22 Feb 2010 07:00
| For Immediate Release | 22 February 2010 |
EGDON RESOURCES PLC
("Egdon" or "the Company")
Signature of Commercial Agreements and Appointment of EPCM Contractor for the Kirkleatham Gas Field Development
The Directors of Egdon Resources plc (AIM:EDR) are pleased to announce the execution of key commercial agreements in relation to the Kirkleatham gas field development in North Yorkshire and Teeside licence PEDL068.
The PEDL068 Joint Venture partners and Sembcorp Utilities (UK) Limited ("Sembcorp"), which owns the power station and much of the land on the Wilton International site and provides utilities and services to industrial customers on that site, have signed a series of agreements relating to the commercial terms of gas sales, the lease of a process site, the granting of wayleave rights for pipelines and for the operation and maintenance of the facilities on the Wilton site.
Under the terms of the Gas Sales Agreement all Kirkleatham gas will be sold to Sembcorp. Sembcorp has also been granted certain rights to participate in any future gas storage project that may be developed at Kirkleatham.
Planning consent was received for the Kirkleatham development in August 2009. The consent allowed for production from the existing Kirkleatham-4 well site and for the drilling, testing and production from up to two additional wells at the site. Gas will be transported from the well site via a six hundred metre long underground pipeline to the Wilton site boundary and then via an above ground pipeline to a processing site within Wilton. On the processing site, water and all hydrocarbon liquids will be removed and the gas heated and metered prior to delivery via an above ground pipeline to a Sembcorp-owned combined heat and power plant which generates electricity for site and export use and can also generates steam for site use.
Egdon is also pleased to announce that following a tendering process in late 2009 it has appointed Stockton-on-Tees based K Home International Limited ("KHI") as the Engineering, Procurement Services and Construction Management ("EPCM") contractor for the Kirkleatham development project.
KHI will manage the detailed design, procurement and construction phase of the development under the oversight of Egdon's engineering consultants and project managers Vision Oil & Gas of Guildford.
The near term focus will now be to secure the remaining regulatory approvals and to begin the construction phase of the project. The target for first gas is the start of the winter 2010 gas season.
Commenting on these developments, Mark Abbott, Managing Director of Egdon, said:
"This is a significant milestone for the Kirkleatham project. We have been working to monetise the Kirkleatham gas field since its discovery in early 2006 and are delighted to have reached agreement with Sembcorp in relation to the commercial terms for the project. We are also pleased to announce the appointment K Home International Limited as our EPCM contractor. KHI is a local company with experience of operating on the Wilton site and we look forward to working with them to secure first gas and cash flow for the coming winter. I would also like to thank our engineering and commercial advisors Vision Oil & Gas and Energy Contract Solutions who have worked tirelessly over the last year to get us to this point."
For further information please contact:
| Egdon Resources plc Mark Abbott Managing Director |
01256 702292 |
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| Buchanan Communications Miranda Higham, Ben Willey |
020 7466 5000 |
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| Nominated Adviser and Broker - Seymour Pierce Jonathan Wright, Richard Redmayne |
020 7107 8000 |
Company Background
Egdon
Egdon Resources plc 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 Europe.
Egdon holds interests in twenty four 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 has production from the Keddington and Kirklington oil fields in the East Midlands and the Avington oil field in Hampshire. Further oil and gas production is anticipated from Eakring-Dukes Wood, Waddock Cross and Kirkleatham in 2010.
Egdon Resources plc listed on AIM in January 2008, following the demerger of its gas storage business, Portland Gas plc (now renamed Infrastrata plc). The pre-demerged business was formed in 1997 and listed on AIM in December 2004.
www.egdon-resources.com
Sembcorp
Sembcorp Utilities UK provides utilities such as steam and power plus a wide range of services to industrial customers in sectors such as chemicals and biofuels. Headquartered on the Wilton International site, the company employs around 400 people.
www.sembcorp.co.uk
Kirkleatham Project Background
The Kirkleatham gas field is located to the west of the town of Redcar in Egdon operated licence PEDL068. The Kirkleatham-4 exploration well was completed in January 2006 and encountered a 19m gas column in the Permian age Cadeby Formation at a depth of 804.3 metres. Testing produced good quality gas with minor amounts of H2S at rates of up to 5 million cubic feet of gas per day. The well was completed as a future gas producer.
Evaluation of this stratigraphically trapped gas accumulation has indicated potential gas in place in the range 2 to 15.75 billion cubic feet of gas* ("BScf"). The currently proven gas in place accessed by the Kirkleatham-4 well is 2 Bscf* and it is planned to produce the well and sell gas into the nearby Wilton works. Monitoring of pressure data during production will help to determine the ultimate gas in place and recovery for the field. Potential exists to convert the depleted gas field into a gas storage facility conditional upon reservoir behaviour during production and obtaining all necessary consents.
The PEDL068 Joint Venture partners are:
Egdon Resources U.K. Limited (20%) operator
Sterling Resources UK Limited (47%)
EnCore Petroleum Limited (20%)**
Yorkshire Exploration Limited (8%)
Montrose Industries Limited(5%)
* Gas in place numbers are Egdon estimates based on evaluation by independent consultants
** Egdon are close to finalising an agreement to acquire a package of assets from EnCore Oil plc which will include their 20% interest in PEDL068.
In accordance with AIM rules - guidance for mining, 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 23 years experience.