Egdon Resources plc (AIM:EDR) is pleased to announce the acquisition of 100% interest in Promote Licence P2304 (UKCS Block 41/24) from Arenite Petroleum Limited (“Arenite”) and Europa Oil & Gas Limited (“Europa”). P2304 is located to the immediate south of Egdon’s 100% owned licence P1929 (UKCS Blocks 41/18 and 41/19) offshore North Yorkshire, which contains the 1966 Resolution gas discovery.
The consideration comprises the immediate reimbursement of the 2017 licence rental, OGA Levy and vendors’ legal costs (c. £15,000 in total) and future staged payments contingent on the successful completion of various potential exploration activities and/or on reaching certain production milestones.
The Resolution discovery structural closure is mapped by Egdon as extending southwards from P1929 into P2304 and the licence also contains a second gas discovery confirmed by wells, 41/24A-1 (1969, Total), 41/24A-2 (1981, Total), and 41/24-3 (1993, Conoco) which tested at rates of up to 34 million cubic feet of gas per day and 1280 barrels per day of condensate from the Plattendolomit, a Zechstein carbonate unit slightly younger than the Hauptdolomit reservoir tested in the Resolution discovery well. As with P1929, P2304 contains additional prospectivity in deeper gas bearing Carboniferous sandstones underlying the proven Zechstein reservoir sequences.
P2304 was awarded to Europa and Arenite as a Promote Licence in the UK Offshore 28th Licensing Round with an effective date of 1 December 2015, and the OGA has agreed to extend the Initial Term of the Licence until 1 December 2018. The transfer of interests in P2304 from Europa and Arenite to Egdon is subject to OGA approval.
Commenting on the acquisition, Mark Abbott, Managing Director said: “We are pleased to have acquired this highly prospective acreage at a nominal up-front consideration. The licence contains a mapped extension of the Resolution gas accumulation and an additional proven gas discovery. We will now work to integrate our evaluation of the new licence into our detailed understanding of P1929 with a view to progressing appraisal of the proven gas resources in the combined area.”
The contingent elements of the consideration comprise:
- On completion of the acquisition of a 3D survey over any part of the Licence (other than a third party survey to which neither the P2304 Licensees nor the licensees of the P1929 licence have access) a cash payment of fifty thousand Pounds (£50,000).
- On completion of the drilling of the first well located wholly or partly within the area covered by the Licence a cash payment of one hundred thousand Pounds (£100,000).
- On first production, other than testing, from any well located wholly or partly within the area covered by the Licence a cash payment of one hundred thousand Pounds (£100,000).
- On reaching a total production of five billion standard cubic feet of gas (5 bcf) (or oil equivalent) from any wells located wholly or partly within the area covered by the Licence a cash payment of two hundred thousand Pounds (£200,000).
- On reaching a total production of twenty billion standard cubic feet of gas (20 bcf) (or oil equivalent) from any wells located wholly or partly within the area covered by the Licence a cash payment of one million Pounds (£1,000,000).