TR1 – EGDON RESOURCES PLC – 17 07 2019

Egdon Resources plc (AIM:EDR) is pleased to provide a positive update in respect of the Biscathorpe-2 exploration well drilled in Petroleum Exploration and Development Licence PEDL253, located in Lincolnshire, where Egdon holds a 35.8% interest.  

The Biscathorpe-2 well is located within the proven hydrocarbon fairway of the Humber Basin, on trend with the Saltfleetby gasfield and the Keddington oilfield which produces oil from a Carboniferous Westphalian aged sandstone reservoir (“Westphalian”) and which was the principal target in the Biscathorpe-2 well.  The initial well results were reported on 20 February 2019. During drilling elevated gas readings were recorded from the Westphalian and below this over the total 157 metre Dinantian Limestone interval (“Dinantian”) along with the presence of oil shows (pale white blue cut fluorescence) in both Westphalian and Dinantian cuttings samples.  The Biscathorpe-2 well was suspended to allow the option for a future side-track to be made following the re-processing and re-mapping of up to 85 square kilometres of existing 3D seismic data. 

Since reporting the initial well results, further detailed technical analyses of the data from the Biscathorpe-2 well have been undertaken, including an updated petrophysical evaluation by both Egdon and Union Jack’s petrophysical consultants which focussed specifically on the Dinantian.  These petrophysical analyses indicated hydrocarbon saturations of greater than 50% within the upper parts of the Dinantian.

Union Jack, Montrose Industries Limited, and Egdon Resources plc, also appointed independent geotechnical consultants, Applied Petroleum Technology (UK) Limited (“APT”), to perform a detailed geochemical analysis of drill cutting samples taken from 20 intervals in the Biscathorpe-2 well, comprising five from the Westphalian and 15 from the Dinantian.  The objective of the APT analysis was to provide geochemical evidence for the presence of live hydrocarbons together with an estimate of the likely oil quality (the “APT Report”). 

The APT Report has confirmed the occurrence of hydrocarbons in the Westphalian and Dinantian cutting samples analysed from the Biscathorpe-2 well.  The APT Report also confirmed that the data supports the existence of a significant column of good quality oil ( high API gravity), within the Dinantian, validated by the presence of a full suite of gases ranging from methane to pentane (C1 to C5 and nC5) recorded during drilling, all indicative of a working petroleum system in close proximity to the Biscathorpe-2 well.

A sample of oil from the nearby producing Keddington oilfield to the east of PEDL253, was analysed as a benchmark for comparison with the hydrocarbons extracted by APT from the Biscathorpe-2 cutting samples. 

The key results contained in the APT Report are summarised below:

• Good quality hydrocarbon extracts were obtained from the Westphalian and Dinantian cuttings samples
• All hydrocarbons extracted appear to be non-biodegraded
• The hydrocarbons extracted are comparable to those extracted from a known oil-bearing Westphalian interval (Keddington oilfield)
• APT confirmed the likely presence of a live oil column in the top of the Dinantian interval from approximately 1,980 metres to 2,015 metres (35 metres), with likely residual oil below
• Data evaluated at the base of the analysed section, and wellsite gas readings, are also suggestive of possible additional hydrocarbon pay below 2,133 metres
• API gravity results in the Biscathorpe-2 well intervals were as follows:

The results of the APT Report together with re-processed 3D seismic data will be integrated to inform the direction of any potential future side-track of the Biscathorpe-2 well that would target the Westphalian and Dinantian.

Commenting on these positive results Mark Abbott, Managing Director of Egdon, said:

“The results of the revised petrophysical analysis and the APT Report have upgraded the Biscathorpe-2 well result, confirming the likely presence of a 35 metre column, of good quality oil, within the Dinantian interval.  This along with the elevated gas readings and oil shows over an extended interval in the well are indicative of proximity to an effective petroleum system and validate the potential that exists within the PEDL253 licence area.

