Egdon to acquire Encore's onshore & Ceres interests

23rd Sep '09 by doverbeach

51 comments 18328 reads

Egdon announcement: http://www.investegate.co.uk/article.aspx?id=200909230700154916Z&fe=1

The assets to be acquired would comprise of EnCore's entire interest in 10 onshore UK licences, 2 onshore French licences and an interest in the Ceres gas field on the UKCS.

The consideration, which will be satisfied in Egdon Ordinary Shares, will be finalised as part of the contract negotiations and the transaction will be structured so that on completion EnCore's ownership will not exceed 29.9% of the enlarged share capital.

Egdon market cap currently £9.4m, so that puts a cap on the Encore shareholders valuation at c £4m

The only overlap between the two company's portfolios is in the Kirkleathem asset, where both have 20%.

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About the Author

Doverbeach

Premium Member

51 comments

doverbeach

5th Nov '10

You beat me to it, Man Siarad...

I am guessing that article is the cause of today's price rise.

db

ManSiarad

5th Nov '10

Well, the directors are obviously feeling optimistic, two of them, including the MD, adding to their holdings yesterday...

http://www.investegate.co.uk/article.aspx?id=201011051042437013V

Man Siarad

ryanandbethan

7th Nov '10

Obviously any increase in EDR will have a knock on to EO. who own approx 30% of it.

Exciting times in EO. in more ways than one

doverbeach

7th Nov '10

EDR market cap c.30m
EO. market cap c 350m

30% of Egdon is nice to have, but it's never going to be exciting for Encore.

db

ManSiarad

12th Nov '10

as noted in this S'pedia story today

http://www.stockopedia.com/content/northern-petroleum-set-to-begin-drilling-in-west-sussex-50388/

Northern Petroleum are to start drilling their Markswell-1 well in West Sussex

Egdon share: 10 per cent (though no RNS from them yet and nothing yet on their website - perhaps to announce the spudding in a few days time?)

NOP RNS here:

http://www.investegate.co.uk/Article.aspx?id=20101112070000P7D42

I'm slightly puzzled by the remark in the reserves audit from RPS Energy

http://www.northpet.com/assets/uploads/assets/uk-reserves-and-markwells-wood-summaries.pdf

that Proven plus Probable are set at 5.7 million barrels, and Proven at 0.70 million, when this would appear to be the first well on the field, though this might be explained by the phrase in the NOP RNS that

The location is between the Horndean and Singleton producing oil fields and is assessed to be an extension of the former.

The Egdon website says of the field:

http://www.egdon-resources.com/UK

Markwells Wood (PEDL125 – 10% non-operated interest)

The Markwells Wood-1 appraisal well in Hampshire, will target a possible eastern extension of the Horndean oil field which produces from the Middle Jurassic Great Oolite reservoir. The operator, Northern Petroleum (GB) Limited, has now advised that drilling operations are expected to commence prior to the end of 2010. Net Egdon best estimate prospective resources are estimated at 0.32 mmbo.

This comment in the NOP RNS from Musgrove is also worth noting:

Whilst we see greater potential in Italy and The Netherlands, it is important that we are pursuing and realising shareholder value for the oil discoveries at
Markwells Wood, Baxters' Copse and Hedge End. If we are not offered the value of the UK assets through a sale, then we will realise the value by drilling and
producing the assets."

Have NOP been trying to offload their share of this licence?

It's been a long wait to get approval for this - here's a Guardian piece from May 2008 about the protests from the environmentalist lobby

http://www.guardian.co.uk/environment/2008/may/13/fossilfuels.conservation

No indication officially of how long the well will take, though this BBC story, also from May 2008, says, in part:

http://news.bbc.co.uk/2/hi/uk_news/england/sussex/7390454.stm

Drilling is expected to take place 24 hours a day over a four to five-week period.

Worth remembering, for anyone looking into these UK onshore licence-holders, that the planning permission process can cause VERY lengthy delays! Well over 2 years on this one.

Perhaps a result before Christmas then, (SW10's law permitting).

As an aside of no operational relevance, Egdon says the well is in Hampshire. the NOP RNS correctly notes it's in West Sussex, as would seem logical,given that it's the West Sussex Coiunty Council that has given the approvals.

