Comment on Recent Shale Gas Developments

8 July 2013

Egdon Resources plc (AIM:EDR) note the recent publication of a number of government initiatives and reports in relation to shale gas and the wider onshore UK oil and gas industry.

Commenting on the implications of these for Egdon, Mark Abbott, Managing Director of Egdon said;

“The release by the Department of Energy and Climate Change of the British Geological Survey (“BGS”) report (https://www.gov.uk/government/publications/bowland-shale-gas-study) on estimated gas in place in the Bowland-Hodder unit of Central England has confirmed the significant potential of this play. Of particular relevance to Egdon, the report includes estimates of gas in place for the lower Bowland-Hodder unit (“Lower Bowland”) which, although carrying higher uncertainty due to the current limited number of well penetrations, is evaluated as having potential gas in place volumes of around four times those estimated for the upper Bowland-Hodder unit (“Upper Bowland”).

Egdon have long recognised that the Lower Bowland sequence in the Gainsborough Trough could be in excess of 1500 metres in thickness and the BGS report shows most of Egdons licences, PEDL139, PEDL140 and PEDL209, as being located within the area of gas mature Lower Bowland. This highlights the possibility of further significant gas in place in the licences in addition to that already evaluated by RPS Energy for the approximately 125 metre thick Upper Bowland sequence (see Note 1). Whilst it is premature to assign resources to the Lower Bowland in these licences the planned exploration well in PEDL139/140 will gather information from the Lower Bowland sequence to enable its potential to be more fully defined. The BGS report also highlights additional shale gas potential in certain parts of Egdons PEDL201 and PEDL130 licences. We are highly encouraged by the content of the report and continue to undertake our own detailed evaluation of the shale gas potential of these and other licences and of the potential for shale oil elsewhere in our existing portfolio with the expectation of upgrading our resource estimates in due course.

As an active member, Egdon welcome and endorse the publication by the UK Onshore Operators Group (“UKOOG”, http://www.ukoog.org.uk/) of a binding industry charter for members covering the minimum required standards of engagement with local communities alongside a community benefits scheme designed for the next phase of shale oil and shale gas exploration and production.

The Company is encouraged by the Governments commitment to publish in July 2013 a package of measures designed to “kick-start” the shale gas industry in the UK. The publication by the Department for Communities and Local Government of planning guidance for onshore oil and gas (including shale gas) should provide a clear framework for how such developments should proceed through the planning system. We also look forward to the outcome of the consultation on a “pad allowance” in relation to taxation for shale gas which should provide clarity on the fiscal regime and we welcome the commitment of the Environment Agency to streamline and simplify environmental regulation of onshore oil and gas activities.”

Note 1 – RPS Energy (“RPS”) evaluated the potential shale gas resources in Egdons licences PEDL139 and PEDL140 (the “Licences”) which are located in Lincolnshire and where the Company holds 13.5% interests.The Licences are located in the Gainsborough Trough geological basin and contain a 125 metre thick sequence of Carboniferous age Pendleian Shale at a depth of over 2000 metres. The Pendleian Shale is the approximate age equivalent of the upper Bowland-Hodder unit as defined in the recent BGS report. RPS estimated the mean net Egdon total gas in place (“GIIP”) as 1.76 trillion cubic feet of gas (“tcf”) within the Licences. A review of the surface and sub-surface access constraints in the area has resulted in an estimated mean net Egdon Accessible GIIP of 1.22 tcf. The net Egdon mean Prospective Resources are estimated as 0.19 tcf based on recovery rates in analogous US plays. Please use the following link for the full press release in relation to this assessment:

PEDL139_and_140_Shale-Gas_Resources_Assessment