Egdon Resources PLC P1929 and P2304 Farm-In Agreement with Shell U.K. (4800A)
22 January 2020 - 12:00AM
UK Regulatory
TIDMEDR
RNS Number : 4800A
Egdon Resources PLC
21 January 2020
21 January 2020
EGDON RESOURCES PLC
("Egdon" or "the Company")
P1929 and P2304 Farm-In Agreement with Shell U.K. Limited
Further to our announcement of 20 January 2020, Egdon Resources
plc (AIM:EDR) is pleased to announce the signature of a Farm-In
Agreement with Shell U.K. Limited ("Shell") in relation to UK
offshore licences P1929 and P2304 ("the Licences") which contain
the Resolution and Endeavour gas discoveries respectively.
Egdon subsidiary, Egdon Resources U.K. Limited ('ERUK')
currently holds a 100% interest in both licences.
Under the terms of the farm-in agreement;
-- Shell will acquire a 70% working interest in Licences P1929
and P2304, and be appointed as the licence operator
-- ERUK will retain a 30% non-operated interest in the Licences
-- As consideration, Shell will pay 85% of the costs of the
acquisition and processing of a 3D seismic survey covering both the
Resolution and Endeavour gas discoveries with the carry on the
acquisition costs capped at US$5 million gross, beyond which it
would pay 70% of the costs ; and
-- Shell will also pay 100% of all studies and manpower costs up
to a well investment decision on the Licences
The farm-in is conditional upon;
-- Approval from the Oil & Gas Authority ("OGA"); and
-- Agreement of a mutually acceptable forward work programme and timeline with the OGA
In December 2019 Egdon announced that the OGA had granted
extensions to the Licences to 31 May 2020 subject to securing a
farm-in agreement by 31 January 2020 (which this agreement fulfils)
and to demonstrating by the 31 March 2020, that the Licensees are
on track to deliver a future programme of 3D seismic data
acquisition across both Licences (which is in progress). Egdon and
Shell will now engage with the OGA to agree the nature and timing
of the forward work programme which will enable further licence
extensions to be granted to accommodate this.
A Competent Person's Report prepared by Schlumberger Oilfield UK
PLC (April 2019) reported Mean Contingent Gas Resources of 231
billion cubic feet of gas ("bcf"), with a P90 to P10 range of 100
to 389 bcf, attributable to the Resolution gas discovery (P1929).
The Resolution discovery was made by Total in 1966 when well
41/18-2 flow tested gas from the Permian aged Zechstein carbonate
(limestone) reservoir. Additionally, Egdon estimates that the
Endeavour gas discovery (P2304) contains Mean Contingent Resources
of 18 bcf, with a P90 to P10 range of 10 to 28 bcf.
Commenting on Shell's farm-in to these licences, Mark Abbott,
Managing Director of Egdon Resources plc, said:
"We are delighted to have signed a farm-in agreement with Shell
in respect of these highly prospective licences. This transaction
validates our views on the potential of these blocks and introduces
a highly experienced and respected operator to progress appraisal
activity on the Resolution and Endeavour gas discoveries. In
difficult market conditions Egdon has secured a substantial carry
on costs to the well investment decision whilst retaining a
material 30% interest in the licences.
Our immediate focus will be to work with Shell to agree a
forward work programme and timeline for the licences with the OGA.
The first part of this work programme will be the acquisition of a
marine 3D seismic survey to enable a decision on the contingent
appraisal well. We look forward to working with Shell and
benefitting from their substantial worldwide operational experience
and expertise, including in the development of carbonate reservoirs
of this type."
For further information please contact:
Egdon Resources plc
Mark Abbott / Martin Durham 01256 702 292
Buchanan
Ben Romney, Chris Judd 020 7466 5000
Nominated Adviser and Joint Broker - Cantor Fitzgerald
Europe
David Porter/ Rick Thompson (Corporate Finance) 020 7894 7000
Caspar Shand Kydd (Sales)
Joint Broker - VSA Capital Limited
Andrew Monk (Corporate Broking) 020 3005 5000
Andrew Raca (Corporate Finance)
Notes to Editors:
Egdon Resources plc (LSE: EDR) is an established UK-based
exploration and production company focused on onshore exploration
and production in the hydrocarbon-producing basins of the UK.
Egdon holds interests in 44 licences in the UK and has an active
programme of exploration, appraisal and development within its
portfolio of oil and gas assets. Egdon is an approved operator in
the UK. Egdon was formed in 1997 and listed on AIM in December
2004.
Qualified Person Review
In accordance with the AIM Rules - Note for Mining and Oil and
Gas Companies, this release has been reviewed by Mark Abbott,
Managing Director of Egdon, who is a geoscientist with over 30
years' experience and is a member of the Petroleum Exploration
Society of Great Britain and a Fellow of the Geological Society. Mr
Abbott has consented to the inclusion of the technical information
in this release in the form and context in which it appears.
Evaluation of hydrocarbon volumes has been assessed in
accordance with 2018 Petroleum Resources Management System (PRMS)
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), the Society of Petroleum Evaluation
Engineers (SPEE), the Society of Exploration Geophysicists (SEG),
the Society of Petrophysicists and Well Log Analysts (SPWLA) and
the European Association of Geoscientists & Engineers
(EAGE).
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). Upon the
publication of this announcement via Regulatory Information Service
("RIS"), this inside information is now considered to be in the
public domain.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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