Man Siarad

ManSiarad

12th Nov '10

Egdon RNS now released

http://www.investegate.co.uk/Article.aspx?id=201011121510371196W

ohisay

16th Nov '10

Missed this earlier - nice summary of Egdon in IC last week .

Slowly slowly ...

http://www.investorschronicle.co.uk/Tips/Buy/MiniTips/article/20101109/9a76db3e-e8f6-11df-93f5-00144f2af8e8/Egdon-ready-for-take-off.jsp

Together with April's £2m placing at 12.5p, Egdon is well financed and can now put more money into exploration. But it's also downplaying potential output if more goes right in 2010-11. During 2009-10 output averaged just 74 barrels of oil equivalent per day (boepd).

Already the figure is up to 170 boepd thanks to a successful well at 75 per cent-owned Keddingtom in Lincolnshire and broker Seymour Pierce's target is 1,000 boepd by 2012.

Seymour Pierce is forecasting 2010-11 revenues of £10m and a £1.8m profit pre-exceptionals and amortisation on the basis of its September note. No tax suggests fully diluted earnings of 1.4p this year would reduce the PE ratio to single figures. The shares remain a buy.

ManSiarad

22nd Nov '10

For the record - the NOP RNS on the spudding of Markwells Wood-1 yesterday.

http://www.investegate.co.uk/Article.aspx?id=20101122110609P9797

Nothing as yet from EDR.

Man Siarad

ManSiarad

23rd Nov '10

Two RNSs to catch up.

First the Markwells Wood announcement

http://www.investegate.co.uk/Article.aspx?id=201011230700096219W

Second, the completion of the acquisition of a couple of EnCore licences in France

http://www.investegate.co.uk/Article.aspx?id=201011230700096217W

"France remains a key focus for Egdon and the addition of the Mairy and Nimes permits to our portfolio provides further opportunities for conventional and unconventional oil and gas within the country. We expect a well to be drilled in Mairy during 2011 and will be progressing our evaluation of Nimes over the coming months."

Apart from the result of the Markwells Wood-1 well, which should come with a bit of luck before the end of the year (SW10's Law permitting), the next snippets of news should relate to Ceres and Kirkleatham production - always assuming that they're considered sufficiently material to announce. This from the 3rd November annual report, above:

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 months.

So a few weeks of somnolence ahead, perhaps.

Sufficient funding available for several wells next year, but none yet scheduled, as far as I am aware.

Man Siarad

ManSiarad

7th Dec '10

A new presentation now on the website, from today's AGM

http://www.egdon-resources.com/userfiles/file/EDR_AGM_071210.pdf

Plenty of activity planned for 2011.

Man Siarad

ManSiarad

24th Dec '10

Yesterday's RNS, with the NOP statement about 'live oil' at Markwell's Wood

http://www.investegate.co.uk/Article.aspx?id=201012231559035571Y

The Directors of Egdon Resources plc (AIM:EDR) note the interim statement made today by Northern Petroleum plc ("Northern") the operator of the Markwells Wood-1 well in Sussex licence PEDL126, where Egdon's wholly owned subsidiary Egdon Resources U.K. Limited holds a 10% interest. The statement read as follows.

"Northern announces that live oil has been encountered in the Markwells Wood-1 well in the primary reservoir target. A core was taken and the well drilled to 4584 feet sub-sea level, and various logging tools are being run to aid the assessment of results. There will be no further comment until log evaluation is complete."

An earlier RNS

http://www.investegate.co.uk/Article.aspx?id=201011121510371196W

had this to say of the objectives for the well:

The Markwells Wood-1 well is located between the Horndean and Singleton producing oil fields and is assessed to be an extension of the former. The final measured depth of the directionally drilled well will be 1831m at a true vertical depth of 1380m. The operator has stated that Markwells Wood-1 well will test a target with independently assessed mean potential of 35.0 million barrels of oil in place, with upside potential (with a ten percent probability) of 61.4 million barrels of oil in place.

'Live oil', AIUI, can mean a variety of things - not necessarily commerciality of any discovery...

Man Siarad

ManSiarad

6th Jan '11

A further RNS today on the Markwells Wood well.

It's good news...

http://www.investegate.co.uk/Article.aspx?id=201101060700059858Y

"Northern announces that assessment of the logs has confirmed that the entire Great Oolite drilled reservoir sequence in Markwells Wood-1 is oil bearing above the Horndean Field oil water contact of 4446 feet sub-sea level (TVD SS), meeting the primary objective.

The presence of mobile ("live") oil was observed when the 30 feet of core was extracted from the well. Initial analysis of the logs indicate the well, which was deviated at an inclination of approximately 56 degrees through the Great Oolite, penetrated a gross hydrocarbon bearing interval of 275 feet with a calculated net reservoir of 192 feet with an average porosity of 13-14%, a typical porosity value for this reservoir in the nearby fields in the same formation. The top of the Great Oolite was encountered 51 feet low to prognosis and the Great Oolite vertical thickness was 146 feet compared to a prognosis of 240 feet.

Testing to follow, but this sounds encouraging:

Testing to establish pressures and flow rates in the existing wellbore will take place when the required services and equipment have been contracted. Testing operations will be conducted utilising a work-over rig at a lower day rate cost. Analysis of the result will enable the determination of the oil reserve potential and will be the basis for production planning."

Man Siarad

ManSiarad

13th Jan '11

I'm somewhat puzzled by (though not unhappy with) Egdon's performance today - up 13.5% on turnover, so far, of 6.5 times the three-month daily average, in the absence of any news at all, as far as I can see and on what seems to be a fairly quiet day for oilies.

No sign of excitement on its generally somnolent ADVFN board - only two posts so far, the first since 9th January. A few largish Sells, but Buys, over the last few hours, at least, have been pretty small.

The only news flow anticipated, AFAIAA, is an announcement about Ceres coming back on stream and a start-up announcement for the Kirkleatham gas field, both of which should be due within the next ten days or so, unless the results of the testing of Markwells Wood are leaking. And as of 6th January, they hadn't even contracted the testing equipment - see #43, above.

A tip somewhere, a rumour, or just an oddity?

Man Siarad

ohisay

13th Jan '11

Just thinking aloud -might it not be related to the increased interest in European "shale plays" over the last 4 weeks.?!
(Specifically the SLG interests in France and more tangentially the San Leon plays in Poland )

http://www.energy-pedia.com/article.aspx?articleid=143096

ManSiarad

28th Jan '11

An RNS today announcing acquisition of more acreage in Lincolnshire

http://www.investegate.co.uk/article.aspx?id=201101280700082237A

Egdon Resources plc (AIM:EDR) is pleased to announce that it has reached agreement to acquire the entire interest of Valhalla Oil and Gas Limited ("Valhalla") in two onshore UK Petroleum Exploration and Development Licences ("PEDLs"). The interests to be acquired comprise 50% of PEDL180 and 50% of PEDL181, which are located in the East Midlands Petroleum Province in the County of Lincolnshire. The consideration for the acquisition will be the grant to Valhalla of 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 13^th UK Landward Licensing Round in 2008 and are located adjacent to Egdon's operated licences PEDL182 and PEDL241 where the Company holds a 50% interest. PEDL180, covering an area of 100 square kilometres, 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 square kilometres and contains among other interesting structures the Caistor Lead, defined on 3D seismic data. Both licences are operated by Europa Oil and Gas and are subject to a drill or drop decision during 2011.

No cost to Egdon at this stage, then. Let's see whether EOG decide to drill.

Still waiting on news from Kirkleatham and Ceres - perhaps yesterday's price fall (on higher turnover than usual) suggests that there's something worrying about the delays?

Man Siarad

thegreatgeraldo

28th Jan '11

Still waiting on news from Kirkleatham and Ceres - perhaps yesterday's price fall (on higher turnover than usual) suggests that there's something worrying about the delays?

That's what I'd been thinking, 20% or so off its recent high, although maybe someone got wind of today's deal, but got the wrong end of the stick & sold in anticpation of a placing?

ManSiarad

5th Feb '11

Planning permission granted for re-entry and testing of Nooks Farm well

http://fool.uk-wire.com/Article.aspx?id=201102041227167187A

Egdon Resources plc (AIM:EDR) is pleased to announce that it has been advised by Seven Star Natural Gas Ltd ("Seven Star"), the farm-in partner on Staffordshire licence PEDL141, that planning permission was granted by Staffordshire County Council for the re-entry and testing of the Nooks Farm-1A well at a planning committee meeting held on 3 February 2011.

