Final Results for the Year Ended 31 July 2012
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.
PEDL139 and 140 Shale-Gas Resources Assessment
Egdon Resources plc (AIM:EDR) is pleased to announce the results of an independent evaluation by RPS Energy (“RPS”) of the potential shale-gas resources in the Company’s onshore U.K. East Midland licences PEDL139 and PEDL140 (the “Licences”) where the Company holds 13.5% interests.RPS has reviewed the available data in the Licences and made an assessment of potential gas volumes and geological chance of success based on analogous shale-gas plays in the USA. The Licences are located in Lincolnshire and cover an area which is underlain by the Gainsborough Trough, a geological basin which contains a 125 metre thick sequence of the Carboniferous age Pendleian Shale at a depth of over 2000 metres. The Pendleian Shale is the approximate age equivalent of parts of the Bowland Shale which is the principal shale-gas reservoir target under evaluation in the Bowland Basin of North West England.RPS estimates the mean net Egdon total gas in place (“GIIP”) as 1.76 trillion cubic feet of gas (“tcf”) within the Licences. A review of the surface and sub-surface access constraints in the area has resulted in an estimated mean net Egdon Accessible GIIP of 1.22 tcf. The net Egdon mean Prospective Resources(1) are estimated as 0.19 tcf based on recovery rates in analogous US plays. RPS estimates the geological chance of success to be 24%.Egdon intends to evaluate the potential of the Licences through drilling a deep exploration well, which it is hoped will be undertaken during 2014 subject to obtaining all necessary consents and approvals. Egdon’s costs are carried through this work programme.In addition to the Pendleian Shale, which is the subject of the RPS report, Egdon interprets potential for significant additional shale-gas resources in the underlying Carboniferous succession in the blocks that will be evaluated by any future drilling. Egdon is also evaluating the unconventional resource potential in certain of the Company’s other East Midlands licences.Commenting on the report and recent government announcements in relation to shale-gas exploration, Mark Abbott, Managing Director of Egdon, said;
“Whilst recognising that we are still at an early exploration stage in these Licences, and indeed for UK unconventional resources in general, we are encouraged by the results of the RPS evaluation which indicate that the geological conditions appear favourable for the development of a potentially material shale-gas resource based on the currently available data and comparison with US analogues.We welcome the announcements in December 2012 by the UK Government in relation to Gas Strategy, the setting up of the Office of Unconventional Gas and Oil, and the approval for restarting of shale-gas exploration in the UK. There is now a clear regulatory framework for the exploration of the UK’s unconventional oil and gas resources which have the potential to make a significant contribution to the UK’s economy and energy mix over the coming decades.An executive summary of the report by RPS will be available for download from Egdon’s website.”
Note(1) Any development would have to take into account permitting, legal issues, environmental issues and availability of project finance, but RPS has not made a risk assessment of these factors. In addition RPS has made the assumption that adequate numbers of rigs and fraccing units will be available to drill and complete the large number of horizontal wells which would be required to fully develop the mean Prospective Resources estimated by RPS.View or Download RPS Executive Summary Report
Mairy Permit Update - Commencement of drilling operations, farmout and modification to Royalty Agreement
Egdon Resources plc (AIM:EDR) is pleased to provide an update in relation to the Mairy Permit (the “Permit”), located in the eastern part of the Paris Basin, onshore France.Egdon has been informed by the operator, Hess Oil France (“Hess”), that drilling operations commenced on 20 January 2013 at the Huiron-1 exploration well in the Permit. The Huiron-1 well will evaluate the hydrocarbon potential of the Jurassic, Rhaetian and older formations and is expected to take around 60 days to drill.In addition, Egdon is pleased to advise that it has finalised a farmout of part of its interest in the Mairy Permit to Hess. Under the terms of the farmout, Egdon will transfer an unencumbered 35% interest in the Permit to Hess, taking their total beneficial interest to 85%, in return for a carry of the well costs attaching to Egdon’s retained 15% interest, capped at the level of a gross cost of $10.25 million for the Huiron-1 well. Additionally Hess will carry Egdon for $0.5 million of other general and administrative costs on the Permit. The effective date for the farmout is 1 January 2012. The farmout is subject to the standard government approval process.Egdon also advises that it has reached agreement with Geoex Eastern Limited (“Geoex”) to reduce the burden of an existing Overriding Royalty on the Permit from 4.5% of Egdon’s pre-Farmout interest to 4.5% of the retained 15% interest only. The consideration payable to Geoex for this restructuring comprises $100,255 payable in cash and $100,000 in new Egdon Ordinary shares calculated by reference to the average closing price for the five trading days prior to completion. Accordingly, application has been made for admission of 595,207 new Ordinary shares to trading on AIM, which is expected to become effective on or around 25 January 2013. The newly issued shares represent 0.45 per cent. of the enlarged share capital of the Company.The total number of Egdon Ordinary Shares in issue is now 132,787,543. Therefore, the total number of voting rights in the Company is 132,787,543.Commenting on developments with the Mairy Permit, Mark Abbott, Managing Director of Egdon, said;
“We are pleased to have finalised the restructuring of our interest in the Mairy Permit and as a result have significantly reduced our financial exposure to the Huiron-1 well. We await the results of the well with interest.”
Director Share Dealing
The Company has been informed that Mark Abbott, Managing Director, today purchased 200,000 ordinary shares in the Company at a price of 10.64 pence each via his SIPP. Mr Abbotts total beneficial shareholding in the Company is now 7,563,824 ordinary shares, representing 5.7 per cent of the issued share capital of the Company.
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