Ceres Production Update
Egdon Resources plc (AIM:EDR) is pleased to announce the resumption of production from the Ceres Gas Field where the Company holds a 10% interest. Production from the Ceres Gas Field was restarted on 11th November 2012 and has continued since.
Completion of the Acquisition of Dorset Exploration Limited
Further to the announcement made on 21 June 2012, Egdon Resources plc (AIM:EDR) is pleased to announce that it has completed the acquisition of the entire issued share capital of Dorset Exploration Limited (“DEL”). DEL is a private company which holds 10% interests in Production Licence PL090 and Petroleum Exploration and Production Licence PEDL237, both located in the county of Dorset. Egdon Resources U.K. Limited is operator for both these Licences with a 45% interest in each.As consideration for the Acquisition, Egdon has today issued 1,223,242 Ordinary Shares (“the Consideration Shares”) to the previous shareholders of DEL which include Mr. John Rix who was a non-executive Director of Egdon until his retirement from the Board in late 2011. The issued shares represent 0.93 per cent. of the enlarged share capital of the Company. Application has been made for admission of the Consideration Shares to trading on AIM, which is expected to become effective on 3 August 2012. The total number of Egdon Ordinary Shares in issue is now 132,192,336. Therefore, the total number of voting rights in the Company is 132,192,336.Licence PL090 contains the Waddock Cross Oil Discovery, where Egdon intends to progress with a planning application for the development of the field, and a number of other prospects. In PEDL237 the licence group has identified and delineated a potentially commercial accumulation of oil which was encountered in the 1959 Langton Herring North-1 well but may not have been adequately tested, and has mapped a number of structural prospects and leads at the level of the Sherwood Sandstone, the primary reservoir at the Wytch Farm oilfield. The licence group plans to delineate these structures, which extend into PL090, by reprocessing existing vintage 2D seismic data and/or acquiring new seismic, most likely 3D, with a view to promoting at least one into a viable, drillable prospect.Egdon estimate that the transaction will add an estimated 11 mmbo of Best Estimate Prospective Resources to Egdon’s resource inventory.The interests in PL090 and PEDL237 are as follows:Egdon Resources U.K. Limited (operator)45.00%First Oil Expro Limited 26.25%Aurora Exploration (UK) Limited18.75%Dorset Exploration Limited10.00%Commenting on the acquisition Mark Abbott, Managing Director of Egdon said:
“We are pleased to have completed this acquisition which increases our interest in these existing prospective Egdon operated licences. The transaction adds 11 million barrels of prospective resources to our prospect inventory and increases our interest in the Waddock Cross oil discovery where we are now in the process of developing a planning application for development of the field.”
Planning Granted for Westerdale-2 Well
Egdon Resources plc (AIM:EDR) is pleased to announce that, at today’s meeting of the Planning Committee of the North York Moors National Park Authority, permission was granted for an exploratory borehole near the village of Westerdale in onshore Petroleum Exploration and Production Licence PEDL068, where Egdon is operator with a 40% interest.The Westerdale-2 well is planned to evaluate the Ralph Cross/Westerdale gas discovery in an area up-dip of the Ralph Cross-1 well, drilled in 1966, which flowed gas from fractured limestone of the Permian age Brotherton Formation at a depth of 1040 metres below surface. Company evaluations have indicated the potential for between 5 and 38 billion cubic feet (“Bcf”) of gas in place, with a most likely case of around 18 Bcf.The Company had previously drilled a well in the Westerdale area in 2006. This well did not find commercial gas reserves and the site was subsequently restored to farmland.The interest holders in PEDL068 are as follows:Egdon Resources U.K. Limited (operator)40.00%Sterling Resources (UK) Limited47.00%Yorkshire Exploration Limited8.00%Montrose Industries Limited5.00%Commenting on the decision Mark Abbott, Managing Director of Egdon said:
“We are delighted that the National Park Authority has approved our application for the Westerdale-2 well. The final timing of the drilling will be dependent upon the conditions of planning, rig and contractor availability and final joint venture approval and is likely to be during 2013. We recognise the unique qualities of the North York Moors and in accordance with Egdon’s Health, Safety and Environmental procedures will be doing everything possible to minimise the impact of our activities on the area.”
