Egdon Resources plc (AIM:EDR) and its partners (GP Energy Limited, Island Gas Limited (“IGas”) and eCORP Oil & Gas UK Limited (“eCORP”)) are pleased to announce the signature of a Farm-out Agreement (“The Agreement”) with Total E&P UK Limited (“Total”), a wholly owned subsidiary of Total SA, in respect of UK Onshore Petroleum Exploration and Development Licences PEDL139 and PEDL140 (“The Licences”) located in the Gainsborough Trough geological basin in Lincolnshire, whereby Egdon will hold a 14.5% interest in The Licences. The Licences cover an area of 240 square kilometres and are immediately adjacent to licences PEDL209 and PL161/162 where Egdon has further interests.
Under the terms of The Agreement Total will earn a 40% interest in The Licences through the payment of $1.6 million (ca. £1 million) in back costs and the funding of a fully carried work programme of up to $46.5 million (ca. £29 million). Total has the option to exit after an initial period of this work programme corresponding to a minimum commitment of $19.5 million (ca. £12 million). The programme will include the acquisition of 3D seismic, the drilling and testing of a vertical exploration well and associated well pad construction, and, conditional on the success of the testing of the exploration well, the drilling and flow testing of a second appraisal horizontal well.
The transaction is subject to approval by the Secretary of State for the Department of Energy and Climate Change.
Island Gas Limited, a subsidiary of IGas Energy plc, will be appointed as the operator of The Licences on completion and Total will become operator at the end of the carried work programme.
The Agreement supersedes the previous farm-out agreement with eCORP and on completion the interests in The Licences will be:
|Total E&P UK Limited||40.0%|
|GP Energy Limited (a subsidiary of Dart Energy Europe Limited)||17.5%|
|Egdon Resources U.K. Limited||14.5%|
|Island Gas Limited||14.5%|
|eCORP Oil & Gas UK Limited||13.5%|
Commenting on The Agreement, Mark Abbott, Managing Director of Egdon, said:
“This announcement signals the entry of the first major into UK shale gas exploration and is a further endorsement of the potential that exists following the earlier commitments by Centrica and GDF Suez. The farm-out arrangements provide for a substantial carried work programme designed to verify the significant shale gas potential previously identified in The Licences by Egdon and its partners. Total will bring extensive resources and experience in unconventional hydrocarbon plays to the PEDL139/140 Joint Venture and we look forward to working with them and the new operator, IGas.”
Commenting on the acquisition, Patrice de Viviès, Total’s Senior Vice President for Northern Europe, said:
“This opportunity is an important milestone for Total E&P UK and opens a new chapter for the subsidiary in a promising onshore play. The Group is already involved in shale gas projects in the US, Argentina, China, Australia and in Europe in Poland and in Denmark, and will leverage its expertise in this new venture in the UK.”
For information the 2012 assessment of PEDL139/140 Resources for the Upper Bowland-Hodder Unit is given below: