Egdon Resources Plc Acquisition of Dorset Exploration Limited and Weald Basin Update
Egdon Resources plc (AIM:EDR) is pleased to announce that it has reached agreement to acquire the entire issued share capital of Dorset Exploration Limited ("DEL"). DEL is a private company which holds 10% interests in Production Licence PL090 and Petroleum Exploration and Production Licence PEDL237, both located in the county of Dorset. Egdon Resources U.K. Limited is operator for both these Licences with a 45% interest in each.
The consideration for this acquisition will comprise £100,000 to be satisfied by the issue of new Egdon shares at completion. The number of consideration shares will be calculated based on the average closing mid-price for the five days prior to the day of completion. The commercial date of the transaction is 1 February 2012.
The transaction is subject to approval of the change of control by DECC.
DEL is owned and controlled by Mr. John Rix and his family members. Mr. Rix was a non-executive Director of Egdon until his retirement from the Board in late 2011.
Licence PL090 contains the Waddock Cross Oil Discovery where recent extended testing has confirmed the potential for a commercial development which the joint venture group expects to sanction within the next few weeks. In PEDL237 the licence group has identified and delineated a potentially commercial accumulation of oil which was encountered in the 1959 Langton Herring North-1 well but may not have been adequately tested, and has mapped a number of structural leads at the level of the Sherwood Sands, the primary reservoir at the Wytch Farm oilfield. The licence group plans to delineate these leads, which extend into PL090, by reprocessing existing vintage 2D seismic data and/or acquiring new seismic, most likely 3D, with a view to promoting at least one into a viable, drillable prospect.
Egdon estimate that the transaction will add an estimated 11 mmbo of Best Estimate Prospective Resources to Egdon's resource inventory.
The interests in PL090 and PEDL237 are as follows:
Egdon Resources U.K. Limited (operator) 45.00%
First Oil Expro Limited 26.25%
Aurora Exploration (UK) Limited 18.75%
Dorset Exploration Limited 10.00%
Egdon also notes the recent announcement by the operator for Licence PEDL126 (Egdon 10% interest), Northern Petroleum plc ("Northern"), that the Markwells Wood-1 oil discovery well in the South Downs National Park Authority areahas been suspended following the extended well test. The results of this test were below expectations. The possibilities for further action will now be examined by the joint venture group.
Northern has also announced, as operator for Hampshire Licence PEDL125 (Egdon 10% interest), that the joint venture group has not been able to locate, rent or acquire a suitable drilling location from which to test the Hedge End Prospect, and therefore the licence will be allowed to lapse at the end of its current term. This will reduce Egdon's Best Estimate Prospective Resources by 0.3 mmbo.
Commenting on the acquisition Mark Abbott, Managing Director of Egdon said:
"The acquisition of DEL adds to our existing interests in licences where we have identified significant exploration potential in the Bridport Sandstone and Sherwood Sandstone plays. It also provides us with an additional 10% interest in the Waddock Cross oil discovery, where we anticipate a decision on development in the next few weeks."