Agreement to acquire UK and French assets from EnCore Oil plc, Conditional Placing of Ordinary Shares and Notice of General Meeting

22 March 2010

The Directors of Egdon Resources plc are pleased to announce that further to the announcement of 23 September 2009, Egdon and EnCore Oil plc (“EnCore”) have executed a series of agreements in relation to the acquisition of certain of EnCore’s UK and French assets by Egdon (“the Acquisition”).  In addition, Egdon has conditionally raised £2 million (before expenses) through a placing of ordinary shares.

The Acquisition

The package of assets to be acquired comprise EnCore’s entire interest in nine onshore UK licences, two onshore French licences and an interest in the Ceres gas field in the Southern North Sea (“the Assets”).

The Assets will provide Egdon with near-term cash-flow from the Ceres gas field and an increased interest in the Kirkleatham gas field development later in 2010. They also significantly expand the exploration opportunity base of the Company through the acquisition of the interests in nine onshore UK licences and two onshore French licences that contain numerous oil and gas prospects.

The Acquisition is in line with Egdon’s strategy of developing a significant onshore European exploration and production business.

As consideration for the Acquisition, Egdon has agreed to issue 39,200,000 Ordinary Shares to EnCore (the “Consideration Shares”), which will represent 29.998 per cent. of the enlarged share capital of the Company following the completion of the Acquisition and the proposed conditional placing (the “Enlarged Share Capital”), and in addition to pay £100,000 in cash.  The total consideration values the Assets at £5 million.

Other terms of the transaction include:

Non-Compete Arrangements — under which, other than by agreement, Egdon will restrict its offshore activities in the UK to operations in the immediate area of Ceres and EnCore will restrict its onshore operations in the UK and France to the area adjoining its Merrow prospect on the eastern margin of the Irish Sea.

Lock-in Arrangements — whereby EnCore and certain of its subsidiaries have undertaken not to dispose of any Consideration Shares for a period of 12 months from the date of their admission to trading on AIM (the “Lock-in Period”). EnCore has also agreed to orderly market provisions for a further period of 12 months following the Lock-in Period.

Technical Services Agreement — whereby EnCore and Egdon have agreed to provide each other with certain services  in connection with each of their businesses and the development of the Assets following the Acquisition.

Facility Agreement — under which EnCore has agreed to provide Egdon with access to an unsecured loan facility for the purpose of exploration and development activities of Egdon and its affiliates. The Facility Agreement provides a term loan facility for a period of two years in an aggregate amount equal to £1,500,000 which can be drawn down at the request of Egdon in tranches of £250,000 at an interest rate of 10% or LIBOR plus 5% if greater.

Board Representation – whereby EnCore will have a right to appoint a non-executive director to the Egdon Board on completion of the Acquisition, and for a period of five years thereafter, provided that either it holds 15 per cent. or more of the share capital of Egdon or it is the largest shareholder of the Company.  It is currently anticipated that the nominee will be Alan Booth, EnCore’s Chief Executive Officer.

The transfer to Egdon of EnCore’s UK onshore licences and interest in Ceres is subject to the usual regulatory approvals from the Department of Energy and Climate Change (DECC), and approval from the joint venture partners on each licence. In addition French regulatory consent will be required for the sale of the subsidiary holding Encore’s French licences.

The Placing

The Company is pleased to announce the conditional placing of 16,000,000 Ordinary Shares at a price of 12.5 pence per Ordinary Share with institutional and other investors to raise £2 million before costs.

The proceeds of the Placing will be used to fund the additional near-term commitments associated with developing the enlarged Egdon business.  This will include, but not be limited to, the development of the Kirkleatham gas field, the drilling of wells at Markwells Wood and Havant, and advancing evaluation of all other new and existing opportunities.

The Placing also ensures that EnCore’s shareholding in Egdon will be below 30 per cent. at completion.

Application will be made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM. Subject to, amongst other things, the resolutions to be proposed at the General Meeting being passed by the requisite majorities at the General Meeting, it is expected that admission of the Placing Shares will become effective, and that trading in the Placing Shares will commence on AIM at 8.00 a.m. on 7 April 2010.

General Meeting and Circular

The Acquisition and the Placing are conditional upon, amongst other things, Resolutions being passed by the requisite majorities required at a General Meeting of the Company to be held at 10.00 a.m. on 6 April 2010 at the offices of Norton Rose LLP at 3 More London Riverside, London SE1 2AQ.

Resolutions will be proposed to approve the Acquisition and the Placing and to authorise the Directors to allot and issue shares in connection with the Placing and the Acquisition.

Resolutions will also be proposed to replace the general allotment and disapplication of pre-emption right authorities that were granted at the last AGM of the Company on 3 December 2009, taking into account the Enlarged Share Capital.

The full text of the Resolutions is set out in the Notice of General Meeting which will be circulated to shareholders today.  A full copy of the circular will also be available for download on the Egdon Resources plc website (

Share Capital

On Admission of the Placing Shares, expected on 7 April 2010 the number of shares in issue will total 91,475,774.  On completion of the Acquisition and issue of the Consideration Shares the number of shares in issue will total 130,675,774.

Commenting on today’s announcement, Mark Abbott, Managing Director of Egdon said:

“The acquisition of these assets from EnCore provides an excellent strategic fit with Egdon’s existing portfolio and will result in an increase in near-term cash flow from the Ceres field, a more material interest in Egdon’s operated Kirkleatham gas development and access to an expanded opportunity base in the UK and France from which to develop and grow our business over the coming years.

To take advantage of the opportunities presented by this transaction it is essential that the Company is well capitalised and the additional funds available from the Placing and access to the £1.5 million loan facility provide the Company with additional short-term working capital until our revenue stream increases from the anticipated growth in production.

We welcome EnCore as a significant shareholder in the Company and look forward to working with the EnCore team in developing the Assets of the enlarged Egdon.”

Commenting on the transaction, Alan Booth, EnCore’s Chief Executive Officer said:

“Our shareholding in Egdon will place a tangible and transparent valuation on parts of our overlooked asset base.  Egdon is an experienced and committed onshore player, and, as a result of this transaction, we believe that Egdon now has the capacity and resources to grow into a significant onshore E&P company. As Egdon’s largest shareholder, EnCore will continue to actively support and assist in Egdon’s ambitious growth plans.”

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