TIDMEDR
RNS Number : 8343Q
Egdon Resources PLC
24 June 2020
24 June 2020
EGDON RESOURCES PLC
("Egdon" or "the Company")
Settlement Reached with Humber Oil & Gas Limited, PEDL253
Biscathorpe
Egdon Resources plc (AIM: EDR, "Egdon") is pleased to advise the
signing of a legally binding and confidential settlement agreement
(the "Settlement Agreement") between Egdon Resources U.K. Limited
(acting on behalf of the PEDL253 joint venture partners) and Humber
Oil & Gas Limited ("Humber"). The joint parties to PEDL253 have
therefore resolved the dispute arising under the JOA and look
forward to co-operating in the future in the development of the
licence.
Upon implementation of the terms of the Settlement Agreement
Egdon Resources U.K. Limited will hold a 35.8% operated interest in
PEDL253.
Egdon has previously announced the results of a detailed
evaluation of the Biscathorpe project which concluded that a
possible material and commercially viable hydrocarbon resource
remains to be tested. In summary;
-- Economic modelling indicates a financially robust project
even in the current oil price environment
-- The principal Westphalian target has an estimated un-risked
gross NPV(10) of GBP55.6 million
-- Break-even full-cycle economics estimated to be (NPV(10)) US$18.07 per barrel of oil
-- A 57 metre oil bearing section in the Dinantian Carbonate of
Biscathrope-2 represents a secondary target with potentially
significant commercial upside
-- Future identified drill targets are accessible via a
side-track of the suspended Biscathorpe-2 well.
Mark Abbott, Managing Director of Egdon Resources plc,
commented: "We are pleased that agreement has been reached with
Humber, enabling the project to now move forward with full support
from all partners.
Having retained the wellsite, the JV has maintained its
optionality to pursue a cost effective side-track to test the
resource potential of not only the Basal Westphalian Sandstone
play, but also to appraise the oil column demonstrated in the
deeper Dinantian Carbonate reservoir.
Our detailed work has concluded that a potentially material and
commercially viable hydrocarbon resource remains to be tested at
Biscathorpe.
We look forward to providing further updates to shareholders as
the Biscathorpe project develops."
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
Joint Broker - VSA Capital Limited
Andrew Monk (Corporate Broking) 020 3005 5000
Andrew Raca (Corporate Finance)
Notes to Editors:
Biscathorpe
Biscathorpe is located within the proven hydrocarbon fairway of
the Humber Basin, on-trend with the Saltfleetby gasfield and
Keddington oilfield (Egdon 45%) which produces oil from a
Carboniferous Westphalian aged reservoir, the principal target at
Biscathorpe.
The PEDL253 Joint Venture partnership has now completed
extensive and detailed studies of the Biscathorpe project,
including the reprocessing and remapping of 264 square kilometres
of 3D seismic. This work has been integrated with the results of
the Biscathorpe-2 well, resulting in a significantly improved
understanding of the prospectivity in the Biscathorpe project area.
The results of this substantial piece of work have concluded that a
possible material and commercially viable hydrocarbon resource
remains to be tested.
Accessible target areas have been identified, where evidence for
a thickened Westphalian sandstone reservoir interval is evident on
the reprocessed 3-D seismic. These areas can be targeted by a
side-track of the existing Biscathorpe-2 well which was suspended
following drilling operations in 2019. The side-track will also
target the oil column logged in the underlying Dinantian Carbonate
in Biscathorpe-2, as detailed below.
The gross Mean Prospective Resources associated with the
Westphalian target area are estimated by Egdon to be 3.95 million
barrels of oil (mmbbls), with an upside case of 6.69 mmbbls.
Preliminary economic modelling demonstrates that the Westphalian
target is economically robust in the current oil price environment
with break-even full cycle economics estimated at US$18.07 per
barrel and an NPV(10) valuation of GBP55.60 million.
The Westphalian objective was absent at the Biscathorpe-2 well
location, however, a total of 57 metres of oil bearing, Dinantian
Carbonate has been confirmed by petrophysical analysis. Hydrocarbon
shows with background gas and sample fluorescence were recorded
across the entire section from Top Dinantian Carbonate to the Total
Depth ("TD") of the well (an interval of over 150 metres).
A geochemical analysis of the gas data and hydrocarbons
extracted from drill cuttings was originally commissioned by Union
Jack and carried out by Applied Petroleum Technology (UK) Limited
("APT"). The results of this analysis show a hydrocarbon column of
33-34 degree API gravity oil comparable with nearby producing
fields.
An assessment of the Dinantian oil volumes indicates gross Mean
Stock Tank Oil Initially in Place ("STOIIP") of 24.3 mmbbls with an
upside STOIIP case of 36 mmbbls.
Although the Dinantian is not considered to be the primary
target, should there be effective permeability, or the presence of
fractures within this section there is the possibility of a further
commercially viable play being present within the Biscathorpe
licence area that would add considerable resources upside over and
above those associated with the principal target in the Westphalian
reservoir .
About Egdon
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.
Glossary of Terms
API degree gravity - is a commonly used index of the density of
a crude oil or refined products. API stands for American Petroleum
Institute which is the industry organisation that created this
measure. A crude oil will typically have an API Gravity of between
15 and 45 degrees. Higher API gravities indicate a lighter (lower
density) crude oil.
Prospective Resources - are estimated volumes associated with
undiscovered accumulations. These represent quantities of petroleum
which are estimated, as of a given date to be potentially
recoverable from oil and gas deposits identified on the basis of
indirect evidence, but which have not yet been drilled.
Stock Tank Oil Initially In Place ("STOIIP") - is the volume of
oil in a reservoir prior to production. Stock tank barrels refers
to the volume of oil at surface pressure.
Side-Track - A well drilled directionally out of an existing
wellbore.
Petrophysical Analysis - Computational analysis of the rock and
fluid properties of a geological formation using measurements of
the physical properties of the rock, such as its natural
radioactivity, its density, the passage of sound waves and the
electrical and other physical responses to define amongst other
things the nature of the pores within the rock and the types of
fluids (water, oil or gas) which are present in those pore
spaces.
mmbls - Million barrels of oil
NPV(10) - The present day value of the cumulative cash flows
from a project using a 10% annual discount rate
Reservoir - are rock formations capable of containing fluids,
namely oil, gas and water (brine). These fluids accumulate int he
natural pores and fractures that exist in the reservoir rock.
Typical reservoirs comprise sandstones or limestones
(carbonates).
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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