Signature of Commercial Agreements and Appointment of EPCM Contractor for the Kirkleatham Gas Field Development
The Directors of Egdon Resources plc (AIM:EDR) are pleased to announce the execution of key commercial agreements in relation to the Kirkleatham gas field development in North Yorkshire and Teeside licence PEDL068.The PEDL068 Joint Venture partners and Sembcorp Utilities (UK) Limited (“Sembcorp”), which owns the power station and much of the land on the Wilton International site and provides utilities and services to industrial customers on that site, have signed a series of agreements relating to the commercial terms of gas sales, the lease of a process site, the granting of wayleave rights for pipelines and for the operation and maintenance of the facilities on the Wilton site.Under the terms of the Gas Sales Agreement all Kirkleatham gas will be sold to Sembcorp. Sembcorp has also been granted certain rights to participate in any future gas storage project that may be developed at Kirkleatham.Planning consent was received for the Kirkleatham development in August 2009. The consent allowed for production from the existing Kirkleatham-4 well site and for the drilling, testing and production from up to two additional wells at the site. Gas will be transported from the well site via a six hundred metre long underground pipeline to the Wilton site boundary and then via an above ground pipeline to a processing site within Wilton. On the processing site, water and all hydrocarbon liquids will be removed and the gas heated and metered prior to delivery via an above ground pipeline to a Sembcorp-owned combined heat and power plant which generates electricity for site and export use and can also generates steam for site use.Egdon is also pleased to announce that following a tendering process in late 2009 it has appointed Stockton-on-Tees based K Home International Limited (“KHI”) as the Engineering, Procurement Services and Construction Management (“EPCM”) contractor for the Kirkleatham development project.KHI will manage the detailed design, procurement and construction phase of the development under the oversight of Egdon’s engineering consultants and project managers Vision Oil & Gas of Guildford.The near term focus will now be to secure the remaining regulatory approvals and to begin the construction phase of the project. The target for first gas is the start of the winter 2010 gas season.Commenting on these developments, Mark Abbott, Managing Director of Egdon, said:
“This is a significant milestone for the Kirkleatham project. We have been working to monetise the Kirkleatham gas field since its discovery in early 2006 and are delighted to have reached agreement with Sembcorp in relation to the commercial terms for the project. We are also pleased to announce the appointment K Home International Limited as our EPCM contractor. KHI is a local company with experience of operating on the Wilton site and we look forward to working with them to secure first gas and cash flow for the coming winter. I would also like to thank our engineering and commercial advisors Vision Oil & Gas and Energy Contract Solutions who have worked tirelessly over the last year to get us to this point.”
Holding in Company
The Company was notified on 15 February 2010 that, following a disposal on 12 February 2010, Hargreave Hale Limited now holds 12,039,871 Ordinary Shares (with an equivalent amount of voting rights) which represents approximately 15.952 per cent. of the issued Ordinary Share voting capital of the Company.8,585,000 of the Ordinary Shares held by Hargreave Hale Ltd. are held for unit trusts operated by Malborough Fund Managers Ltd. for whom Hargreave Hale Ltd. manages the portfolio of investments on a discretionary basis.
Kirklington Drilling Results
The Directors of Egdon Resources plc (AIM:EDR) provide an update on drilling operations at the Kirklington site in its Nottinghamshire licence PEDL203.The Kirklington-3 well was drilled directionally using the BDF28 rig to a total depth of 821 metres against a planned depth of 980 metres and encountered the target Chatsworth Grit sandstone significantly deeper than predicted. The Chatsworth Grit was encountered below the interpreted field oil water contact with only poor oil shows seen and was interpreted as water bearing. As such, a decision was made to curtail the drilling of the planned horizontal section and to cement back the well to allow the drilling of a sub-vertical sidetrack (Kirklington-3z) close to the original Kirklington-2 producer to gain additional data and enable restoration of field production.The Kirklington-3z well reached a total depth of 698 metres on 10 February 2010. The well encountered the Chatsworth Grit interval some 3.5 metres deeper than in the Kirklington-2 well which is located only 25 metres to the north-east. The reservoir was also thinner at 5.2 metres thick compared to 9.2 metres at Kirklington-2. Drill cuttings through the interval had oil staining and good oil shows. An open-hole completion has been run in Kirklington-3z to enable pumped production of the Chatsworth Grit.The rig is currently being demobilised from site following which surface facilities will be reinstalled. The next well in Egdon's planned drilling programme is a sidetrack of the Keddington-2y well in Lincolnshire licence PEDL005 (Remainder). This will now commence in March once all drilling preparations are completed at the site.Commenting on the drilling results Mark Abbott, Managing Director of Egdon said:
"These results have shown that the Kirklington field is far more complex than our pre-drill information indicated. We will be assessing the new information gathered to determine if further drilling activity and investment is warranted at Kirklington. In the meantime we look forward to putting the Kirklington-3z well onto production through the existing facilities."
