Egdon Resources plc (AIM:EDR) is pleased to announce that it has reached agreement for the sale of a 12.5% interest in Wessex Basin Licences PL090 and PEDL237 to Corfe Energy Limited (“Corfe”) for a cash consideration of £500,000. The Waddock Cross field development area in PL090 is excluded from the transaction.
In addition, under the terms of an Earn-In Agreement, Egdon will be able to earn back a 6.25% interest in both Licences through paying the costs attributable to such interest as well as the costs attributable to the 6.25% interest acquired by Corfe from Egdon up to a combined maximum of £500,000. The net financial effect of the transaction to Egdon is as if it had benefitted from a “two for one” promote on the relevant proportion of the gross £4 million work programme planned on the Licences.
The parties have agreed to acquire a programme of 3D seismic over the Casterbridge prospect, the Broadmayne prospect and other prospective structures which is expected to commence during the fourth quarter of 2013. Following completion of the seismic programme and prior to the drilling of an exploration well on either of the Licences, Egdon is entitled to opt out of the Earn-In obligation but under these circumstances will re-assign its 6.25% Earn-in interest to Corfe.
Corfe has also reached agreement on the same terms with First Oil Expro Limited and Aurora Exploration (UK) Limited and on completion of the Earn-In the Licence Interests in PL090 and PEDL237 will be as follows:
|First Oil Expro Limited||22.6042%|
|Aurora Exploration (UK) Limited||16.1458%|
|Corfe Energy Limited||12.5000%|
|Dorset Exploration Limited(1)||10.0000%|
The transfer of interests is subject to approval by the Department of Energy and Climate Change.
The PL090 and PEDL237 licencees have also agreed an Area of Mutual Interest in respect of the existing licence areas and certain adjacent areas.
Commenting on the transaction Mark Abbott, Managing Director of Egdon said:
“The transaction with Corfe is a further example of delivery of Egdon’s “farm-out” strategy to reduce financial exposure and accelerate activity on key exploration projects and provides the impetus for the acquisition of a 3D seismic programme over the main prospective trend later in 2013. The intention is to firm-up a drilling location to test a high potential Sherwood Sandstone Prospect in 2014. We have identified two prospective structures at Casterbridge and Broadmayne where Egdon evaluate combined gross Best Estimate Prospective Resources of around 50 million barrels of oil. The planned 3D seismic programme should enable us to identify the best location for a future exploration well.
Elsewhere in the area the Waddock Cross planning decision is now expected during April with a planned production start-up around mid-year, dependent upon a positive decision on planning.”
(1) Dorset Exploration Limited is a wholly owned subsidiary of Egdon Resources plc