P business with significant news
flow expected in both conventional and unconventional resources
exploration.
The fundamentals of the business remain robust with the Company
being debt free, holding a range of assets with excellent potential
for both conventional and unconventional resources in a
jurisdiction which remains commercially attractive even with
current commodity prices, and with a strong balance sheet allowing
us to deliver on our strategy.
We remain committed to, and optimistic about, obtaining planning
consent for the development of the Wressle oil discovery and look
forward to the planning appeal in early November and the decision,
which is likely early in 2018.
In the meantime we plan to workover the newly acquired Fiskerton
Airfield wells to increase production and expect the Holmwood-1
well to be drilled in the Weald with potential exposure to the
Kimmeridge Limestone play which is due to be tested at the nearby
Brockham oilfield and Horse Hill and Broadford Bridge
discoveries.
We look forward to commencement of operations at Springs Road-1,
the potentially play opening Gainsborough Trough exploration well
where Egdon's costs are carried, later in 2017. This well along
with the Tinker Lane well to the south and other UK drilling and
testing activity will potentially provide the data required to
de-risk our core area for unconventional resources."
Unconventional Resources
Over the past three years Egdon has successfully increased its
unconventional resources acreage position in Northern England by
360% to c. 201,000 net acres (814 net km(2) ) through a series of
targeted acquisitions, farm-ins and success in the 14(th)
Round.
The second half of 2017 is expected to see significant activity
in this sector of our business with the planned drilling, hydraulic
fracturing and testing of two horizontal wells at Preston New Road
by Cuadrilla, hydraulic fracturing and testing operations by Third
Energy at Kirby Misperton-8 ("KM-8") and 3D seismic acquisition by
INEOS in the East Midlands including over parts of Egdon's PEDL001
and PEDL130 licences. In relation to our own licence activity, the
operator IGas has advised that it intends to drill the potentially
play opening Gainsborough Trough exploration well Springs Road-1
(PEDL140, Egdon 14.5% carried) later in 2017. This is a key well
for Egdon as it is located in our core area for unconventional
resources. The well will drill a thick Lower Carboniferous tight
sand and shale sequence and will be extensively logged and cored to
provide a full suite of modern data with which to evaluate the play
properly.
We have made considerable progress on our operated and
non-operated 14(th) Round licences since award. Work to date has
included extensive cuttings sampling and analysis and integration
with petrophysical models, the acquisition and interpretation of
new gravity data, and the reprocessing and interpretation of
existing seismic data. These studies will support the planning for
additional seismic acquisition on several licences expected during
2018 and in planning exploration wells in future years.
There is currently significant interest in the Carboniferous
tight gas sandstone plays of the Cleveland Basin and Southern North
Sea with a well at present being drilled offshore by BP at
Ravenspurn North. Later in 2017, Third Energy will test KM-8
onshore with potential read through to the neighbouring Cloughton
gas discovery (Egdon 17.5%) and Resolution Prospect (Egdon
100%).
Elsewhere, we note that IGas has applied for planning permission
to test gas shows in the Pentre Chert in the 2014 Ellesmere Port-1
exploration well. This well is located very close to PEDL191 (Egdon
100%). This possibly extensively naturally fractured chert is a
newly identified potential gas play.
Conventional Resources Exploration and Appraisal:
Egdon's next drilling activity is likely to be the Holmwood-1
conventional exploration well in Weald Basin licence PEDL143 (Egdon
18.4%) where the operator, Europa Oil and Gas ("Europa"), has
advised that they expect to commence operations later in 2017 once
all final approvals are in place. In addition to targets in the
Portland and Corallian sandstones, where the operator has estimated
mean prospective resources of 5.6 mmbls of oil ("mmbo") (net Egdon
1.03 mmbo), the well will also test the highly prospective
Kimmeridge Limestone play. The Horse Hill-1 well (UK Oil and Gas
Investments plc ("UKOG")) is located some 8 kilometres to the east
of Holmwood in a similar structural position and tested 323 barrels
of oil per day ("bopd") from the Portland Sandstone and 1,365 bopd
in total from two intervals in the Kimmeridge Limestone. Egdon is
largely carried on the Holmwood-1 well by UKOG. Over the next few
months extended well tests at Horse Hill and Brockham (Angus Energy
plc) and testing at Broadford Bridge (UKOG) will provide further
insights into the commerciality of the Kimmeridge Limestone play
and its potential at Holmwood.
The Oil and Gas Authority ("OGA") has granted Egdon licence
extensions for both PEDL253 (Biscathorpe) and PEDL241 (North
Kelsey) to 30 June 2018. In July Egdon announced the issue of the
environmental permits required for the operated Biscathorpe-2
exploration well in Lincolnshire licence PEDL253. The Biscathorpe
Prospect is estimated by Egdon to hold mean prospective resources
of 14.0 mmbo (Egdon 7.4 mmbo) but could be significantly larger if
a stratigraphic trapping mechanism enhances the prospect's westerly
closure. Drilling operations at Biscathorpe-2 are expected to
commence early in 2018.
We also continue to pursue partnership opportunities for the
North Kelsey Prospect in Lincolnshire licence PEDL241 where we
estimate mean prospective resources of 6.5 mmbo (Egdon 5.2 mmbo) in
stacked reservoir targets, and hope to drill the well by
mid-2018.