Acquisition of Dorset Exploration Limited and Weald Basin Update
Egdon Resources plc (AIM:EDR) is pleased to announce that it has reached agreement to acquire the entire issued share capital of Dorset Exploration Limited (“DEL”). DEL is a private company which holds 10% interests in Production Licence PL090 and Petroleum Exploration and Production Licence PEDL237, both located in the county of Dorset. Egdon Resources U.K. Limited is operator for both these Licences with a 45% interest in each.The consideration for this acquisition will comprise £100,000 to be satisfied by the issue of new Egdon shares at completion. The number of consideration shares will be calculated based on the average closing mid-price for the five days prior to the day of completion. The commercial date of the transaction is 1 February 2012.The transaction is subject to approval of the change of control by DECC.DEL is owned and controlled by Mr. John Rix and his family members. Mr. Rix was a non-executive Director of Egdon until his retirement from the Board in late 2011.Licence PL090 contains the Waddock Cross Oil Discovery where recent extended testing has confirmed the potential for a commercial development which the joint venture group expects to sanction within the next few weeks. In PEDL237 the licence group has identified and delineated a potentially commercial accumulation of oil which was encountered in the 1959 Langton Herring North-1 well but may not have been adequately tested, and has mapped a number of structural leads at the level of the Sherwood Sands, the primary reservoir at the Wytch Farm oilfield. The licence group plans to delineate these leads, which extend into PL090, by reprocessing existing vintage 2D seismic data and/or acquiring new seismic, most likely 3D, with a view to promoting at least one into a viable, drillable prospect.Egdon estimate that the transaction will add an estimated 11 mmbo of Best Estimate Prospective Resources to Egdon’s resource inventory.The interests in PL090 and PEDL237 are as follows:Egdon Resources U.K. Limited (operator)45.00%First Oil Expro Limited26.25%Aurora Exploration (UK) Limited18.75%Dorset Exploration Limited10.00%Egdon also notes the recent announcement by the operator for Licence PEDL126 (Egdon 10% interest), Northern Petroleum plc (“Northern”), that the Markwells Wood-1 oil discovery well in the South Downs National Park Authority area has been suspended following the extended well test. The results of this test were below expectations. The possibilities for further action will now be examined by the joint venture group.Northern has also announced, as operator for Hampshire Licence PEDL125 (Egdon 10% interest), that the joint venture group has not been able to locate, rent or acquire a suitable drilling location from which to test the Hedge End Prospect, and therefore the licence will be allowed to lapse at the end of its current term. This will reduce Egdon’s Best Estimate Prospective Resources by 0.3 mmbo.Commenting on the acquisition Mark Abbott, Managing Director of Egdon said:
“The acquisition of DEL adds to our existing interests in licences where we have identified significant exploration potential in the Bridport Sandstone and Sherwood Sandstone plays. It also provides us with an additional 10% interest in the Waddock Cross oil discovery, where we anticipate a decision on development in the next few weeks.”
Notification of Results
Egdon Resources plc (AIM:EDR) the UK-based onshore exploration and production company primarily focused on the hydrocarbon-producing basins of the UK and Europe, announces that its Interim Results for the six months ended 31 January 2012 will be announced on Monday 23 April 2012.An analyst meeting will be held at 9.30am on Monday 23 April 2012 at Buchanan, 107 Cheapside, London, EC2V 6DN.
