Egdon Resources plc (LSE: EDR) is pleased to note that Europa Oil and Gas (Holdings) plc (“Europa”) has today announced that the Surrey County Council’s Planning & Regulatory Committee has granted permission for the underground drilling corridor for the Holmwood Exploration Well in PEDL143 in Surrey.
Europa’s RNS contained the following information:
“Europa Oil & Gas (Holdings) plc … is pleased to confirm that Surrey County Council’s Planning & Regulatory Committee has granted permission for the underground drilling corridor of an exploratory borehole at the Holmwood prospect (‘Holmwood’) in the PEDL143 licence in the Weald Basin. Europa holds a 40% interest in PEDL 143, which contains the conventional Holmwood prospect, alongside Egdon Resources (18.4%), Altwood Petroleum (1.6%), Warwick Energy (20%) and UK Oil & Gas Investments (20% subject to completion of farm-in).
The Holmwood prospect is to be drilled as a deviated exploration well. Europa and its partners now have planning permission for both the surface site and the underground drilling corridor. Next steps will include fulfilment of planning conditions and commencement of detailed drilling planning and environmental permitting. It is anticipated that drilling will take place in late 2016 or in 2017. Europa and its partner Warwick Energy intend to farm out some of their combined 60% equity in licence PEDL 143. The farm out process has already commenced and further updates will be provided as when it is appropriate to do so.
An application for planning permission to drill the Holmwood prospect on PEDL143 was submitted in 2008 and was dismissed by Surrey County Council in 2011. A planning appeal in 2012 was dismissed by the Planning Inspectorate. Europa successfully challenged this decision in the High Court in 2013. In 2014 the Court of Appeal upheld the 2013 High Court judgment in the Company’s favour and a second planning appeal was heard at an eight day public inquiry in April and June 2015. The Planning Inspectorate issued a decision to allow the remitted appeal on 7 August 2015 and Surrey County Council allowed planning permission for the underground drilling corridor on 23 September 2015.
Europa provided the following information in its Geological Proof of Evidence submitted at the Planning Inquiry in April 2015: “In the event of a successful oil discovery at Holmwood and based on the most likely resource in place then the field is projected [by Europa] to have a Present Value of around £137 million at 60 $/bbl oil price in 2015 rising to 92 $/bbl by 2018 and inflated at 2% thereafter. After taking costs and discounting into account the Net Present Value to the Government based on current taxation rates will be around £86 million with around £51 million accruing to the Licensee group. As such the Holmwood prospect is considered of material value to both the Government and the Licensee.”
CEO Hugh Mackay said “Following Surrey County Council’s favourable decision, we are meeting with our joint venture partners and reviewing plans to take the Holmwood prospect forward to drilling. With gross mean un-risked prospective resources of 5.6 million barrels of oil, as estimated in a CPR published in June 2012, Holmwood would be the UK’s fifth largest onshore field were the mean resources case to be proved by drilling success. Combined with a one in three chance of success, we therefore regard Holmwood as one of the best undrilled conventional prospects in onshore UK..”
Egdon will be carried on the drilling costs for the Holmwood well on its 18.4% interest up to a set spending limit under the terms of an agreement announced on 29 June 2015 with UK Oil & Gas Investments plc.
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.
Under the terms of an agreement announced on 29June 2015, 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%.
Egdon Resources plc
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).