Egdon Resources plc (AIM:EDR) is pleased to announce that it has reached agreement in respect of a farm-out of Weald Basin, Petroleum Exploration and Development Licence PEDL143 to UK Oil & Gas Investments PLC (“UKOG”).
PEDL143 contains the Holmwood Prospect, which the PEDL143 partnership plan to test with the Holmwood-1 exploration well. Regulatory consent to drill the well is currently awaiting the outcome of a planning inquiry held by the Planning Inspectorate following appeal by the license group. The operator of PEDL143 is Europa Oil & Gas Limited (“Europa”).
Under the terms of the agreement, UKOG will pay a 40% share of the Holmwood-1 drilling costs in order to acquire a 20% working interest in PEDL143 from Egdon. UKOG’s share of well costs will be capped at £1.2 million net to UKOG (i.e. 40% of a gross Holmwood-1 well cost estimate of £3 million). Gross well costs above £3 million, should they arise, will be met according to the working interests in PEDL143. Egdon’s interest in the licence on completion will be 18.4%.
Completion of the transaction is subject to the grant of planning consent for the Holmwood-1 well and to receipt of the necessary approval from the Oil & Gas Authority,
Commenting on the transaction, Mark Abbott Managing Director of Egdon Resources said:
“We are pleased to have concluded this deal with UKOG within their core business area. The transaction means that should planning consent be granted for the well, Egdon will retain a material interest in the Holmwood Prospect whilst minimising the Company’s financial exposure and managing our technical risk while evaluating the prospect’s potentially significant prospective resource.
Notes to Editors:
The Holmwood Prospect:
The Holmwood Prospect is one of the largest undrilled prospects in the Weald Basin and was independently assessed by Troy Ikoda in 2004 as having potential gross Best Estimate Prospective Resources of 41.5 bcf. However, the recent discovery of oil at Horse Hill-1 some 10km to the East increases the chances of oil rather than gas being present at Holmwood. A Competent Persons Report by ERC Equipoise Limited, published in June 2012 on Europa’s website (http://www.europaoil.com/documents/CPR_Europa_Final_070612.pdf) estimates that the Holmwood prospect could contain mean gross unrisked prospective resources of 5.6 million barrels of oil for the combined Portland and Corallian objectives.
The original planning application for the Holmwood-1 exploration well was refused by Surrey County Council in May 2011. An initial planning appeal was dismissed by the Planning Inspectorate in September 2012. The licence group received a favourable judgment at the High Court in July 2013 quashing the Planning Inspector’s original decision and a second appeal against the initial Surrey County Council refusal of Planning Consent was heard during May and June 2015. We are currently awaiting the decision of this appeal which is anticipated later in the summer.
Egdon Resources plc (LSE: EDR) is an established UK-based exploration and production company primarily focused on onshore exploration and production in the hydrocarbon-producing basins of the UK and France.
Egdon currently holds interests in thirty four licences in the UK and France and has an active programme of exploration, appraisal and development within its balanced portfolio of oil and gas assets. Egdon is an approved operator in both the UK and France.
Egdon was formed in 1997 and listed on AIM in December 2004.
In accordance with the AIM Rules – Note for Mining and Oil and Gas Companies, the information contained in this announcement has been reviewed and signed off by the Managing Director of Egdon Resources plc Mark Abbott, a Geoscientist with over 26 years’ experience.
Evaluation of potential prospective resources has been assessed in accordance with 2007 Petroleum Resources Management System prepared by the Oil and Gas Reserves Committee of the Society of Petroleum Engineers (SPE) and reviewed and jointly sponsored by the World Petroleum Council (WPC), the American Association of Petroleum Geologists (AAPG) and the Society of Petroleum Evaluation Engineers (SPEE).