Egdon Resources plc (AIM:EDR) provides an update on production operations ahead of its interim results which are due for release in late April.Production for the six months to 31 January 2012 was 29,624 barrels of oil equivalent ("boe"), an increase of 67% over the same period last year (17,671 boe). This equates to 161 boe per day ("boepd") for the period (H1 2011- 96 boepd). Revenues from oil and gas sales during the period were £1.54 million, a 71 % increase on 2011 (£0.9 million).Whilst showing significant improvement on the same period last year, production is below our expectations for the period. This has been as a result of the previously reported continuing issues with production at both the Ceres and Kirkleatham gas fields.Ceres has continued to suffer from issues with the production infrastructure and has contributed only minor amounts of production during the period. The field is currently shut-in. The main issue relates to the reliability and performance of the methanol injection system. The operator has been actively working on this issue and it is hoped that the problems can be resolved in the near future. When on production, the Ceres well performs as expected with pre-back-out rates of 20 million cubic feet of gas per day ("mmcfg/d") and post back-out of 1.2 mmscfg/d net to Egdon (c. 200 boepd). Notwithstanding the difficulties with Ceres we do not believe that the long term value is affected.We reported at the time of the 2011 Annual Results that increased water production had been observed at the Kirkleatham gas field (PEDL068 - Egdon 40%) and that in November the well was shut-in awaiting a work-over. A work-over in early December was successful in clearing water from the tubing and production was re-established during December and January. However, overall gas flow rates had to be reduced to balance water production. In February following an unplanned shut-down of the GT2 gas turbine we were again unable to restart flow due to fluid loading in the tubing. An initial nitrogen displacement was unsuccessful and a further work-over last week failed to restore flow. Consequently the well will remain shut-in whilst the joint venture partners consider options aimed at resolving the water production issue and returning the well to production. These options include running production logs to determine the location of the water inflow, recompletion to isolate part of the perforated zone, installation of artificial lift and, ultimately, possibly drilling a sidetrack from the existing well to an up-dip area of the field.As a result of the problems at Kirkleatham we intend to make a precautionary impairment of the Kirkleatham gas field asset of £1.0 million at our interim reporting.The Keddington oil field in Lincolnshire Licence PEDL005(Remainder) (Egdon 75%) suffered from a reduction in production in December due to wax build-up in the production tubing. Hot washes were performed in January on both producing wells and the down-hole pumps were replaced. It is anticipated that production will stabilize at around 100 -125 bopd for the coming period. We have made further progress in developing the gas to electricity project for Keddington and are currently awaiting final detailed costs and timings from the local distribution network for the building of a 1.4 MW grid connection.Environmental consents have recently been received for the Dukes Wood oil field in Nottinghamshire licence PEDL118 (Egdon 50%) and we now expect to commence production during April from the Dukes Wood-1 and Kirklington-3Z wells at initial rates of around 40 barrels of oil per day gross.Until the issues associated with Ceres and Kirkleatham are resolved we anticipate a reduction in overall production and cash flow for the coming period. A prudent estimate of production for the next period is 125-150 boepd from Keddington, Avington and Dukes Wood/Kirklington. Once Ceres resumes production in a sustained manner this will increase to 300-350 boepd and should we be able to restore production from Kirkleatham we would anticipate being back at around 400 boepd.Commenting on production performance during the period Mark Abbott Managing Director of Egdon said;
"Our production volumes during the period, whilst showing significant improvement on the same period last year, are below our expectations. Given the problems being experienced at the moment we expect reduced production and cash flow over the coming period. We anticipate that the current issues with Ceres will be resolved in a timely manner and are actively working on the issues at Kirkleatham.We remain committed to our planned drilling programme in the UK and are making good progress with site agreements and submission of planning applications across these projects."
Directors Holdings in Company
Egdon Resources plc (the "Company") was informed today that as a result of Mr Walter Roberts's younger daughter achieving her majority, her shareholding is no longer to be counted as part of Mr Roberts's beneficial shareholding. Accordingly, although these shares have not been sold, Mr Roberts's beneficial shareholding is reduced by 200,000 ordinary shares to 1,091,750 ordinary shares, representing 0.83% of the issued and voting share capital of the Company.