Egdon is the operator and holds a 65% interest in the PEDL203 licence. Joint venture partner Terrain Energy Limited holds a 25% interest in the licence and on completion of the on-going farm-in Angus Energy will hold a 10% interest.
Kirklington-3 Drilling Operations
The Directors of Egdon Resources plc (AIM:EDR) are pleased to provide an update on operations at the Kirklington well site in its Nottinghamshire licence PEDL203.The Kirklington oil field was discovered by BP in 1985 with the drilling of the Kirklington-2 well and has two oil bearing intervals in the Sub-Alton Crawshaw and the Chatsworth Grit reservoirs at depths of around 600 metres relative to mean sea level. The Kirklington oil field had been shut-in since 2004 prior to Egdon restarting production on 28 July 2009.The Kirklington-3 well will be a sidetrack of the existing well and is targeting an area interpreted as containing un-drained oil up-dip to the north and west of the existing well through the drilling of a 300 metre horizontal interval in the primary Chatsworth Grit producing interval.The BDF28 rig started operations at the Kirklington site on 31 January 2010. The plugging-back of the existing well has now been completed and the drilling of the sidetrack commenced today from a kick-off depth of 510 metres. The well will to be drilled directionally to a total measured depth of approximately 980 metres.The well is expected to be completed for pumped production using the existing surface production facilities shortly after the rig is released from site. Drilling and completion operations are expected to last a total of 12 days.Egdon is the operator and holds a 65% interest in the PEDL203 licence. Joint venture partner Terrain Energy Limited holds a 25% interest in the licence and on completion of the on-going farm-in Angus Energy will hold a 10% interest.Further announcements will be made as operations progress.
Holding in Company
The Company was notified on 29 January 2010 that, following an acquisition on 28 January 2010, Hargreave Hale Limited now holds 12,139,871 Ordinary Shares (with an equivalent amount of voting rights) which represents approximately 16.08 per cent. of the issued Ordinary Share voting capital of the Company.8,685,000 of the Ordinary Shares held by Hargreave Hale Ltd. are held for unit trusts operated by Malborough Fund Managers Ltd. for whom Hargreave Hale Ltd. manages the portfolio of investments on a discretionary basis.
Update on Dukes Wood-1 drilling operations
The Directors of Egdon Resources plc (AIM:EDR) are pleased to provide an update on operations at the Dukes Wood-1 well in Nottinghamshire licence PEDL118.The Dukes Wood-1 well recommenced drilling operations on 11 January 2010 using the British Drilling and Freezing Limited rig 28 (“BDF28”). The well reached a total depth of 793 metres measured depth (615.7 metres true vertical depth) on 20 January 2010. All formations were penetrated very close to the pre-drill prognosis. Oil shows were observed in a number of the target formations whilst drilling. Analysis of the wireline log data over the primary objective for this well, the Ashover Grit unit 5 (“AG5”), indicates a total net pay thickness of 4.7 metres (4 metres vertical thickness) with porosity averaging 20% and oil saturations in excess of 50%.Whilst encouraged by these results only an extended well test will determine the full production potential of the AG5 and other zones. The well has been cased and perforated over a 5 metre interval in the AG5 and completed for test production. Testing operations are expected to commence during February 2010, as soon as all approvals are obtained and equipment and personnel mobilised.Four other intervals of interest have also been identified within the well, the Sub-Alton Crawshaw, Loxley Edge Rock, Ashover Grit unit 4 and Wingfield Flags. The total potential net pay across these formations is 21.64 metres (measured depth) and these zones may be perforated and tested at a later date.Egdon holds a 65% interest in and is operator of the PEDL118 licence. Joint venture partner Terrain Energy Limited holds a 25% interest in the licence and on completion of the on-going farm-in Angus Energy will hold a 10% interest.The BDF28 rig is currently being rigged down and will then be moved to the Kirklington oil field to drill a sidetrack of the Kirklington-2 production well.Further announcements will be made as operations progress.Commenting on the well results Mark Abbott managing Director of Egdon said;
“The Dukes Wood-1 well provides the first modern data from the Eakring-Dukes Wood field and will provide useful information for the development of our long term plans to rejuvenate the field. We are encouraged by the initial analysis of the well results which have indicated the presence of a number of zones capable of oil production. We now look forward to the outcome of the production testing of the Ashover Grit and potentially other formations over the coming months. Our near-term focus now turns to the Kirklington sidetrack in adjacent licence PEDL203.”
