Biscathorpe assessment demonstrates significant commercial upside

Egdon Resources plc (AIM: EDR, “Egdon”) is pleased to provide an update on the Biscathorpe Project in Lincolnshire Licence PEDL253 where the Company holds a 44.75% operated economic interest.

Highlights

  • Economic modelling indicates a financially robust project even in the current oil price environment
  • The principal Westphalian target has an estimated un-risked gross NPV(10) of £55.6 million
  • Break-even full-cycle economics estimated to be (NPV(10)) US$18.07 per barrel of oil
  • A 57 metre oil bearing section in the Dinantian Carbonate of Biscathrope-2 represents a secondary target with potentially significant commercial upside
  • Future identified drill targets are accessible via a side-track of the suspended Biscathorpe-2 well.

Biscathorpe is located within the proven hydrocarbon fairway of the Humber Basin, on-trend with the Saltfleetby gasfield and Keddington oilfield (Egdon 45%) which produces oil from a Carboniferous Westphalian aged reservoir, the principal target at Biscathorpe.

The PEDL253 Joint Venture partnership has now completed extensive and detailed studies of the Biscathorpe project, including the reprocessing and remapping of 264 square kilometres of 3D seismic. This work has been integrated with the results of the Biscathorpe-2 well, resulting in a significantly improved understanding of the prospectivity in the Biscathorpe project area. The results of this substantial piece of work have concluded that a possible material and commercially viable hydrocarbon resource remains to be tested.

Accessible target areas have been identified, where evidence for a thickened Westphalian sandstone reservoir interval is evident on the reprocessed 3-D seismic. These areas can be targeted by a side-track of the existing Biscathorpe-2 well which was suspended following drilling operations in 2019.  The side-track will also target the oil column logged in the underlying Dinantian Carbonate in Biscathorpe-2, as detailed below.

The gross Mean Prospective Resources associated with the Westphalian target area are estimated by Egdon to be 3.95 million barrels of oil (mmbbls), with an upside case of 6.69 mmbbls.  Preliminary economic modelling demonstrates that the Westphalian target is economically robust in the current oil price environment with break-even full cycle economics estimated at US$18.07 per barrel and an NPV(10) valuation of £55.60 million.

The Westphalian objective was absent at the Biscathorpe-2 well location, however, a total of 57 metres of oil bearing, Dinantian Carbonate has been confirmed by petrophysical analysis. Hydrocarbon shows with background gas and sample fluorescence were recorded across the entire section from Top Dinantian Carbonate to the Total Depth (“TD”) of the well (an interval of over 150 metres). 

A geochemical analysis of the gas data and hydrocarbons extracted from drill cuttings was originally commissioned by Union Jack and carried out by Applied Petroleum Technology (UK) Limited (“APT”). The results of this analysis show a hydrocarbon column of 33-34 degree API gravity oil comparable with nearby producing fields. 

An assessment of the Dinantian oil volumes indicates gross Mean Stock Tank Oil Initially in Place (“STOIIP”) of 24.3 mmbbls with an upside STOIIP case of 36 mmbbls.

Although the Dinantian is not considered to be the primary target, should there be effective permeability, or the presence of fractures within this section there is the possibility of a further commercially viable play being present within the Biscathorpe licence area that would add considerable resources upside over and above those associated with the principal target in the Westphalian reservoir.

Commenting, Mark Abbott, Managing Director of Egdon Resources plc, said:

“We are highly encouraged by the post-well evaluation of the Biscathorpe project area which has now benefited from an integrated assessment of the 2019 well data and reprocessed 3D seismic data. This work has concluded that a potentially material and commercially viable hydrocarbon resource remains to be tested.

Having retained the wellsite, the JV has maintained its optionality to pursue a cost effective side-track to test the resource potential of not only the Basal Westphalian Sandstone play but also to appraise the oil column demonstrated in the deeper Dinantian Carbonate reservoir.

I look forward to being able to update all stakeholders as we progress our plans for this potentially significant oil accumulation.”

30 March 2020

Wressle Development Update

Egdon Resources plc (AIM: EDR, “Egdon”) is pleased to provide an update on the Wressle development in North Lincolnshire Licences PEDL180 and PEDL182 where the Company holds a 30% operated interest.

Given recent events in the oil and gas markets, Egdon has updated its economic model for the Wressle project. 

This work demonstrates that the project is economically robust in the current low oil price environment with an estimated project break-even oil price of $17.62 per barrel. 

The Wressle development was granted planning consent on appeal on 17 January 2020.  The planning inspector also allowed  Egdon’s application for costs against North Lincolnshire Council (“NLC”) and this has subsequently been submitted to NLC.

The forward plan for the Wressle development comprises the following key stages

  1. Discharging the planning conditions, finalising detailed designs, tendering and procurement of materials, equipment and services and finalising all HSE documentation and procedures
  2. Installation of the ground water monitoring boreholes and establishment of baseline conditions through monitoring
  3. Reconfiguration of the site
  4. Installation and commissioning of surface facilities
  5. Sub-surface operations
  6. Commencement of production

Progress to date has concentrated on the enabling works highlighted in point 1 above.  The initial work on site will be the installation of the groundwater monitoring boreholes with the main site operations occurring in the last months of the work stream. On current plans, the Company envisages first oil during H2 2020.

