Egdon Resources plc (AIM:EDR) is pleased to announce the acquisition of the producing Fiskerton Airfield oil field in Lincolnshire licence EXL294.
Egdon Resources plc (or “the Company”) will acquire a 100% interest in, and operatorship of the Fiskerton Airfield oil field from Cirque Energy (UK) Ltd (“Cirque”) for a cash consideration of $750,000 (c. £0.59 million) payable from existing cash resources upon completion. The effective date of the acquisition will be 1st January 2017.
The Fiskerton Airfield oil field is located approximately 7 kilometres to the East of the City of Lincoln. The field was discovered in 1997 and cumulative production has totalled around 440,000 barrels of oil from the most likely mapped Oil in Place estimated at 2.2 million barrels. The oil is of good quality (35.2°API) and is exported by road tanker to Immingham, North East Lincolnshire. Egdon estimate that in excess of 100,000 barrels of oil remain recoverable from the existing wells.
The field is currently producing circa 19 barrels of oil per day (“bopd”) from one of two production wells (FA-3). The second producing well (FA-1) is currently shut-in awaiting a workover. The field also has a dedicated water disposal well to reinject produced water into the reservoir for pressure support (FA-2). The field has suffered from a lack of investment in recent years. Egdon plans to enhance the cash flows and profitability of the operation by increasing production initially to between 30 and 40 bopd via low cost well interventions. It is planned to workover both the currently producing FA-3 and the shut-in FA-1 wells during 2017 by installing new tubing, pumps and isolating water producing zones.
Completion of the acquisition is subject to the usual OGA approvals.
Commenting on the acquisition, Mark Abbott, Managing Director of Egdon Resources plc, said:
“We are pleased to acquire the Fiskerton Airfield oil field for a modest cash outlay. The field has suffered from a lack of investment over recent years and we plan to undertake simple low-cost workovers to enhance production and profitability in the short-term, adding valuable near-term cash-flow to Egdon’s portfolio. In the longer term, we will investigate the potential to enhance productivity through in-fill drilling.”
AIM Rule Disclosure
The acquisition of the interest in the Fiskerton Airfield oil field is a substantial transaction as defined in the AIM Rules for Companies (“AIM Rules”). With respect to disclosures required under the AIM Rules for substantial transactions, due to a lack of historical financial information available to the Company with respect to Cirque’s activities at the oil field, the Company is not able to provide disclosure on the profits or losses attributable to the interest in the Fiskerton Airfield oil field in this announcement. Egdon has a thorough understanding of current and likely future operating costs on the field and the costs of the planned workovers. The Company will record the acquisition in its books at the purchase cost.