Further to the announcement on 23 June 2010, the Directors of Egdon Resources plc are pleased to announce the completion of the sale of Egdon Resources (New Ventures) Ltd (“ERNV”), the holder of certain of Egdon’s permit interests in France, to eCORP Oil and Gas UK Ltd (“eCORP”) for a consideration of £4.5 million in cash.
The assets of ERNV at completion are a 60% interest in the Navacelles Permit, a 40% interest in the Gex Permit and a 40% interest in the Gex Sud Permit Application (the “Permit Interests”).
In addition to the cash consideration Egdon has also been granted options to acquire a 6% interest in the Gex Permit, a 6% interest in any permit to be issued pursuant to the Gex Sud Permit Application and a 9% interest in the Navacelles Permit (“The Back-In Options” or “Options”). These Options are exercisable up to the later of two years from the 23 June 2010 (or in the case of the Gex Sud Permit Application two years from any licence award) or 60 days following plugging and abandonment of the relevant drilled well or the completion of initial testing of the first well on each permit, subject to an end-stop date of 23 June 2015. On exercise of any Back-In Option Egdon will pay to ERNV its pro-rata share of all costs incurred by ERNV on that permit together with the appropriate proportion of the original acquisition price.
Prior to completion, the French Ministry have confirmed that they do not oppose the transfer of the beneficial interests in the St. Laurent and Pontenx Permits previously held by ERNV to two newly-incorporated Egdon subsidiaries, Egdon Resources France Limited (“ERF”) and Aquitaine Exploration Limited (“Aquitaine”). Once awarded to ERNV, the beneficial interest in the Donzacq Permit will also be transferred from ERNV to the new subsidiaries. ERNV will continue to hold the registered title to the interests in the St Laurent and Pontenx Permits, and when awarded the Donzacq Permit, while the legal transfer of these permit interests to ERF and Aquitaine undergoes the assignment process under the French Mining Code. Egdon and eCORP have entered into an agreement governing their relationship in respect of the rights and liabilities relating to these permit interests during this period which can take up to15 months.
Egdon will also provide eCORP with certain services in connection with the business and development of the Permit Interests under a Technical Services Agreement.
Commenting on the completion of the disposal of ERNV, Mark Abbott, Managing Director of Egdon said:
”The sale of ERNV to eCORP crystallises tangible value from these early-stage exploration projects and significantly strengthens Egdon’s balance sheet.
The cash generated from this transaction gives us the opportunity to accelerate activity on a number of our projects including a renewed focus on higher potential exploration projects. We are also better positioned to take advantage of any acquisition opportunities which may arise.
Egdon retain access to upside value in these licences through the Back-In Option and we look forward to assisting eCORP through the provision of technical services in the exploration of the conventional and shale-gas potential of the ERNV permits.
France remains a key focus for Egdon, and the St Laurent and Pontenx Permit interests and the Donzacq Permit Application (which we expect to be awarded by year end), hold significant potential for Egdon and along with the two permits being acquired as part of the EnCore transaction (Mairy and Nimes) continue to provide Egdon with a significant operated opportunity base in France.”