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Last close As at 09/06/2023
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Market capitalisation
GBP23m
Research: Oil & Gas
Egdon Resources’ Wressle-1 well continues to produce above expectation, delivering 760–800bopd (228–240bopd net) during the six months to end January 2022. This high rate, combined with high commodity prices, has driven a 500% increase in revenues to £2.55m for the period, up from £0.42m in H121, and has made Egdon profitable for the first time since H111. With cash of £2.08m, the company says it is funded for near-term committed activities. Egdon will now look to increase Wressle production further. Other onshore drilling projects have been held up by planning permission refusals, while the UK government’s request to review shale gas extraction could bring the company’s shale assets back into play. Progress offshore has been affected by Shell’s withdrawal from the licences holding the Resolution and Endeavour gas discoveries. Egdon’s share price has performed strongly over the last six months, peaking at 4.2p/share in April and falling back over the last month.
Egdon Resources |
Wressle continues to deliver
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Oil & gas |
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4 May 2022 |
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Egdon Resources is a client of Edison Investment Research Limited |
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Egdon Resources’ Wressle-1 well continues to produce above expectation, delivering 760–800bopd (228–240bopd net) during the six months to end January 2022. This high rate, combined with high commodity prices, has driven a 500% increase in revenues to £2.55m for the period, up from £0.42m in H121, and has made Egdon profitable for the first time since H111. With cash of £2.08m, the company says it is funded for near-term committed activities. Egdon will now look to increase Wressle production further. Other onshore drilling projects have been held up by planning permission refusals, while the UK government’s request to review shale gas extraction could bring the company’s shale assets back into play. Progress offshore has been affected by Shell’s withdrawal from the licences holding the Resolution and Endeavour gas discoveries. Egdon’s share price has performed strongly over the last six months, peaking at 4.2p/share in April and falling back over the last month.
Additional production potential at Wressle
Production from Wressle is still constrained by gas handling equipment, with pressure tests indicating that flow rates of 1,200–1,500bopd could be achieved. Egdon plans to export gas via a short pipeline to the local gas network, which will require regulatory consent, and is targeting completion over the coming winter period. The company is also looking to produce from the Penistone Flags reservoir, which has been audited to hold mid-case contingent oil and gas resources of 1.53mmbbl and 2bcf.
Beyond Wressle: Mixed fortunes
Shell’s withdrawal from the P1929 and P2304 offshore licences will further delay progress at the Resolution and Endeavour gas discoveries. A 3D seismic survey over Resolution would have been funded by Shell, but had already slipped. Planning permissions for a sidetrack at Biscathorpe and an exploration well at North Kelsey were both refused, while planning consent is in place for a sidetrack at Keddington, which could deliver 180,000bbl of incremental production.
UK shale gas review
In April 2022, the UK government announced that it has commissioned the British Geological Survey to advise on the latest scientific advice on shale gas extraction. A lifting of the moratorium on hydraulic fracturing for shale gas would be transformational for Egdon, which holds independently estimated net mean volumes of gas initially in place of 37.6tcf in the Gainsborough Trough. The company’s focus would be on its Spring’s Road-1 well in which it holds a 14.5% WI.
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Historical figures
Source: Egdon Resources. Note: *Reported EPS. **Unaudited 6 months to 31 January 2022. |
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Research: Healthcare
In February, Basilea announced a strategic refocusing on its core anti-infective business and is exploring strategic options for its oncology assets. Strong FY21 results were driven by key anti-infective assets Cresemba and Zevtera, which collectively contributed CHF131.4m to Basilea’s revenue (up 18% y-o-y). Global Cresemba sales were US$324m in FY21, resulting in significantly increased royalty and milestone payments. Management envisages sustainable profitability and positive operating cash flow from 2023. Top-line data from the key ERADICATE study of Zevtera in bloodstream infections is expected in mid-2022. If positive, this would enable an NDA submission, paving the way to the US antibiotics market. In oncology, potential value uplift could come from positive readouts (expected in H122) from lead asset derazantinib in trials for iCCA (FIDES-01) and gastric cancer (FIDES-03).
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