Egdon has made continued progress with the Resolution Prospect
(160bcf, Egdon 100%) in UK offshore licence P.1929. Following the
interpretation of reprocessed seismic data, we now plan to acquire
a new 3D seismic survey during 2018 to confirm the potential
resource volumes and enable optimisation of the planning for an
offshore appraisal well. Egdon is seeking an industry partner
and/or investors to share the forward costs. The 3D survey will
also assist in understanding the Carboniferous potential within and
around the Resolution Prospect where unconventional resource
prospectivity in tight gas sands, a play currently being tested by
BP offshore and Third Energy onshore, may be significant on this
large regional structure.
The Company completed its withdrawal from France during the past
quarter with withdrawal from the renewal process for both the
Pontenx and Mairy permits. The Company's attention and resources
are now focussed solely on the UK.
Producing Assets
The Ceres gas field has been shut-in since October 2016 with
attributable production derived from "back-out" gas produced from
the Mercury and Neptune gas fields. Installation of a new flow
meter at Ceres, expected in 2018 will facilitate simultaneous
production of the Ceres gas field with the other fields in the
system. The various production facilities were shut down for annual
maintenance during early July with production recommencing in early
August. The relative timing of the 2016 (September-October) and
2017 (July) maintenance shut-downs has resulted in only 9 months of
production contribution from Ceres during the 2016-17 financial
year. Despite this, mean daily production for the full year is
expected to be in-line with our latest guidance of 100-110
boepd.
The Keddington oil field continues to produce in line with
forecasts from the K-3Z well at c. 24 bopd (net to Egdon 12 bopd)
and we now expect to take a decision on further drilling on the
field in the autumn of 2017. Avington also continues to produce in
line with expectations.
In July 2017 Egdon announced the acquisition of 100% of the
producing Fiskerton Airfield oil field in Lincolnshire licence
EXL294 for $0.75 million. The field has suffered from a lack of
investment over recent years and we plan to undertake simple,
low-cost workovers to enhance production and profitability in the
short-term, adding valuable near-term cash-flow to Egdon's
portfolio. In the longer term, we will investigate the potential to
enhance productivity through in-fill drilling. Completion of this
acquisition is expected later in August with an effective date of
1st January 2017 meaning that production from then of c. 17-18 bopd
will be allocated to Egdon.
A significant focus during the period has been to progress our
Wressle oilfield development, where planning was refused by the
North Lincolnshire District Council Planning Committee at meetings
in January and July 2017 despite recommendations to approve from
the council's planning officers on each occasion. We have co-joined
appeals against both of these decisions and expect the planning
inquiry to be heard in early November 2017. The inquiry will be
heard by an independent planning inspector who will consider the
applications in the context of their planning merits. A successful
outcome would see the commencement of operations to establish long
term production which would be expected to add 125 bopd to Egdon's
production.
Egdon has interests in a number of currently shut in fields
where we continue to seek innovative ways of bringing them back
into profitable production. For example, we have initiated
discussions with third parties on potential further investment in,
and the restarting of production from, the shut-in Dukes Wood
(PEDL118) and Kirklington (PEDL203) oil fields. If an agreement
were to be reached we would expect operations to commence in late
2017.
We also continue to evaluate the shut-in Waddock Cross oil field
(PL090) where we have nearly completed reprocessing 3D seismic
data, and the Kirkleatham gas field (PEDL068) where we have
completed specialist processing of key seismic lines to confirm the
remaining unproduced gas resources and have identified additional
gas potential within the underlying Carboniferous sandstones.
For further information please contact:
Egdon Resources plc
Mark Abbott 01256 702 292
Buchanan
Richard Darby, Anna Michniewicz 020 7466 5000
Nominated Adviser and Broker - Cantor Fitzgerald Europe
Sarah Wharry (Corporate Finance) 020 7894 7000
Mark Westcott (Sales)
Joint Broker - VSA Capital Limited
Andrew Monk (Corporate Broking) 020 3005 5000
Andrew Raca (Corporate Finance)
Notes to Editors:
Egdon Resources plc (LSE: EDR) is an established UK-based
exploration and production company now fully focused on onshore
exploration and production in the hydrocarbon-producing basins of
the UK.
Egdon holds interests in 44 licences in the UK and has an active
programme of exploration, appraisal and development within its
balanced portfolio of oil and gas assets. Egdon is an approved
operator.
Egdon was formed in 1997 and listed on AIM in December 2004.
In accordance with the AIM Rules - Note for Mining and Oil and
Gas Companies, the information contained in this announcement has
been reviewed and signed off by the Managing Director of Egdon
Resources plc Mark Abbott, a Geoscientist with over 26 years'
experience.
Evaluation of hydrocarbon volumes has been assessed in
accordance with 2007 Petroleum Resources Management System prepared
by the Oil and Gas Reserves Committee of the Society of Petroleum
Engineers (SPE) and reviewed and jointly sponsored by the World
Petroleum Council (WPC), the American Association of Petroleum
Geologists (AAPG) and the Society of Petroleum Evaluation Engineers
(SPEE).
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). Upon the
publication of this announcement via Regulatory Information Service
("RIS"), this inside information is now considered to be in the
public domain.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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