Egdon Resources Agrees Farm-Out To Union Jack Oil On PEDL253 Licence

20th Mar 2018 12:25

LONDON (Alliance News) - Oil and gas exploration company Egdon Resources PLC announced on Tuesday it has signed a farm-out agreement on the PEDL253 licence with Union Jack Oil PLC and Humber Oil & Gas Ltd.

PEDL253 is located in the South Humber basin and contains the drill-ready Biscathorpe prospect, where the Biscathorpe-2 conventional exploration well is planned to be drilled around the middle of the year.

Union Jack and Humber will each acquire 6% of Egdon's interest in PEDL253 by paying their pro-rata share of the Biscathorpe-2 well costs plus an additional GBP10,000 per percentage point of interest acquired. This is equivalent to a farm-in with a 1.36x promote at the estimated well cost.

Union Jack and Humber will also each acquire 4% of Montrose Industries Limited's interest in PEDL253 under the same terms.

Egdon will hold a majority interest in PEDL253 of approximately 41%, while Montrose Industries Ltd will hold 27%, Union Jack Oil 22%, and Humber 10%.

"Union Jack's proprietary economic modelling of the Biscathorpe prospect highlights its attractiveness and shows a pre-drill value for the success case of circa GBP24 million net to Union Jack. This is significantly in excess of the approximate GBP1 million drilling cost we will be incurring, for which we are fully funded following our recent placing," said Executive Chairman of Union Jack, David Bramhill.

Egdon Resources shares were down 2.6% at 5.65 pence per share on Tuesday while Union Jack was up 5.0% at 0.092 pence per share.

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