16 May 2006 - Portland-1 Operations Update

Egdon Resources Plc (AIM : EDR), the onshore UK focused energy company, today provides an update on its gas storage project on the Isle of Portland in Dorset.

Portland Gas Limited (‘the Company’), a wholly owned subsidiary of Egdon Resources Plc, is drilling the Portland-1 borehole on the Isle of Portland, Dorset to confirm that a halite sequence (called ‘S7’ by the Company), within a Triassic salt sequence (‘Saliferous Beds’) of the Wessex Basin, is suitable for the creation of caverns to store natural gas.

As previously reported, the top of the Saliferous Beds was encountered at a depth of 2139 metres. Following the setting of a 7 inch steel liner in the hole, coring of the sequence, using a wireline retrievable 4.2 metre core barrel within a ‘PQ’ coring string, commenced on 14 April 2006 at a depth of 2149 metres.

On 26 April, after cutting core number 32 at a depth of 2260.98 metres, the ‘PQ’ string jammed in the hole and whilst trying to pull it free the pipe parted at a depth of 1086 metres. During subsequent ‘fishing’ operations to retrieve the ‘PQ’ string that remained in the hole, the rig had mechanical problems which further delayed the operations. The ‘PQ’ pipe was partially recovered to a depth of 2107 metres. On 12 May the decision was made to sidetrack the well at a depth of 2040 metres, drill the new hole section to 2250 metres (with the sidetracked well path programmed to be approximately 10 metres to the northwest of the original hole at this depth) and then resume coring using a conventional 18 metre core barrel on the end of drilling pipe.

At 06:00 hours today the window in the 7 inch steel liner had been cut and drilling operations will resume within the next 24 hours. It is anticipated that coring will re-start within the next 3 days.

The top of the S7 sequence was encountered at a depth of 2235 metres (to be confirmed by wireline logging after the Saliferous Beds has been drilled). Core has been recovered in the well to a depth of 2256.68 metres. To date, 117.68 metres of the Saliferous Beds have been confirmed, of which 21.68 metres are interpreted as the S7 sequence. The S7 is expected to be approximately 180 metres thick at Portland-1.

Core samples from the section already drilled have been taken to laboratories in Germany to enable the Company to start a series of tests to confirm the suitability of the Saliferous Beds on the Isle of Portland for the development of a gas storage facility and, if so, to optimise the design of the storage caverns. The results of these tests are anticipated at the end of July 2006. If positive, this will result in a planning application being submitted in September or October 2006.