Exploration Option and Farm-in

RNS Number : 7772Y

Egdon Resources PLC

04 December 2014

 

                                                                                                                   4 December 2014

EGDON RESOURCES PLC

("Egdon" or "the Company")

Exercise of Exploration Option and Farm-in Agreement, PL161 and PL162

Further to the announcement made on 5 December 2013, Egdon Resources plc (AIM:EDR) is pleased to announce that it has exercised its Exploration Option and Farm-in Agreement ("The Agreement") with Scottish Power Generation Limited ("SPG") to farm in to UK Onshore Production Licences PL161 (Block SE/60b) and PL162 (Blocks SE/70a and SE/80b) located in Lincolnshire and South Yorkshire.

The Agreement defines an "Exploration Area", which excludes those parts of PL161 and PL162 relating to the Hatfield Moor operational gas store, the Hatfield West gas storage reservoir and the operational gas reception facility operated by SPG.Under the terms of The Agreement, SPG granted Egdon an Option Period of twelve months by the end of which Egdon was required to either advise SPG of its intention to commit to the drilling of an exploration well in the Exploration Area (the "Option Well") or else terminate The Agreement.  

During the Option Period, Egdon undertook a full evaluation of the hydrocarbon potential of the Exploration Area, which included reprocessing all relevant existing 2D seismic data. Egdon is very encouraged by the results of this evaluation, both in terms of conventional and unconventional prospectivity, and has elected to exercise its option. 

Egdon will meet the full cost of the drilling and evaluation of a well in the Exploration Area to the point of either abandonment or suspension in the case of a discovery.  Egdon will earn a 50% working interest in the Exploration Area through the drilling of the Option Well and will become Operator of the Exploration Area.  Initial work will comprise new 2D acquisition to finalise the location for the option well.

The transaction is subject both to certain conditions precedent and to approval by the Secretary of State for the Department of Energy and Climate Change.

Commenting on the announcement, Mark Abbott, Managing Director of Egdon said: 

"We are very encouraged by the results of our evaluation of PL161 and PL162, both in terms of conventional and unconventional prospectivity, and look forward to working with SPG in exploring these exciting plays.  We expect to see a play opening well operated by our partner IGas on neighbouring acreage in H2 2015, which should aid in de-risking the unconventional plays on PL161 and PL162."

"The exercise of this option is consistent with our strategy of increasing our exposure to shale-gas prospective acreage in our Gainsborough Trough core area."

For further information please contact:

Egdon Resources plc

Mark Abbott, Jerry Field                                                                                          01256 702 292

Buchanan

Richard Darby, Anna Michniewicz                                                                         020 7466 5000

Nominated Adviser and Broker - Cantor Fitzgerald Europe

David Porter, Sarah Wharry (Corporate Finance)                                                  020 7894 7000

Richard Redmayne (Corporate Broking)

Joint Broker - VSA Capital Limited

Andrew Monk, (Corporate Broking)                                                                        020 3005 5000

Andrew Raca (Corporate Finance)

Notes to Editors:

PL161 and PL162

PL161 and PL162 are located in the East Midlands Petroleum Province, on the northern margin of the Gainsborough Trough geological basin.  The licences contain the Hatfield Moor and Hatfield West gas fields which produced gas from sandstones of Carboniferous age from the 1980s. The Hatfield Moor gas field is now an operational  gas storage facility.  In addition, five exploration wells were drilled in the Exploration Area between 1973 and 1978. 

Egdon could be carried on up to three shale exploration wells on acreage adjacent to PL161 and PL162 in the next two years with the first well expected to be drilled in H2 2015.

Egdon Resources Shale Growth Strategy

In January 2014, Egdon completed a farm-out with Total E&P for PEDL139 and 140 located in the Gainsborough Trough, Lincolnshire, whereby Egdon now holds a 14.5% interest. Also in January 2014 Egdon and its partners signed an Opt-in Agreement with Total E&P for PEDL209 in the Gainsborough Trough giving Total the option to farm into the licence in return for a carried drilling work programme.  Egdon built on these two key transactions in June 2014 by further augmenting its UK shale acreage position with the acquisition of Alkane Energy's UK shale acreage portfolio, which also included substantial acreage in the Gainsborough Trough.  Egdon is now the second largest UK public shale-gas company on a net acreage basis, with 140,000 acres and an estimated 28 trillion cubic feet of net undiscovered gas initially in place for shale-gas assets.

Egdon Resources plc

Egdon Resources plc (LSE: EDR) is an established UK-based exploration and production company primarily focused on onshore exploration and production in the hydrocarbon-producing basins of the UK and France. 

Egdon currently holds interests in thirty six licences in the UK and France and has an active programme of exploration, appraisal and development within its balanced portfolio of oil and gas assets.  Egdon is an approved operator in both the UK and France.

Egdon was formed in 1997 and listed on AIM in December 2004.

In accordance with the AIM Rules - Note for Mining and Oil and Gas Companies, the information contained in this announcement has been reviewed and signed off by the Managing Director of Egdon Resources plc Mark Abbott, a Geoscientist with over 26 years' experience.

Evaluation of Undiscovered gas resources has been assessed in accordance with 2007 Petroleum Resources Management System prepared by the Oil and Gas Reserves Committee of the Society of Petroleum Engineers (SPE) and reviewed and jointly sponsored by the World Petroleum Council (WPC), the American Association of Petroleum Geologists (AAPG) and the Society of Petroleum Evaluation Engineers (SPEE).

 

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