Commenting, Mark Abbott, Managing Director of Egdon Resources plc, said:

“Our modelling shows that the Wressle development is economically robust at and below the current oil price and remains a core focus for the business with a current expectation of first oil in the second half of 2020.”

18 March 2020

East Humber Basin Update – Keddington, Keddington South and Louth

Egdon Resources plc (AIM:EDR, “Egdon” or “the Operator”) notes the announcement made this morning by Union Jack Oil plc (“UJO” or “the Company”) on their acquisition of an additional 35% interest in the producing Keddington Oilfield PEDL005(R) and a 15% Interest in PEDL339 from Terrain Energy Limited. (“Terrain”).

Egdon holds a 45% interest in PEDL005(R) and a 65% interest in PEDL339 and is the operator of both licenses.

The UJO release refers to technical work undertaken by Egdon on PEDL005(R) and PEDL339 and included the following statements by UJO which are of relevance to Egdon’s shareholders:

“Keddington, currently producing approximately 28 barrels of high-quality oil per day from Carboniferous age sandstone reservoirs, is located along the highly prospective East Barkwith Ridge, an east-west structural high on the southern margin of the Humber Basin.

A detailed, in-depth subsurface review of the Keddington field and the surrounding licence area was conducted by Egdon during 2019, resulting in a fully audited and consistent data set that supports updated resource estimates generated by the Operator.

These geological and geophysical studies indicate that potentially significant resources remain unswept at Keddington, highlighting an excellent opportunity to increase production volumes multi-fold by the drilling of a relatively inexpensive development well from the existing production site.  The gross remaining Mean Contingent Resource at Keddington is 567,000 bbls of oil ”

Egdon “is finalising the assessment of potential in-fill drilling locations at Keddington with a view to targeting a side-track drilling location.

The Keddington site lease has been extended until 2029.  Current planning consent expires in 2058, with approval in place for the drilling of a further two wells.

In addition to the unswept resources in Keddington, a near-field exploration opportunity exists at Keddington South, which has a gross Mean Prospective Resource Volume of 635,000 bbls of oil.

As part of this acquisition, the Company is also acquiring a 15% interest in PEDL339 into which the Louth Prospect, with a gross Mean Prospective Resource of 600,000 bbls of oil, extends from PEDL005(R). Significant additional Prospective Resources, both for oil and gas also exist over the licence areas and includes the North Somercotes Prospect”.

Commenting on the updated work reported in the UJO release, Mark Abbott, Managing Director of Egdon Resources plc, said:

“We are encouraged by the results of the subsurface review of our eastern Humber Basin licences which has identified a new low-risk near-field exploration opportunity at Keddington South, additional resources in our producing Keddington oil field and confirmed low risk resources at Louth. 

We believe these opportunities can be targeted by drilling from the current Keddington location and present a number of low-risk/low-cost drilling opportunities for Egdon.

We welcome UJO’s increased participation in the licences and continued technical contribution and thank Terrain for their active involvement  to date.”

9 March 2020

H1 2020 Production Update and Notice of Interim Results

Egdon Resources plc (AIM:EDR) is pleased to provide an update on production for the first half of the Company’s 2019-2020 financial year (“H1 2020” or “the Period”) which ended on 31 January 2020.

Production during the Period was 32,758 barrels of oil equivalent (“boe”), at an average of 178 boe per day (“boepd”) (H1 2019: 30,026 boe, 164 boepd).  This is in line with previous guidance for H1 of 170-180 b/d. The previously stated guidance of 130-140 boepd for the full year remains valid.  Production was attained from the Ceres gas field and the Keddington and Fiskerton Airfield oil fields. 

The Company’s interim results for H1 2020 are scheduled to be announced on 21 April 2020.

Commenting on the update, Mark Abbott, Managing Director of Egdon Resources plc, said:

“2020 has started positively for Egdon, with continued strong production across our portfolio, a positive outcome to the Wressle planning inquiry and the announcement of a farm-in by Shell U.K. Limited into our offshore Resolution and Endeavour projects.

Our current focus is on the Wressle field development, where we are working to discharge the planning conditions ahead of commencing site works. We will provide shareholders with a detailed update on Wressle and the Biscathorpe project following Joint Venture meetings in the coming weeks.”

26 February 2020

P1929 and P2304 Farm-In Agreement with Shell U.K. Limited

Further to our announcement of 20 January 2020, Egdon Resources plc (AIM:EDR) is pleased to announce the signature of a Farm-In Agreement with Shell U.K. Limited (“Shell”) in relation to UK offshore licences P1929 and P2304 (“the Licences”) which contain the Resolution and Endeavour gas discoveries respectively.

Egdon subsidiary, Egdon Resources U.K. Limited (‘ERUK’) currently holds a 100% interest in both licences.

Under the terms of the farm-in agreement;

  • Shell will acquire a 70% working interest in Licences P1929 and P2304, and be appointed as the licence operator
  • ERUK will retain a 30% non-operated interest in the Licences
  • As consideration, Shell will pay 85% of the costs of the acquisition and processing of a 3D seismic survey covering both the Resolution and Endeavour gas discoveries with the carry on the acquisition costs capped at US$5 million gross, beyond which it would pay 70% of the costs ; and
  • Shell will also pay 100% of all studies and manpower costs up to a well investment decision on the Licences

The farm-in is conditional upon;

  • Approval from the Oil & Gas Authority (“OGA”); and
  • Agreement of a mutually acceptable forward work programme and timeline with the OGA

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21 January 2020
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