Operations Update

4 October 2010

The Directors of Egdon Resources plc are pleased to provide an update on operations in itsUK licences.

Keddington Oil Field

Egdon holds a 75% interest and is the operator of the Keddington oil field located inLincolnshire.  Egdon’s joint venture partners in the Keddington oil field are Terrain Energy Limited (15%) and Alba Resources Limited (10%), a wholly-owned subsidiary of Nautical Petroleum plc.

The Keddington-3z well has been on free-flowing production since 7 June 2010.  Total production to the end of August 2010 was 15,828 barrels of oil and 60.4 million cubic feet of gas with no associated water.  The field produced for a total of 82 days during this period and the average production rate was 193 barrels of oil per day and 737,000 cubic feet of gas per day. Total flows have remained restricted throughout the period to manage gas production  The flare system on the field was upgraded in late September to handle the high gas flows.

As advised on 14 June 2010 Egdon are investigating the use of the produced gas for electricity generation and export and progress is being made in this regard.  Prior to committing to an investment in electricity generation infrastructure, the sustainable gas flow rates and total gas reserves need to be fully understood to maximise the value of any investment.  The existing 3D seismic data has been re-mapped integrating the results of the Keddington-3 and 3z wells.  It is planned to undertake specialist sampling and analysis of the oil and gas from the well in the next few weeks to determine the mechanism for gas production under reservoir conditions.  This work will enable an update to the field reservoir model and a revision to the field reserves to enable planning of further wells on the field to maximise production.   As part of the field review the potential utilisation of the gas discovered in the underlying Namurian sequence and the early drilling of the contiguous Louth Prospect will be considered to maximise the value of the greater Keddington area.

As an interim measure a dual fuel gas/diesel generator is to be installed during October to utilise produced gas for site electrical use.

The Keddington-1z well has remained shut-in during the period and it is likely that this well will be used as a donor for a horizontal sidetrack to be drilled early in 2011.

Dukes Wood-1 Extended Well Test

Egdon is the operator of Nottinghamshire licence PEDL118 with a 65% interest.  Egdon’s joint venture partners are Terrain Energy Limited (25%) and Angus Energy Eakring Limited (10%).  The Extended Well Test (“EWT”) on the Dukes Wood-1 well has now been completed.  Three separate zones were perforated and tested.

The Ashover Grit Unit 4 (“AG4”) was the primary objective for  this well and produced a total of 1108 barrels of oil and 9783 barrels of water over 67 production days at average rates of 16.5 barrels of oil per day at a water cut of 90%. The AG4 was isolated with a retrievable bridge plug and the Sub Alton-Crawshaw (“SAC”) was perforated over a 5 metre interval (624-629 metres measured depth).  The formation was observed to be over-pressured as a result of the historical water injection on the field and free-flowed formation water with no oil at rates of over 1000 barrels per day.  Following isolation of the SAC interval the Loxley Edge Rock (“LER”) was perforated over a 4 metre interval (611-615 metres measured depth) and put on pumped production.  Due to the low permeability of the LER it was only possible to pump the well for around 6 hours per day.  Each 6 hour cycle produced around 37 barrels of fluid with around 1.5 barrels of oil.

The EWT has indicated significantly better flow rates in the AG4 and SAC from those observed in historical wells which is thought to be as a result of modern drilling and completion techniques.  However, the overall oil rates were lower than pre-drill estimates and a decision on  the future use of the Dukes Wood-1 well will be made in conjunction with partners following a detailed review.

Egdon have identified a number of independent targets on the Eakring/Dukes Wood structure including previously un-drilled highs and these will now be evaluated with the benefit of the Dukes Wood-1 results to inform the next stage of evaluation of the Eakring/Dukes Wood field rejuvenation project.

Ceres Gas Field

The Ceres Gas Field in Southern North Sea block 47/93, where Egdon hold a 10% interest, is currently shut-in following an extension to the planned shut-down of the Cleeton Platform for extended maintenance and repairs by the operator BP.  It is anticipated that these works will be completed and production will re-commence prior to the year-end.

The  47/9c-11x well has only produced intermittently since coming on stream during April 2010 due to issues with the non-operated infrastructure downstream of the well.  However, when on production, the well has flowed according to expectations and it is anticipated that Ceres will generate a stable income stream once the infrastructure issues are resolved.

Kirkleatham Gas Field Development

Construction operations are progressing well at Egdon’s operated Kirkleatham gas field development in PEDL068 where Egdon hold a 40% interest.  Egdon’s joint venture partners in the PEDL068 licence are Sterling Resources (UK) Limited (47%), Yorkshire Exploration Limited (8%) and Montrose Industries Limited (5%).  All necessary consents have been obtained and above and below ground pipeline construction is nearing completion.  The procurement of all equipment is well advanced and it is anticipated that the field will be ready for commissioning during November with first gas currently scheduled for late November to early December 2010 during the winter gas season as planned.

Commenting on developments in its UK portfolio Mark Abbott Managing Director of Egdon said;

 “The ongoing evaluation of the Keddington field is expected to lead to increased field production and revenues during 2011 through the drilling of an additional horizontal producer and the utilisation of the produced gas for electricity export.  The evaluation of additional oil and gas resources in the underlying Namurian sandstones at Keddington and in the nearby 3D defined Louth Prospect is a priority for the Company to determine the value of the greater Keddington area.

The delays in sustained production at Ceres are disappointing but the repair and maintenance programme being undertaken by BP should ensure reliable production from Ceres going forward.

We are pleased with the continued progress at Kirkleatham and look forward to commencement of production from our first operated gas field and the addition of a further revenue stream by the year end “

For further information please contact:

Egdon Resources plc
Mark Abbott, Managing Director
01256 702292

Buchanan Communications
Richard Darby, James Strong
020 7466 5000

Nominated Adviser and Broker – Seymour Pierce
Jonathan Wright, Richard Redmayne
020 7107 8000

Notes to Authors 

Egdon Resources plc

Egdon Resources plc (LSE: EDR) is an established UK-based exploration and production company primarily focused on onshore exploration and production in the hydrocarbon-producing basins of the UK and Europe.

Egdon currently holds interests in thirty five licences in the UK and France and has an active programme of exploration, appraisal and development within its balanced portfolio of oil and gas assets.  Egdon is an approved operator in both the UK and France.

Egdon has production from the Keddington and Kirklington oil fields in the East Midlands and the Avington oil field in Hampshire. Further oil and gas production is anticipated from Kirkleatham and Ceres in 2010 and Waddock Cross in 2011.

On completion of the acquisition of Encore E&P Limited, Egdon will acquire a further two permits onshore France.

Egdon has announced a disposal of its French subsidiary to eCORP.  This will result in two French permits being transferred from Egdon ownership on completion which is expected shortly.

Egdon Resources plc listed on AIM in January 2008, following the demerger of its gas storage business, Portland Gas plc (now renamed Infrastrata plc). The pre-demerged business was formed in 1997 and listed on AIM in December 2004.

In accordance with the AIM Rules – Note for Mining and Oil and Gas Companies, the information contained in this announcement has been reviewed and signed off by the Managing Director of Egdon Resources plc Mark Abbott, a Geoscientist with over 23 years experience.

View or download full release