Egdon Resources plc (AIM:EDR) is pleased to announce the farm-out of an interest in Petroleum Exploration and Development Licence 180 (“PEDL180”), located in Lincolnshire, to Union Jack Oil plc (“Union Jack”). The farm-out is a further example of delivering on the Company’s strategy of farming out assets to manage risk and accelerate activity.
Under the terms of the agreement, Union Jack will pay 16.66% of the cost of the planned Wressle-1 exploration well to earn an 8.33% interest in PEDL180. If the well is successful and proves the existence of an economically developable hydrocarbon accumulation, Union Jack will also earn an 8.33% interest in the part of the field which is determined to extend into the adjoining Licence PEDL182. As a result of this farm-out, Egdon’s exposure to the Wressle-1 well cost is reduced to 16.67%.
On completion, the licence interests in PEDL180 will be as follows:
|Egdon Resources U.K. Limited||25.00% (Operator)|
|Celtique Energie Petroleum Limited||33.33%|
|Europa Oil & Gas Limited||33.34%|
|Union Jack Oil plc||8.33%|
The transfer of interests is subject to approval by the Department of Energy and Climate Change.
PEDL180 was awarded in 2008 and is located on the western margin of the Humber Basin. The Wressle Prospect was originally identified and mapped using vintage 2D seismic data but has now been defined on proprietary 3D seismic data, which was acquired by Egdon in February 2012. The Prospect is located on trend with the producing Crosby Warren oil field and the Broughton-B1 oil discovery, both to the immediate northwest, and the Brigg-1 oil discovery to the immediate southeast. All contain oil in various different sandstone reservoirs within the Upper Carboniferous succession. The gross mean Prospective Resources at Wressle, as calculated by Egdon, are estimated to be 2.1 million barrels of oil.
The planned well will be drilled as a deviated well to a total depth of about 2300 metres (ca. 1850 metres TVDSS) and a maximum offset of approximately 1250 metres. It has been designed to intersect all of the prospective sandstone reservoirs in a structurally favourable position near the crest of the Wressle structure. A surface location for the well site has been identified and a lease agreed with the landowner. A planning application was submitted in March 2013 and subject to receiving planning consent, it is intended that the Wressle-1 well will commence operations in the third quarter of 2013 as part of a programme of drilling, which will include the Burton on the Wolds-1 exploration well in Licence PEDL201.
Commenting on the farm-out Mark Abbott, Managing Director of Egdon said:
“We are pleased to welcome Union Jack into PEDL180 and the drilling of the Wressle Prospect. The prospect is well defined on new 3D seismic data and has the right “address”, being located between existing oil fields and discoveries. This farm-out is a further example of delivering on our strategy of managing both the technical and financial risks within our overall drilling portfolio. We now look forward to commencement of drilling operations in the East Midlands in the third quarter of 2013.”