Egdon Resources plc (AIM:EDR) is pleased to announce changes to the composition of its Board as a result of the acquisition of EnCore Oil plc (“EnCore”) by Premier Oil plc (“Premier”).Andrew Lodge will join the Board with immediate effect as Premier‘s nominated non-executive director. Andrew joined Premier’s Board as Exploration Director in April 2009 from Hess where he was Vice President, Exploration, responsible for Europe, North Africa, Asia and Australia for nine years. Previously, he was Vice President, Exploration, Asset Manager and Group Exploration Advisor for BHP Petroleum, based in London and Australia. Prior to joining BHP Petroleum, Andrew worked for BP as a geophysicist. He has an honours degree in Mining Geology from the University of Wales and a Masters in Applied Geophysics from the University of Leeds. He is a Fellow of the Geological Society.Alan Booth has resigned as a non-executive Director of the Company.Andrew Geoffrey Lodge, age 55, is, or has been in the last five years, a director of the following companies:Current DirectorshipsPremier Oil plcPremier Oil Exploration ONS LimitedPremier Oil ONS LimitedPremier Oil Aberdeen Services LimitedPremier Oil and Gas Services LimitedPremier Oil Exploration LimitedPremier Oil Group LimitedPremier Oil Holdings LimitedPremier Oil UK LimitedPremier Oil Investments LimitedPremier Oil Red Sea LimitedEncore (NNS) LimitedEncore (VOG) LimitedEncore CCS LimitedEncore Gas Storage LimitedEncore Natural Resources LimitedEncore North Sea LimitedEncore Oil & Gas LimitedEncore Oil LimitedPremier Oil (Encore Exploration UK) LimitedPremier Oil (Encore Petroleum) LimitedPremier Oil Vietnam 121 LimitedPrevious DirectorshipsPKP Exploration LimitedHess (Indonesia Pangkah) LimitedHess Indonesia New Ventures LimitedTalisman (Jambi Merang) LimitedHess (Indonesia-Tanjung Aru) LimitedHess (Faroes) LimitedHess (Thailand) LimitedHess (Malaysia-SK 306) LimitedHess LimitedHess Indonesia (North Masela) LimitedHess (Indonesia-South Sesulu) LimitedHess Services UK LimitedHess Holdings UK LimitedHess (Indonesia-Blora) LimitedHess Overseas LimitedHess (Indonesia) LimitedAndrew Lodge does not have any interest in the Ordinary Shares of the Company.Commenting on the Board changes, Philip Stephens, Chairman of Egdon said;
“Andrew brings a wealth of exploration experience to the Egdon Board and we look forward to his contribution. We would also like to thank Alan Booth for his efforts over the last 18 months and wish him well in his future endeavours.”
Farm-out of Interest in PEDL201
Egdon Resources plc (AIM:EDR) is pleased to announce the farm-out of a 12.5% interest in Petroleum Exploration and Development Licence 201 (“PEDL201”) located in Nottinghamshire and Leicestershire to Terrain Energy Limited (“Terrain”) and Corfe Energy Limited (“Corfe”).Under the terms of the agreement, Terrain and Corfe will each pay 12.5% of the cost of the planned Burton on the Wolds-1 exploration well to earn a 6.25% interest. As a result Egdon’s exposure to the well is reduced from 50% to 25% up to an agreed well cost. Terrain and Corfe have also agreed the same terms with Celtique Energie Petroleum Ltd (“Celtique”).On completion the licence interests in PEDL201 will be as follows:Egdon Resources U.K. Limited37.50% (operator)Celtique Energie Petroleum Limited37.50%Terrain Energy Limited12.50%Corfe Energy Limited12.50%The transfer of interests is subject to the approval by the Department of Energy and Climate Change.PEDL201 was awarded to Egdon and Celtique in 2008 and is located on the southern margin of the Widmerpool Gulf geological basin. The Burton on the Wolds Prospect has been mapped on proprietary 2D seismic data which was acquired by Egdon in May 2011. Evaluation has highlighted a prospect with targets at two distinct stratigraphic levels. The shallower target, the Rempstone Sandstone, is productive at the nearby Rempstone oil field and is mapped as having gross Best Estimate Prospective Resources of 1.4 million barrels of oil (“mmbo”). A seismic anomaly, possibly indicative of a carbonate reef, underlies the Rempstone Sandstone and has estimated gross Best Estimate Prospective Resources of 2.17 mmbo and would represent a new play in the basin.The planned well will be shallow with a drilled depth of around 1000 metres to test both targets. A potential site has been identified and lease negotiations are progressing along with development of a planning application. Subject to planning it is intended that the Burton on the Wolds-1 well will now form part of Egdon’s planned 2012 multi-well programme in the East Midlands.Commenting on the farm-out Mark Abbott, Managing Director of Egdon said:
“The Burton on the Wolds Prospect combines a lower risk reservoir target offsetting nearby production with a higher risk, higher potential play at present untested in the basin. This farm-out agreement enables Egdon to promote the well up the drilling schedule whilst managing our risk and cost exposure on the prospect. We now expect to submit a planning application during the second quarter with a view to drilling before end 2012, subject to all statutory approvals.”
