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Research: Energy & Resources
Egdon and IGas have provided a summary of initial analysis of the core extracted from Springs Road-1 (SR-01), in which Egdon holds a 14.5% interest. The well was drilled as a vertical exploration well in the centre of the Gainsborough Trough Basin where Egdon holds 82,000 net acres. The Bowland Shale, the Millstone Grit and the Arundian Shale were encountered with 429m of hydrocarbon bearing shale (147m cored) within the Bowland. Core analysis is positive with key shale characteristics comparable to commercial shales found in North America. High clay content was viewed as a risk pre-drill but the company believes that average clay content of below 30% should ensure the rock can be effectively fracture stimulated.
Written by
Egdon Resources |
Springs Road exploration well results |
Shale results |
Oil & gas |
27 June 2019 |
Share price performance
Business description
Analysts
Egdon Resources is a research client of Edison Investment Research Limited |
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Egdon and IGas have provided a summary of initial analysis of the core extracted from Springs Road-1 (SR-01), in which Egdon holds a 14.5% interest. The well was drilled as a vertical exploration well in the centre of the Gainsborough Trough Basin where Egdon holds 82,000 net acres. The Bowland Shale, the Millstone Grit and the Arundian Shale were encountered with 429m of hydrocarbon bearing shale (147m cored) within the Bowland. Core analysis is positive with key shale characteristics comparable to commercial shales found in North America. High clay content was viewed as a risk pre-drill but the company believes that average clay content of below 30% should ensure the rock can be effectively fracture stimulated.
Year end |
Revenue (£m) |
PBT* |
EPS* |
EBITDA |
Net cash/ (debt) (£m) |
Cash flow from operations (£m) |
07/17 |
1.0 |
(2.2) |
(0.7) |
(1.2) |
6.1 |
(0.4) |
07/18 |
0.8 |
(1.7) |
(0.8) |
(2.2) |
2.8 |
(1.6) |
07/19e |
2.2 |
(2.1) |
(0.2) |
(0.5) |
0.6 |
(0.3) |
07/20e |
2.7 |
(1.8) |
(0.8) |
0.1 |
(0.4) |
0.6 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, share-based payments
SR-01 comparison to US shale gas play parameters. SR-01 total organic content of average 3% (ranging from 2-7%) is consistent with the averages of the top ten US shales which range from 0.9% to 5.3%. Thermal maturity at an average 464degC puts SR-01 shale in the wet gas to dry gas window. Total porosity of average 4% (range 2-9%) is comparable to US analogue shales which typically range from 4-7%. Gas content at an average 71scf/ton (range 24-131scf/ton) compares to a range of 15-350scf/ton typically seen in the US. Average clay content of 30% by weight (in The Carboniferous Bowland Shale gas study: geology and resource estimation – 2013, BGS states that clay content should be below 35% to facilitate fracture stimulation) is considered as low. From an operational perspective it is encouraging that SR-01 well costs came in 20% below budget; however well costs have not been released at this stage.
Operator IGas is to make a further announcement and technical presentation of these results in Q319.
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Research: Healthcare
Immunicum’s investment case has transformed over the course of 2018. The funding of SEK351m gross (in a direct and subsequent rights issue) raised in Q418 allows the company to be more ambitious and finance R&D for the lead product, immune primer ilixadencel, through to 2021. The strategy stays unchanged, which is to accumulate as much clinical proof-of-concept data in combinations with checkpoint inhibitors and other anti-cancer therapies before seeking an out-licensing (2020). The fund-raise ensures cash reach to late 2021, including publication of the results from the Phase II MERECA and the Phase Ib/II ILIAD trials and potential updates on partnering activities. Our valuation has increased to SEK2.0bn or SEK21.7 (vs SEK15.1/share previously).