Acquisition of Licence

6 Dec 2006 07:01

Egdon Resources PLC06 December 2006 6 December 2006 For immediate release EGDON RESOURCES PLC ("EGDON") Agreement for the acquisition of the Keddington Oil Field, PEDL005 (Remainder), Onshore UK Egdon Resources Plc ("Egdon"), the onshore UK focused energy company, is pleasedto announce that it has reached agreement with Roc Oil (GB) Limited ("Roc") forthe purchase of its entire interest in Petroleum Exploration and DevelopmentLicence PEDL005 (Remainder). PEDL005 (Remainder), located in Lincolnshire,covers a total area of 23.57 km2 and incorporates the Keddington Oil Field. The PEDL005 licence is split into two sub-licences; PEDL005 (Remainder), whichis the subject of this acquisition; and PEDL005 (Saltfleetby) which contains theSaltfleetby gas field owned 100% by WINGAS Storage UK Limited ("WINGAS"), andwhich is not affected by this acquisition. The Keddington Oil Field is located to the east of the town of Louth and wasdiscovered by Roc in 1998. The field produces from a sandstone reservoir ofWestaphalian (Carboniferous) age at a depth of around 2180 metres. The field hastwo production wells; Keddington-1, which is a pumped well which was producingaround 20 to 30 barrels of oil per day ("bopd") with around a 60% water cut, andKeddington-2 which was free-flowing dry oil at 10-15 bopd along with up to110,000 cubic feet of gas per day. The gas was being flared. Keddington hasproduced a total of 173,000 barrels of oil to date. Keddington is not currently in production. The Keddington-1 well has beensubject to ongoing tubing and pump problems in recent years and has been shut-insince June waiting on a work-over rig. The Keddington-2 well has not been putback on production since a pressure survey in March 2006. Egdon plans to re-complete the Keddington-1 well with a deeper set pump tooptimise pumped production and also to restore free-flowing production from theKeddington-2 well. This work-over programme is planned for early 2007. Egdonwill also investigate the potential to utilise the produced gas in a gas enginealready installed at Keddington to generate electricity for use on site, thusreducing operating costs. WINGAS personnel from Saltfleetby provided operationalsupport at Keddington for Roc on a contract basis and will continue to providethis service to Egdon. PEDL005 (Remainder) also contains the North Somercotes Prospect which is mappedon 3D seismic data. Egdon will re-evaluate this prospect as part of itsre-assessment of the remaining potential in the licence. Planning approval hasalready been received for an exploration well on the North Somercotes Prospect. The agreement is subject to DTI consent and completion of transferdocumentation. On completion, Egdon will hold a 100% interest in PEDL005(Remainder). Commenting on the agreement, Mark Abbott, Joint Managing Director of Egdon said: "We are delighted to have concluded this agreement with Roc which will addnear-term production and cashflow in one of Egdon's core areas of the onshoreUK. The acquisition provides the potential to re-develop the Keddington OilField to enhance and extend the producing life of the facility, giving Egdon anearly opportunity to prove itself as a UK onshore production operator. Thepresence of a drill-ready prospect at North Somercotes identified on 3D seismicdata and with planning consent already in place provides additionalopportunities within the licence and is a valuable addition to our prospectinventory." For further information please contact: Egdon resources Plc Andrew Hindle, Joint Managing Director 01256 702 292Mark Abbott, Joint Managing Director Buchanan Communications Eric Burns 01943 883 990Ben Willey 020 7466 5000 Seymour Pierce Jonathan Wright 020 7107 8000 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 whichhas a portfolio of nineteen exploration licences containing identified oil andgas prospects ranging from discoveries under appraisal through to higher riskbut higher reward "wild-cat" exploration prospects. • A gas storage business initially focused on thedevelopment of a major salt cavern gas storage facility beneath the Isle ofPortland, Dorset. Egdon has recently announced plans to demerge the twobusinesses during 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 Geophysicist withover 21 years experience. This information is provided by RNS The company news service from the London Stock Exchange