Egdon Resources plc announced a decrease in losses while production remained within guidance during the six months ended 31 January 2021 from its UK oil and gas interests.
The operator’s unaudited results showed production was 92 barrels of oil equivalent per day (H1 2020: 178 boepd) in line with guidance of 90-100 boepd.
FINANCE
Oil and gas revenues during the period were recorded at £0.424 million (H1 2020: £0.675m) due to declining production and lower prices.
Reported loss was £0.763m (H1 2020: £1.044m) before impairments, with overall losses of £1.039m including £0.276m of impairments (H1 2020: loss of £3.235m and £2.191 impairments).
Cash and cash equivalents were £2.422m (H1 2020: £0.781m).
Egdon had net current liabilities of £0.126m, which includes liability for £0.962m convertible loan (H1 2020: £Nil) and £0.417m deferred consideration for Wressle in the East Riding of Yorkshire.
This compares with H1 2020 net current assets of £0.370 million including liability for Wressle deferred consideration of £0.417m).
During H1 2020, the company had net assets of £25.658m (H1 2020: £27.812m).
A £1m loan facility was secured with joint venture partner Union Jack Oil plc and £1.051m convertible loan notes were issued in January 2021.
OPERATIONS
Egdon completed the farm-outs for the Resolution and Endeavour gas discoveries (P1929 and P2304) in the North Sea to Shell Oil UK Ltd, with the Resolution 3-D seismic survey deferred to February 2022.
The company received an extension to its planning approval to drill North Kelsey-1 (PEDL241) in North Lincolnshire, while the Holmwood PEDL143 licence in Sussex was relinquished.
Free-flow test production began at Wressle following safe and successful operations to recomplete and reperforate the Ashover Grit reservoir interval.
OUTLOOK
Egdon said that production guidance for the full year was of 110-130 boepd.(2020: 145 boepd).
The company’s focus for the coming period includes:
• progress the proppant squeeze at the Wressle oil field to attain target production of 150 boepd net to Egdon
• secure planning consent for the Biscathrope-2Z side-track, testing and long-term production (Lincolnshire)
• progress a farm-out of North Kelsey-1 and Biscathorpe-2Z with a view to drilling during 2021-22
• progress drilling plans to target incremental oil production / near field exploration opportunities at Keddington oil field (Lincolnshire) and field redevelopment at Waddock Cross (Dorset)
• subject to the Government lifting the moratorium on hydraulic fracturing for shale-gas, Egdon will progress with plans for further testing of the Gainsborough Trough (East Midlands).
Chairman Philip Stephens said that the most significant event during the six months was the completion of site and recompletion works and commencement of oil flows at Wressle.
“We continue to await consent to proceed with the proppant squeeze in order to bring production up to the expected level of 500 bopd which will have a meaningful impact on our production and cash flow.
“Additionally during the period, the company completed refinancing arrangements providing working capital to pursue our key objectives.
“We look forward to pursuing our revised strategy in the context of an improving operating backdrop compared to the last 12 months.”
Egdon Resources was formed in 1997 and awarded its first licence in 1998.