Egdon Resources plc (AIM:EDR) is pleased to announce that it has agreed terms with Blackland Park Exploration Limited (“Blackland Park”) and Stelinmatvic Industries Limited (“Stelinmatvic”) for a farm-in to UK Onshore Petroleum Exploration and Development Licence PEDL209 (“the Licence”) located in Lincolnshire. Under the terms of the Farm-in Agreement Egdon will earn a 60% interest in the Licence in return for paying 100% of the cost of the planned Laughton-1 exploration well to the point of completion of the well for testing or, in the case that the well is a dry hole, abandonment and restoration of the site. Egdon will also assume operatorship of PEDL209.
The Licence Interests in PEDL209 at completion will be;
|Egdon Resources U.K. Limited (Operator)||60%|
|Blackland Park Exploration Limited||28%|
|Stelinmatvic Industries Limited||12%|
The transfer of interests and operatorship is subject to approval by the Department of Energy and Climate Change.
PEDL209 covers a total area of 64 square kilometres and adjoins Egdon’s existing Licences PEDL139 and PEDL140 in the eastern part of the Gainsborough Trough geological basin of the East Midlands Petroleum Province.
The Laughton Prospect is a structural trap defined on 2D seismic data. The prospect has multiple conventional Carboniferous sandstone reservoir targets with the primary objective being the Silkstone Rock, an approximately 15 metres thick sandstone interval which is productive in the Corringham oil field 5 kilometres to the South East. Egdon currently estimate gross Mean Prospective Resources of around 1 million barrels of oil for the Silkstone Rock in the Laughton Prospect. A planning application for the exploration well is currently under consideration by Lincolnshire County Council. The estimated well cost is around £1.3 million and, subject to planning consent, Egdon expects to drill the well during the first half of 2014.
A number of additional oil and gas prospects similar to the Laughton structure have also been identified within the Licence’s area.
Egdon also recognises that there is potential for significant shale-gas resources to be present within parts of the Licence. The Company’s current evaluation indicates that the Pendleian Shale shale-gas play extends over about 45 square kilometres of PEDL209. Using similar parameters to those defined by RPS Energy in their independent evaluation of the prospective shale-gas resources in PEDL139 and PEDL140, Egdon estimates that the total in-place volume of gas within the Pendleian Shale interval in PEDL209 could alone amount to over 3 Trillion cubic feet. Further, as with PEDL139 and PEDL140, PEDL209 is interpreted as holding additional shale-gas potential in the thick Lower Carboniferous sequence which underlies the Pendleian Shale but which remains to be tested by drilling in the region. Neither of these sequences will be penetrated in the planned Laughton-1 well.
Commenting on the transaction Mark Abbott, Managing Director of Egdon said:
“We are pleased to have concluded this farm-in in one of our core business areas. The initial focus will be the drilling of the Laughton-1 exploration well, which will target a conventional prospect with gross Best Estimate Prospective Resources in the primary reservoir target of around 1 million barrels of oil close to existing production.
Importantly the farm-in also delivers on our stated strategy of providing Egdon with increased exposure to shale-gas potential in an area identified by Egdon as containing an extension of the “sweet spot” of the Pendleian Shale play identified in our adjoining Gainsborough Trough licences PEDL139 and PEDL140.
Subject to planning, we expect to drill the Laughton-1 well as part of our planned 2014 drilling programme.”