Egdon Resources plc (AIM:EDR) is pleased to announce the results of an independent evaluation by RPS Energy (“RPS”) of the potential shale-gas resources in the Company’s onshore U.K. East Midland licences PEDL139 and PEDL140 (the “Licences”) where the Company holds 13.5% interests.
RPS has reviewed the available data in the Licences and made an assessment of potential gas volumes and geological chance of success based on analogous shale-gas plays in the USA. The Licences are located in Lincolnshire and cover an area which is underlain by the Gainsborough Trough, a geological basin which contains a 125 metre thick sequence of the Carboniferous age Pendleian Shale at a depth of over 2000 metres. The Pendleian Shale is the approximate age equivalent of parts of the Bowland Shale which is the principal shale-gas reservoir target under evaluation in the Bowland Basin of North West England.
RPS estimates 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(1) are estimated as 0.19 tcf based on recovery rates in analogous US plays. RPS estimates the geological chance of success to be 24%.
Egdon intends to evaluate the potential of the Licences through drilling a deep exploration well, which it is hoped will be undertaken during 2014 subject to obtaining all necessary consents and approvals. Egdon’s costs are carried through this work programme.
In addition to the Pendleian Shale, which is the subject of the RPS report, Egdon interprets potential for significant additional shale-gas resources in the underlying Carboniferous succession in the blocks that will be evaluated by any future drilling. Egdon is also evaluating the unconventional resource potential in certain of the Company’s other East Midlands licences.
Commenting on the report and recent government announcements in relation to shale-gas exploration, Mark Abbott, Managing Director of Egdon, said;
“Whilst recognising that we are still at an early exploration stage in these Licences, and indeed for UK unconventional resources in general, we are encouraged by the results of the RPS evaluation which indicate that the geological conditions appear favourable for the development of a potentially material shale-gas resource based on the currently available data and comparison with US analogues.
We welcome the announcements in December 2012 by the UK Government in relation to Gas Strategy, the setting up of the Office of Unconventional Gas and Oil, and the approval for restarting of shale-gas exploration in the UK. There is now a clear regulatory framework for the exploration of the UK’s unconventional oil and gas resources which have the potential to make a significant contribution to the UK’s economy and energy mix over the coming decades.
An executive summary of the report by RPS will be available for download from Egdon’s website.”
Note(1) Any development would have to take into account permitting, legal issues, environmental issues and availability of project finance, but RPS has not made a risk assessment of these factors. In addition RPS has made the assumption that adequate numbers of rigs and fraccing units will be available to drill and complete the large number of horizontal wells which would be required to fully develop the mean Prospective Resources estimated by RPS.