Commencement of drilling operations at Dukes Wood-1
The Directors of Egdon Resources plc (AIM:EDR) are pleased to report that drilling operations have commenced at the Dukes Wood-1 well in Nottinghamshire licence PEDL118.The Dukes Wood-1 well was drilled and cased to a depth of 47 metres in November 2008 before being suspended. Drilling operations recommenced at 11:30 hours on 11 January 2010 using the British Drilling and Freezing Limited rig 28 ("BDF28"). The well will now be drilled directionally to a planned measured depth of around 800 metres. Dukes Wood-1 will test the crest of the Dukes Wood anticline in an area where Egdon has identified potential for un-drained and re-migrated oil. An abandoned well in this part of the structure was re-entered in 1992 and produced 180 barrels of oil during a short test from the upper interval of the Ashover Grit indicating the presence of recoverable oil. Operations are expected to take around two weeks. The primary target for the well will be the Ashover Grit reservoir interval with secondary reservoir objectives in the Sub-Alton Crawshaw, Loxley Edge Rock and Wingfield Flags all oil bearing on the structure. This is the first well in the evaluation of the rejuvenation potential of the Eakring-Dukes Wood oil field where Egdon has identified low risk opportunities to add production, revenues and reserves.Egdon holds a 75% interest in and is operator of the PEDL118 licence. Joint venture partner Terrain Energy Limited holds a 25% interest in the licence.Following completion of operations at Dukes Wood-1 the BDF28 rig will mobilise to the Kirklington oil field to drill a sidetrack of the Kirklington-2 production well.Further announcements will be made as operations progress.
Holding in Company
The Company was notified on 28 January 2010 that, following a disposal on 27 January 2010, Hargreave Hale Limited now holds 12,039,871 Ordinary Shares (with an equivalent amount of voting rights) which represents approximately 15.95 per cent. of the issued Ordinary Share voting capital of the Company.8,685,000 of the Ordinary Shares held by Hargreave Hale Ltd. are held for unit trusts operated by Malborough Fund Managers Ltd. for whom Hargreave Hale Ltd. manages the portfolio of investments on a discretionary basis.
Farm-out of licences PEDL118 and PEDL203
The Directors of Egdon Resources plc (AIM:EDR) are pleased to announce that the Company has reached agreement to farm-out 10% interests in its Nottinghamshire licences PEDL118 and PEDL203 to subsidiaries of Angus Energy Limited (“Angus”).In PEDL118, Angus Energy Eakring Development Limited will earn a 10% interest in the licence in return for paying 20% of the costs of the currently drilling Dukes Wood-1 well. Following completion Egdon will hold a 65% operated interest in the licence. As part of the agreement Egdon has also granted Angus an option to acquire up to a further 10% interest in the licence on commencement of drilling of the second well on the licence. In consideration, Angus will carry Egdon on the same terms for this second well and will pay certain back costs for any additional acquired interest.In PEDL203 Angus Energy Kirklington Development Limited will earn a 10% interest in return for paying 20% of the cost of the forthcoming sidetrack of the Kirklington-2 well. Following completion Egdon will hold a 65% operated interest in the licence.The transaction is subject to regulatory approval by the Department of Energy and Climate Change.Angus is a private Scottish registered company which is looking to develop a portfolio of onshore UK producing assets.Commenting on the transaction, Mark Abbott, Managing Director of Egdon said;
“We are pleased to welcome Angus as a partner on these licences. With this farm-out and the recently completed sale to Terrain we have reached our objective of reducing our cost and risk exposure on the Eakring-Dukes Wood and the Kirklington projects whilst maintaining a material operated interest. We now look forward to the results of the current drilling at Dukes Wood-1, the first well to be drilled on this oil bearing structure since the 1940’s.”