Egdon Looks Ahead to Markwells Wood-1 Well Test

- Egdon Looks Ahead to Markwells Wood-1 Well Test

Wednesday, August 03, 2011
Egdon Resources plc

Egdon provided an update on its UK operations and production at its year end of July 31, 2011.

Egdon's production during July 2011 from the Keddington, Kirkleatham and Avington fields was 420 barrels of oil equivalent per day ("boepd").

Keddington

At the Keddington Oil Field in Lincolnshire, license PEDL005(remainder) (Egdon 75% interest) the Keddington-4 (K4) well was drilled as a re-entry and horizontal sidetrack from the Keddington-1Z "donor" well during April 2011, and a total of 120 meters of the primary reservoir Unit 1 sandstone was encountered along with 65 meters of Unit 2.

As reported in May the K4 well initially free-flowed oil and gas at maximum rates in excess of 200 barrels of oil per day ("bopd") and 518,000 cubic feet of gas per day with no associated formation water. Following "bleeding- off" of the gas pressure the well was put on pumped production using a down-hole sucker-rod pump and stabilized rates of around 75 bopd along with 200,000 cubic feet of gas per day were achieved by the end of June. Indications are that the pump is operating at low efficiency due to the high gas levels in the produced fluids and that the well is capable of delivering higher oil rates with greater drawdown. Options to resolve this are being investigated.

The Keddington-3z well (K3Z), which had been shut-in since March 2011, was put back on free-flow production, along with continued production from K4, from the beginning of July and total oil rates have steadily increased during the month from 120 to 180 bopd (Net Egdon 135 bopd) as the gas pressure in the well has gradually been "bled-off" in a controlled manner and has been constrained by flaring capacity. Average daily production during July was 158 bopd (Net Egdon 118.5 bopd) and 850,000 cubic feet of gas per day (Net Egdon 106 boepd currently being flared).

To date no formation water has been produced from either K3Z or K4 resulting in a decrease in project operating costs.

We continue to pursue the best options for export of electricity from the site to minimize constraints on oil production and are integrating the results of the K4 well into a field model to enable a reassessment of the ultimate reserves for the field.

Kirkleatham

As previously reported the Kirkleatham gas field in PEDL068 (Egdon 40% interest) achieved first production on April 19, 2011. Following the resolution of a number of residual mechanical and control issues the field has been capable of 24 hour production since mid-May. Availability of the end-user power plant restricted production during June. However, production uptime during July has been high with production averaging 4.24 million cubic feet of gas per day ("mmcfg/d") (Net Egdon 1.7 mmcfg/d or 282 boepd). Levels of H2S have stabilized at 60 parts per million, well below design limitations.

The power plant was shut-in for 7 days for routine maintenance on 30 July during which time down-hole pressure data will be retrieved from the Kirkleatham-4 well for analysis.

It is planned to produce the well at between 3 and 3.5 mmcfg/d (Net Egdon 1.2 to 1.4 mmcfg/d or 200 to 233 boepd) on resumption of production to match expected power output and manage reservoir pressure.

Ceres

The Ceres field in block 47/9c (Egdon 10% interest) is now in a position to produce following completion of repair work on the damaged Eris umbilical and resolution of hydrate issues in the flow lines. The Ceres field was brought back on stream on June 13, 2011 and was produced with some interruptions until June 26, 2011 when the field was shut-in due to annual maintenance at the Cleeton platform. Egdon have been advised that this shut-down is likely to last for a period of around sixty days with the expectation of a restart of sustained production during September 2011. Production occurred over seven days during June 2011 and average net Egdon gas production for the period was 1.6 mmscfg/d (c. 260 boepd).

Waddock Cross

At the Waddock Cross oil discovery in Dorset license PL090 (Egdon 45%), the site is in the final stages of preparation for commencement of an Extended Well Test. Test operations are expected to start within the next two weeks and to continue for a period of up to six months. The intention is to trial a number of techniques aimed at increasing oil production in this high water cut reservoir to enable a decision to be made over a future development of this field which contains significant in place oil reserves.

