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Research: Oil & Gas
Egdon Resources’ core focus is on its conventional assets, and the commencement of oil flow at Wressle was the most significant event for the six months to 31 January 2021. The company is targeting 150boed net here, pending further activity. Production during the period was 92boed, down from 178boed in H120 and guidance for FY21 is 110–130boed. Further planned onshore drilling will depend on successful farm-outs, while offshore, the 2020 farm-out of the Resolution and Endeavour gas discoveries to Shell will fund a 3D seismic survey, though this has slipped into 2022. Egdon is also screening geothermal opportunities, and signed an MoU with Creative Geothermal Solutions (CGS) to facilitate progress both within Egdon’s portfolio and beyond.
Written by
Ian McLelland
Egdon Resources |
Wressle key to production increase
Oil & gas |
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29 April 2021 |
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Egdon Resources is a client of Edison Investment Research Ltd |
Egdon Resources’ core focus is on its conventional assets, and the commencement of oil flow at Wressle was the most significant event for the six months to 31 January 2021. The company is targeting 150boed net here, pending further activity. Production during the period was 92boed, down from 178boed in H120 and guidance for FY21 is 110–130boed. Further planned onshore drilling will depend on successful farm-outs, while offshore, the 2020 farm-out of the Resolution and Endeavour gas discoveries to Shell will fund a 3D seismic survey, though this has slipped into 2022. Egdon is also screening geothermal opportunities, and signed an MoU with Creative Geothermal Solutions (CGS) to facilitate progress both within Egdon’s portfolio and beyond.
Strategy to grow production
The additional estimated net production of 150boed from Wressle will grow production from the current 92boed (with Wressle contributing to this rate from 30 January 2021). The well has been undergoing test production and clean-up since January 2021 and will require a successful proppant squeeze to achieve full production, pending regulatory approval. A delay in approval could have an impact on full year production. Further onshore drilling is planned at Biscathorpe (also pending approval) and North Kelsey in c2021/22. The Resolution Zechstein gas discovery, with gross mean contingent resources of 231bcf, has the potential to add the most upside, but with 3D delayed into 2022, drilling is unlikely before 2023. Renewed focus on the Zechstein in the UK following the 2020 Darach oil discovery will also see Shell drill at Pensacola in 2021.
Geothermal potential
Egdon has undertaken a review of the geothermal potential in its existing portfolio and has identified shut-in wells in the Dukes Wood and Kirklington oil fields as initial candidates for geothermal heat production. In April 2021 the company signed an MoU with CGS to screen potential geothermal projects.
Financials: Farm-outs to fund drilling
Farm-outs will be required to fund activity at Biscathorpe and North Kelsey. The company refinanced the business via a £1m loan facility with Union Jack Oil and the issue of £1.05m convertible loan notes with Petrichor Holdings BV, and had cash and cash equivalents of £2.422m at 31 January 2021.
Historical figures
Source: Egdon Resources. Note: *Reported EPS. |
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Research: Investment Companies
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