Shares in Egdon Resources (LON:EDR) edged up 4% to 12.75p this morning on news that the UK and European oil and gas group had scraped a profit in the year to July 2010. The performance comes ahead of plans for a marked ramp up in production later this year – from the Ceres and Kirkleatham gas fields – which should take the company’s production close to 500 barrels of oil equivalent per day (boepd).

Production last year rose by 15% to 27,056 boepd from Egdon’s projects at Keddington (Lincolnshire), Avington (Hampshire) and Kirklington (Nottinghamshire), driving up revenues by 42% to 1.25m. As a result, pre-tax profits came in at £0.24m, up from a loss the previous year of £0.08m, although the figures were boosted by profits from asset disposals of £0.39m.

Egdon sold off a proportion of its interests in four East Midlands licences in December 2009 to Terrain Energy for £687,500. In the same month it farmed out a 10% stake in two other licences in the region - PEDL118 and PEDL203 - to Angus Energy in return for Angus paying 20% of well costs on the licences. Elsewhere, it drilled and completed the Dukes Wood-1 (PEDL 118), Kirklington-3z and Keddington-3z wells.

In July, it wrapped up a deal to buy a package of UK assets from Encore Oil (LON:EO.) including a 10% stake in the Ceres gas field in the Southern North Sea, in return for a near 30% stake in the company. When production recommences at Ceres later this year it will produce around 200 boepd net to Egdon. That extra production, combined with expected first gas from the Kirkleatham gas field development later in 2010, will boost Egdon’s production to 500 boepd.

Commenting on the results, Philip Stephens, chairman of Egdon, said: “We have had an active year with the completion of a major acquisition and a number of profitable disposals. Our cash position is strong and we have the resources to pursue a number of drilling opportunities in 2011 to enhance the value of our assets. Our total production is expected to exceed 500 barrels of oil equivalent per day when Ceres recommences production and Kirkleatham starts producing, both of which are expected in the next two…

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