Egdon Resources plc (AIM:EDR) is pleased to announce that it has reached agreement on Heads of Terms in respect of a farm-out of interests in PEDL253 to Union Jack Oil PLC (“UJO”, AIM: UJO) and Humber Oil & Gas Limited (“Humber”,private). PEDL253 is located in Lincolnshire and contains the Biscathorpe Prospect, scheduled for drilling around mid-2018.
Under the agreed terms, UJO and Humber will each acquire 6% of Egdon’s interest in PEDL253 by paying their pro-rata share of the Biscathorpe-2 well cost plus an additional £10,000 per percentage point interest acquired. This is equivalent to a farm-in with a 1.36 times promote at the estimated well cost. UJO and Humber will also each acquire 4% of Montrose Industries Limited’s interest in PEDL253 under the same terms.
The Biscathorpe Prospect is located between Lincoln and Louth. It lies on the southern margin of the Humber Basin on trend with, and to the west of, the producing Keddington oil field (14 kilometres, Egdon operated) and the Saltfleetby gas field (20 kilometres).
The Biscathorpe-2 well will target a down-dip area of the structure which was tested in a crestal position by the Biscathorpe-1 well drilled in 1987 by BP which found oil in a 1.2 metres thick sandstone of Westphalian (Carboniferous) age. The structure has been mapped using reprocessed 3D seismic data and the sandstone is predicted to thicken to the north and east away from the Biscathorpe-1 well. The Mean Gross Prospective Resources at Biscathorpe are estimated by Egdon to be ca. 14 million barrels of oil and the well has been assessed by the Company as having a 40% chance of success.
The transaction is subject to contract and approval from the Oil and Gas Authority. On completion the interests in PEDL253 will become:
Egdon Resources U.K. Limited (Operator) 40.80% (29.31% share of well cost*)
Montrose Industries Limited. 27.20% (19.54% share of well cost*)
Union Jack Oil Plc 22.00% (37.57% share of well cost*)
Humber Oil & Gas Limited 10.00 % (13.57% share of well cost*)
* at the current estimated well cost
Mark Abbott, Managing Director of Egdon Resources plc, said:
“We are pleased to have achieved our objective of balancing our financial exposure and technical risk on the near-term Biscathorpe-2 well. We welcome both Humber Oil & Gas as a new partner and UJO’s increased participation in PEDL253. We now look forward to drilling this high potential conventional oil prospect around mid-2018.”