Egdon Resources (LON:EDR) , the AIM listed oil and gas exploration and production group with assets in the UK and mainland Europe, has agreed a deal to buy two onshore UK Petroleum Exploration and Development Licences (PEDLs) from Valhalla Oil and Gas Ltd. The Egdon Resources share price responded with a rise of 6.5% to 20.5p.

The interests comprise 50% of PEDL180 and 50% of PEDL181 in the East Midlands Petroleum Province in Lincolnshire. Both licences are 50% owned and operated by Europa Oil & Gas (LON:EOG) and are subject to a drill or drop decision during 2011. In return for the licence interests, Valhalla will receive a net profit interest (NPI) of 10% of the acquired interest in each of the licences. The NPI will be payable from any revenues after recovery of allowable exploration, development and production costs.

PEDL180 and 181 were awarded in the 13th UK Landward Licensing Round in 2008 and lie adjacent to Egdon’s operated licences PEDL182 and PEDL241 where the company holds a 50% interest. PEDL180, covering an area of 100 sq km, contains the Wressle Lead, mapped as extending into Egdon’s existing PEDL182 and located to the south-east of the Crosby Warren producing oil field and between oil discoveries at Brigg and Broughton. PEDL181, located to the east of Egdon's existing licences, is a large licence covering over 540 sq km and contains among other interesting structures the Caistor Lead, defined on 3D seismic data. The acquisition is subject to regulatory approval from the Department of Energy and Climate Change, and approval from the joint venture partner.

Egdon’s managing director, Mark Abbott, said: “The acquisition of these licences from Valhalla provides Egdon with access to further high potential acreage in one of our core exploration areas and reinforces our UK onshore growth strategy.”

Earlier this month, oil was confirmed in the Markwells Wood -1 well in West Sussex where Egdon holds a 10% interest. The well, which is operated by Northern Petroleum (LON:NOP), penetrated a gross hydrocarbon bearing interval of 275 feet with a calculated net reservoir of 192 feet with an average porosity of 13-14%. Further analysis of the well is currently underway.

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