The primary target reservoir at Biscathorpe, the Basal Westphalian sandstone, was likely absent at the Biscathorpe-2 location and remains untested by the well. Further technical work is planned, including the reprocessing of the existing 3D seismic data, prior to deciding the next steps for the project which could include a side-track of the suspended Biscathorpe-2 well.

“We look forward to updating shareholders further once the results of the 3D reprocessing are finalised.”

Egdon Resources plc is pleased to note the announcement made this morning by IGas Energy plc (“IGas”) which summarises the results from the analysis of whole core from the Springs Road-1 (“SR‑ 01”) well on licence PEDL140, in which Egdon holds a 14.5% interest.

The IGas release states;

“IGas is delighted to announce highly encouraging core analysis results from its SR-01 exploration well at Springs Road in North Nottinghamshire. The well is a significant step forward in the development of shale gas in the East Midlands.

The Springs Road well was drilled as a vertical, cored exploration well in PEDL140 in North Nottinghamshire in the centre of the Gainsborough Trough basin.  The well sought to assess three target zones: the Bowland Shale; the Millstone Grit and the Arundian Shale.  All three targets were encountered, with 429m of hydrocarbon bearing shales encountered within the primary target, the Bowland Shale. 

IGas acquired 147 metres of core within the Bowland Shale, the first extensive core sample from this basin, which has subsequently been analysed by Stratum Reservoir (formerly Weatherford Labs) in their laboratories in both the UK and the USA.

The results from core analysis are extremely positive and confirm that a significant hydrocarbon resource is present in the Gainsborough Trough.     

• Total Organic Carbon (TOC): 2 – 7 %, average of c. 3 %
• Thermal maturity (Tmax): Average of 464°C (wet gas to dry gas window)
• Total Porosity: 2 – 9 %, average of 4 %
• Gas Content: 24 – 131 scf/ton, average of 71 scf/ton
• Average Clay Content: c.30 wt.%

The key characteristics of the Bowland Shale in SR-01 compare favourably to commercial shale operations observed in North America such as the Permian and the Marcellus. The core results indicate a mature, organic rich source rock with good porosity confirming favourable gas resource density.  In particular, the low clay content is encouraging and an indication that hydraulic fracturing of the rock should be effective.

The analysis conducted will help delineate the resource potential and help refine the subsequent appraisal programme.  IGas, working with its joint venture partners, will now consider the attributes of the data set in order to commence planning for both the appraisal programme and pilot development within the Gainsborough Trough, including redefining the basin model.

We intend to make a further announcement and full technical presentation of the results, including comparison with analogous US shale plays in the third quarter of 2019.

Commenting IGas CEO, Stephen Bowler, said

“This positive dataset is highly promising and materially advances our understanding of the hydrocarbon resources contained within the shales in the Gainsborough trough where IGas holds a large acreage position.  We were particularly pleased with operational performance during drilling leading to the well costs coming in c.20% under budget.

The independent Committee on Climate Change recently reported that by 2050 we will still require some 70% of the gas we currently consume but unless we develop our domestic resources, we will need to import 86% of that gas from overseas. 

These results demonstrate that within the East Midlands we potentially have the resources to produce gas, creating jobs and tax revenues whilst reducing our greenhouse gas emissions.”

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

“The results from this extensive modern core dataset demonstrate that the Bowland Shale of the Gainsborough Trough, where Egdon holds 82,000 net acres, compares favourably with some of the best US commercial shale operations and is potentially world class.  

We echo IGas’ satisfaction at the speed and cost of drilling which bodes well for future operations.   We look forward to providing investors with a more detailed update during the third quarter of 2019 once these results have been fully assessed and integrated. ”

Egdon (AIM:EDR) wishes to correct the announcement that it made on 4 June 2019 in respect of the Results of Open Offer of 43,330,803 Open Offer Shares (RNS number 0038B). (Read more…)

Egdon Resources plc (AIM:EDR), announces the results of its underwritten Open Offer of 43,330,803 Shares, which was announced on 15 May 2019 and closed for acceptances, in accordance with its terms, at 11.00 a.m. on 31 May 2019.  (Read more…)