INEOS Acquires Interests in Egdon's Core Shale Gas Area

Egdon notes that INEOS Upstream Limited ("INEOS") has recently completed its acquisition of Total E&P Limited’s (“Total”) interests in certain UK onshore licences held jointly with Egdon in Gainsborough Trough area.There is no change to Egdon’s financial position or equity interests resulting from this transaction. Total's obligations to carry Egdon in respect of PEDL 139 and 140 have been taken over by INEOS in full.Following completion of the acquisition the new equity interests in the licences are as outlined in the table below:LicenceRegion Equity interests post transactionOperatorPEDL 139North NottinghamshireIGas 32%, INEOS 40%, Egdon 14.5%, ECorp 13.5%IGasPEDL 140North NottinghamshireIGas 32%, INEOS 40%, Egdon 14.5%, Ecorp 13.5%IGasPEDL 273YorkshireIGas 35%, INEOS 30%, Total 20%, Egdon 15%IGasPEDL 305YorkshireIGas 35%, INEOS 30%, Total 20%, Egdon 15%IGasPEDL 316LincolnshireIGas 35%, INEOS 30%, Total 20%, Egdon 15%IGasINEOS has also acquired from Total, Opt-In rights to Egdon’s operated licence PEDL209, as announced in April 2017, and the associated carry of £13.47m (£4.85m net to Egdon’s 36% interest if the option is exercised).Commenting on the deals, Mark Abbott, Managing Director of Egdon Resources plc, said:“INEOS has made verysubstantial commitments to UK shale exploration and Egdon looks forward to working with INEOS in PEDL139/140. Equally we are pleasedto welcome INEOS into our 14th Round licencesandalsotoPEDL209shouldINEOSexerciseitsoptionto participate.We now look forward to the drilling of Springs Road-1 in 2018and further proof of concept exploration across the play in Egdon’s core area of Gainsborough Trough.”Historical Total Deals with Egdon Resources et alIn January 2014, we announced two highly significant deals with Total, the first international major to take a position in UK shale-gas. The first was a farm-in by Total to licences PEDL139/140 where they will earn a 40% interest through a carried work programme of up to c. £28 million ($46.5 million) with a minimum commitment of c. £12 million. As a result of this and other linked transactions Egdon now holds a 14.5% interest in the licences, up from 13.5% previously, and received c. £0.37 million in cash in 2014 under inter-party agreements.The second was a Farm-in Option Agreement in respect of PEDL209, whereby Total had an option, exercisable until 31 December 2015, to earn a fifty per cent interest in the licence by paying for an exploration programme of £13.47 million. Egdon received a cash payment of £0.92 million and retained the exploration rights at Laughton-1 (2016 dry hole) and two other prospects, all of which are purely conventional and were excluded from the option. In April 2017 Egdon entered into a new Opt-In Agreement with Total on PEDL209. Under the terms of the agreement, Total has an option to farm-in to unconventional resources exploration in PEDL209, exercisable until 31 December 2018 and to earn a 36% interest in the licence by paying Egdon’s remaining 36% (together with Total’s own 36% interest) of an exploration programme of up to a gross £13.47 million which would include seismic acquisition and the drilling of a well.These transactions were intended to deliver a significant work programme designed to de-risk the Gainsborough Trough Bowland-Hodder shale-gas play. Since signature, we have completed 3D seismic acquisition over parts of PEDL139/140 and the operator completed a period of community engagement ahead of planning and permitting work culminating in the receipt of planning permission for Springs Road 1 & 2 wells in November 2016.