The Nooks Farm accumulation was discovered by Shell in 1982, with the Nooks Farm-1A well encountering gas bearing sandstones of Carboniferous age at a depth of 430m relative to sea level. The well achieved a maximum flow rate of 1.12 million cubic feet of gas per day on test. Estimates of the volumes of gas in place at Nooks Farm have been independently assessed as being in the range of 0.88 to 3.83 billion cubic feet of gas. It is proposed to re-enter the Nooks Farm-1A well and produce gas for on-site electricity generation with export via an underground cable to the National Grid.

Under the terms of a Farm-in Agreement the drilling will be operated by Seven Star, a wholly owned subsidiary of UK Onshore Gas Limited.

Egdon holds a 46% interest in the licence and will be carried through the planned drilling programme.

A free carry when you hold 46 % of the licence seems a reasonable sort of deal, almost regardless of production rates.

Still waiting for news of Ceres and Kirkleatham, though, and of the Markwells Wood test results. So there should be some news-flow over the next few weeks - whether good, bad or indifferent

Man Siarad

ManSiarad

22nd Mar '11

RNS from Egdon today

http://www.investegate.co.uk/Article.aspx?id=201103221017083832D

Finally, there's some news on Kirkleatham and Ceres. About ruddy time, IMO

Kirkleatham:

Final snagging and pre-commissioning activity is nearing completion and we anticipate commissioning and first gas within the next few weeks.

Ceres:

As previously reported the prolonged maintenance shut-down of the BP Cleeton Platform and associated infrastructure has meant that the Ceres Gas Field (of which Egdon holds a 10% interest) has been shut-in since June 2010. Egdon is pleased to advise that these works are now approaching completion. However, during recent testing of the Ceres/Eris production systems anchor damage was discovered to the Eris umbilical and a repair is underway to allow gas flows from the fields to be resumed. The operator, Centrica, is progressing these repairs as a priority and has advised that work should be completed around mid-April. Assuming a successful conclusion to other outstanding works it is therefore anticipated that gas production from Ceres will resume a few weeks afterwards.

So that'll make it eleven months or so since the shut-down of Cleeton.

A simple statement from the MD that

"We share our shareholders' frustrations with the delays to production at Kirkleatham and Ceres.

isn't really sufficient, in my view. An update a few weeks ago, even if only to say that there were further delays to both, (beyond their control) might have been appropriate. That wouldn't have changed the facts, but it would have kept the market informed.

And isn't it time for an update on the Markwells Wood testing? On 6th January, (#43, above), they said:

Testing to establish pressures and flow rates in the existing wellbore will take place when the required services and equipment have been contracted.

Haven't they succeeded in contracting the services and equipment yet? That was two and a half months ago.

I'm not very impressed by their communications strategy.

This bit of the RNS sounds a bit more positive, though:

The Company also advises that it expects to commence further drilling operations at the Keddington oil field, in Lincolnshire licence PEDL005 (Remainder), in early April. The planned Keddington-4 well will be a horizontal sidetrack from the Keddington-1Z donor well at a kick-off depth of 2080 metres and will be drilled to a total depth of around 2750 metres, which will include a horizontal section of up to 500 metres. This well is designed to increase total field production at a time of high oil price and provide additional reservoir information in an untested part of the structure to enable the investment decision on the scale of the gas to electricity generation project. This is expected to provide an important additional revenue stream and eventually enable unconstrained production of oil from the field. We will provide further details of the well at commencement of operations. Production from site will be shut-in for the duration of these operations which are expected to last around 30 days.

Progress? yes. Slower than expected? Yes. But progress, nonetheless.

Interims due on 19th Aprll

Man Siarad

ohisay

7th Jul '11

Article on progress ? on Markwells today with a few comments from the indefatigable Derek.

http://www.energy-pedia.com/article.aspx?articleid=146207

Loved this bit.

'We never rush these things,

Epitaph and gravestone spring to mind.

gogetter

24th Jul '11

like u all say the lack of news flow on whats goin on is very frustrating,hav been a holder for a number of years now,but slowly off loadin,good luck to all....hav enjoyed readin your posts..

gg

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Egdon to acquire Encore's onshore & Ceres interests

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Doverbeach

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