Extractive Industries

Egdon revenues rise by 530% on Ceres-Wressle success

Egdon Resources plc reported a 160% increase in production and more than 530% rise in oil and gas revenues mainly from onshore oil production at Wressle in North Lincolnshire and offshore Ceres gas field.

Production: Wressle significantly exceeded forecast expectations with average gross production of 656 bopd (Pixabay – generic)

FINANCES

The company’s preliminary results for the year ended 31 July 2022 showed revenues of £6.91 million (2021: £1.09m) following “significantly increased production” and strong commodity prices.

Earnings before interest, tax, depreciation, amortisation, asset impairments, impairment reversals and write-downs were £4.67m (2021: loss of £0.72m).

Post-tax profit was £3.30m including £1.40m of impairment reversals, £1.80m of impairments and £0.15m of write-downs and pre-licence costs (2021: loss of £1.68m including £0.48m of write-downs, pre-licence costs and impairments).

Egdon holds current net assets of £4.90m (31 July 2021: £0.14) of which cash and cash equivalents were £4.80m (31 July 2021: £1.96m).

The company has no borrowings after repaying the £1m loan during May 2022.

On 8 March 2022 Egdon established a revised incentive package for all employees through issuing new share options and cancelling all historical share options.

PRODUCTION

Egdon’s net production increased to 84,894 barrels of oil equivalent (boe) equating to 233 boe per day (boepd) (2021: 32,686 boe, 90 boepd).

The company said that Wressle production (30%) had “significantly exceeded forecast expectations” with average gross production during the period of 656 barrels of oil per day (bopd).

Rates were constrained by the Environment Agency permit limits for gas disposal and with zero water production to date.

The Ceres offshore gas field contributed to the company’s results due to the high gas price and low operating costs.

OPERATIONS

In April 2022, Egdon submitted an appeal against refusal to drill of a side-track well, test and start long-term production at the Biscathorpe project. The company is awaiting the planning inspector’s decision.

Egdon also appealed against refusal for an extension to the existing consents to drill the North Kelsey-1 exploration well.

During April 2022, Shell said it would withdraw from licences P1929 and P2304, containing the Resolution and Endeavour gas discoveries.

Egdon applied to the NSTA for an extension of time to complete the 3D seismic programme over the licences, which was approved post period.

The company became operator of PEDL343, containing the Cloughton gas discovery, and increased its equity to 40%. The company also agreed an extension to 20 March 2024. 

Licences PEDL202 and PEDL130 were relinquished during the period and licence P2304 will be relinquished.

OUTLOOK

Post-period production and revenues show unaudited August to October 2022 revenues of £2.07m.

Egdon’s key operational focus will be maintaining and enhancing production at Wressle with priorities being gas monetisation and Penistone Flags development.

The company also aims to add reserves, production and revenues through the drill-bit in both exploration and development/re-development projects.

SHALE GAS

Chairman Philip Stephens added that the company remained resolute in its stance on shale gas.

“Despite the reintroduction of the moratorium on shale-gas by the Sunak-led Government, we will continue to make the case for the strategic importance that shale-gas could make to the UK’s economy and security of supply.

“In the meantime, Egdon will focus on progressing its conventional oil and gas business and nascent energy transition projects to continue delivering long term value to its shareholders.”

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