EDR.L Regulatory News (EDR)

26 Jul 2007 07:00

Egdon Resources PLC26 July 2007 For Immediate Release 26th July 2007 EGDON RESOURCES PLC ("EGDON") Operations Update Egdon Resources Plc ("Egdon"), the onshore UK focused energy company, is pleasedto provide an update on its UK and French oil and gas operations. Keddington Oil Field (PEDL005(Remainder)) Egdon is pleased to advise that during July oil exports commenced from theKeddington Oil Field in licence PEDL005 (Remainder), where Egdon holds a 100%interest. Workover operations were undertaken on the Keddington-1z well duringMay and June 2007 with the installation of a new downhole completion and pump.During the initial period of production following the workover the well waspumped at an average rate of around 100 barrels of fluid per day, with a 35% oilcut yielding 35 barrels of oil per day with only limited drawdown of the fluidlevel in the well. The pumping rate was increased on 18th July and the well hassince been producing at an average fluid rate rate of 112 barrels per day withan average oil cut of 43% yielding 48 barrels of oil per day. Again only limiteddrawdown has been observed in the well. The forward plan is to optimise field production by further increasing the pumprate of the Keddingtonn-1z well and restoring free flowing oil and gasproduction from the Keddington-2y well. Egdon can also advise that it has received all required regulatory andenvironmental approvals for continuing production from the site. Grenade-3 (St Laurent) In operated French permit "St Laurent", where the Company's wholly ownedsubsidiary Egdon Resources (New Ventures) Limited holds a 33.42% interest, asignificant milestone has been achieved with receipt of approval for thedrilling of the Grenade-3 well from the DRIRE Landes, the permitting authority. A civil engineering contractor has been appointed and site construction hascommenced. A rig has been secured and long lead items are being procured toenable the well to begin drilling as planned during October 2007. The Grenade-3 well will be drilled as a step-out to the Grenade -1 discoverywell, drilled by Elf in 1975, which penetrated a 97 metre column of heavy oil(10 degree API) in a highly porous and permeable limestone reservoir at a depthof 2176 metres. The Grenade-3 well will be drilled as a vertical pilot holedesigned to confirm the oil column and reservoir distribution. Contingent uponthe results of this pilot hole a horizontal sidetrack will be drilled andcompleted for a long term production test to be undertaken. The best estimate oil in place for the field has been mapped by Egdon as 300million barrels (with a range of 95 to 945 million barrels). The production testwould utilise modern completion, pumping and viscosity reduction methods in thehorizontal reservoir interval to determine the likely recoverable reserves andcommerciality of the Grenade oil accumulation Avington 3z (PEDL070) Egdon has been advised by the operator Star Energy plc that drilling operationshave now been completed on the Avington-3z horizontal well in Weald Basinlicence PEDL070, where Egdon holds a 20% interest. This well was a sidetrack ofthe Avington-3 vertical well which was drilled during 2006. The Avington-3z wellhas been logged and completed for production testing which is expected tocommence during August 2007. Burton Agnes-1 (PEDL071) In Egdon operated North Yorkshire licence PEDL071, where the Company has a 25%interest, good progress is being made for the planned drilling of the BurtonAgnes-1 exploration well during the fourth quarter of 2007. Contracts for thesite lease, site construction and drilling rig are in the final stages ofnegotiation and long lead items have been procured. Site construction isexpected to commence during August 2007. The Burton Agnes-1 well will test a Leman Sandstone prospect with mapped gas inplace of up to 50 billion cubic feet. Egdon's share of the costs of the drillingand any subsequent testing of the well will be largely carried. Commenting on recent developments, Mark Abbott, Joint Managing Director of Egdonsaid: "We have been making good progress on our UK and French operations over recentmonths and I am happy to report a significant milestone for the company with thecommencement of our first sustained production from the Keddington Oil Field. Welook forward to increased production from the field over the coming months byoptimising the rates from Keddington-1z and re-establishing production fromKeddington-2y. We can also look forward to an active exploration drilling programme during thefourth quarter of 2007 with wells planned at Burton Agnes-1 in North Yorkshire,Grenade-3 in SW France, which will represent Egdon's first internationaldrilling activity, and on the Tees prospect in block 42/27, which will be theCompany's first offshore well. We also await the results of the Avington-3z production test with interest." For further information please contact: Egdon Resources Plc Mark Abbott, Joint Managing Director 01256 702 292Andrew Hindle, Joint Managing Director 0208 3321200 Buchanan Communications Ben Willey 020 7466 5000Nicholas Melson 020 7466 5000 Seymour PierceJonathan Wright 020 7107 8000 Notes to Editors: Company Background Egdon is an established, UK-based energy company primarily focused on theonshore UK. Egdon also has exploration interests in the offshore UK and France.Egdon's shares are traded on the AIM market. The Company is developing two distinctive businesses: •An oil and gas exploration and production business which has a portfolio of twenty exploration licences containing identified oil and gas prospects ranging from discoveries under appraisal through to higher risk but higher reward "wild-cat" exploration prospects. •A gas storage business initially focused on the development of a major salt cavern gas storage facility on Portland, Dorset. Egdon plans to demerge the two businesses on or soon after 21 December 2007. In accordance with AIM rules - guidance for mining, oil and gas companies, theinformation contained in this announcement has been reviewed and signed off bythe Joint Managing Director of Egdon Resources Mark Abbott, a Geoscientist withover 21 years experience. This information is provided by RNS The company news service from the London Stock Exchange