Completion of Seismic Survey
Egdon Resources plc (AIM:EDR) is pleased to announce the completion of a 3-D seismic survey across the Broughton and Wressle Prospects, which are located to the East and South-East of the town of Scunthorpe in North Lincolnshire.The survey, which covers parts of Petroleum Exploration and Development Licences ("PEDLs") 180, 181, 182 and 241, was undertaken by Tesla Exploration International ("Tesla"). A total of 1,424 vibroseis and dynamite source points were acquired with the resultant survey covering an area of approximately 49 square kilometres.Once processed, the survey will provide detailed structural data over the Broughton and Wressle trend to confirm the prospects previously mapped on multi-vintage 2-D seismic data and enable bottom-hole target locations to be defined for one or both of the prospects. It is planned to drill one or both of these prospects later in 2012 subject to technical confirmation and planning consent.The two prospects are located along an oil productive trend with the Crosby Warren producing oil field at one end and the Brigg oil discovery at the other. The Broughton-B1 well drilled by BP in 1984 flowed on test at up to 40 barrels of oil per day before being abandoned. Egdon has identified an area up-dip from the well and estimates gross Best Estimate Prospective Resource potential of 2.95 million barrels of oil ("mmbo"). The Wressle Prospect has estimated gross Best Estimate Prospective Resource potential of 3.9 mmbo in the primary Chatsworth Grit reservoir target.The joint venture partners in PEDLs 180 and 182, which contain the Broughton and Wressle prospects are:Egdon Resources U.K. Limited33.33%Europa Oil and Gas Limited33.34%Celtique Energie Petroleum Limited33.33%Commenting on the survey Mark Abbott, Managing Director of Egdon said:
"I would like to thank all the personnel of Tesla for their professionalism and commitment in acquiring good quality data in highly challenging operating and weather conditions. We now look forward to receipt of the final data in the next few months so that we can finalise our plans for drilling on this highly prospective oil trend."
Acquisition of Licence Interest
Egdon Resources plc (AIM:EDR) is pleased to announce that EnCore Oil plc (“EnCore”) will assign to Egdon its 7.5% interest in a newly offered offshore licence covering part blocks 98/13 and 98/14. This assignment is a consequence of the agreement by which Egdon acquired certain UK and French assets from EnCore, and which completed in 2010.The new licence is located immediately offshore from existing Isle of Wight onshore licence, PEDL 240 where Egdon also has a 7.5% interest acquired from EnCore. The part blocks 98/13 and 98/14 cover the offshore extension from PEDL 240 of a prospect that has been mapped using both seismic and well data and is located in the same petroleum basin as the Wytch Farm oil field.The assignment is subject to approval from Department of Energy and Climate Change.Following completion the licensees in part blocks 98/13 and 98/14 will be:NP Solent Ltd62.5% (Operator)Magellan Petroleum (UK) Ltd22.5%Egdon Resources U.K. Limited7.5%Montrose Industries Ltd5.0%Oil & Gas Investments Ltd2.5%