Egdon Resources Farms-out PEDL005(R) to Terrain, Union Jack
While experts keep underlining that other North Sea fields might soon cease production earlier than planned as a consequence of the low oil price environment, Egdon Resources announced deals for two separate farm-outs of License PEDL005(R), located in Lincolnshire, UK, to Terrain Energy and Union Jack Oil.
The two farm-outs present different conditions.
‘Under the terms of this farm-out, Terrain will earn an additional 20% interest in the Keddington oil field in return for paying 40% of the cost of a new appraisal/development well expected to be drilled in Q4 2015 as a side-track to the Keddington-4 well’ reads a note released on Tuesday.
The one with Union Jack will earn a smaller additional interest.
‘Under the terms of a second farm-out, Union Jack will earn a 10% interest in Licence PEDL005(R), in return for paying 20% of the cost of the new side-track appraisal/development well at Keddington (as above) and 20% of the cost of an exploration well on the Louth prospect.’
However, Union Jack will also earn a 10% interest from Egdon in any new licence block awarded to the existing PEDL005(R) Joint Venture in the UK 14th Landward Oil and Gas Licensing Round which contains a mapped extension of the Louth prospect.
Two weeks ago, Egdon reached a deal to farm-out the Weald Basin (PEDL143) to UK Oil & Gas Investments (UKOG).
VSA Capital reiterated their buy rating on shares of Egdon Resources Plc in a research note released on Tuesday morning.
The British oil and gas industry keeps suffering, but some companies like Egdon Resources seem to be able to cope with the current uncertainties, which are both legislative and financial in nature.
"It's a sign that many of the meetings I'm going to, the first issue on the agenda is decommissioning," Gunnar Olsen, business development director at Total E&P UK, told Reuters on Tuesday, referring to North Sea production and low oil prices.