Markwells Wood

In West Sussex license PEDL126 (Egdon 10%) we have been advised that well test operations at the Markwells Wood-1 oil discovery are due to commence at the end of August, subject to final DECC approval. The test is planned to last a maximum of 40 days and will include acid stimulation of the reservoir. The outcome of the testing will help in determining the commerciality of the well.

Avington

The Avington oil field in Hampshire license PEDL070 (Egdon 26.67% interest following the recently announced sale of 10% interest in the field) continues to produce from the Avington-2z and Avington-3z wells. Net Egdon production for July was 20 bopd.

Dukes Wood/Kirklington

In Nottinghamshire license PEDL118 (Egdon 65% interest) planning consent has been received for oil production at the Dukes Wood-1 well. Egdon are now in the process of securing the environmental permit and DECC field development approval prior to restarting the combined production from Dukes Wood-1 and Kirklington-3Z later in 2011.

PEDL201 Seismic Program

In Leicestershire/Nottinghamshire license PEDL201 (Egdon 50%) Tessla-IMC completed a 19 kilometer 2D seismic program during May 2011 over the Burton on the Wolds Prospect which is located to the south-east of the Rempstone oil field. The processed data is currently being evaluated with a view to a drilling decision during 2012.

PEDL180/182 3D Seismic Program

A contract has recently been signed with Tessla-IMC for the acquisition of a 45 square kilometer 3D seismic survey over the prospective Broughton-Wressle trend in Lincolnshire licenses PEDL180 & PEDL182. On current timing the survey is expected to be completed by the year end.

Commenting on the recent developments, Egdon's Managing Director Mark Abbott said, "We have made further good progress towards our long stated target of 500 boepd and achieved net Egdon production of 420 boepd during July 2011. The resumption of production at Ceres which is currently expected on conclusion of the maintenance shut-down of the Cleeton platform during September, along with the EWT at Waddock Cross should enable us to exceed our production target at this time.

"We also look forward to the commencement of the Markwells Wood-1 well test which will determine if the discovery is commercial."

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Egdon to Sell Interest in Avington Field

- Egdon to Sell Interest in Avington Field

Monday, August 01, 2011
Egdon Resources plc

Egdon reported that its wholly owned subsidiary Egdon Resources Avington Limited ("ERA") has reached agreement to sell a 10% interest in the Avington oil field under license PEDL070, for £400,000 in cash.

Under the transaction, ERA has agreed to sell a 5% interest to IS E&P Limited and a further 5% interest in the license to IS NV Limited (together the "IS Companies"). The consideration payable by each of the IS Companies for their respective 5% interests will comprise £200,000 in cash payable on completion and the assumption of their pro-rata shares of a Net Profit Interest ("NPI") payable to Heyco Energy Holdings S.L. The NPI varies between 5 and 10% dependent upon oil price. The effective date of the transaction is June 1, 2011.

The transfers of interest are subject to approval by the Department of Energy and Climate Change.

Prior to the transaction ERA held a 16.67% interest in PEDL070. Egdon Resources U.K. Limited also holds a further 20% interest in the license meaning that on completion Egdon will retain an aggregate 26.67% interest in the license and the Avington oil field.

The Avington oil field is located in the County of Hampshire and is operated by Star Energy Oil UK Limited. Oil is currently produced from the Jurassic age Great Oolite reservoir from two wells, Avington-2Z and Avington-3Z. Production averaged approximately 70 barrels of oil per day in June 2011.

The sale will reduce Egdon's daily production by a maximum expectation of 7 barrels of oil per day and reduce its Proven and Probable reserves by an estimated 23,000 barrels of oil. The contribution to net profit from the 10% interest for the eleven months to end June 2011 after depreciation and amortization was £18,500 before tax (unaudited). The gross cash flow from the interest for the same period was £58,000 (unaudited). The carrying value of the asset sold as at June 30, 2011 was £422,390 (unaudited).

The proceeds of the sale, which will total £400,000 payable on completion, will be utilized on Egdon's active UK and French exploration, appraisal and development program where the Company believes it can generate a better return on investment.

The IS Companies are private companies involved in oil and gas exploration and production. InfraStrata is a 50% shareholder in both companies although both companies have independent boards. Egdon directors Ken Ratcliff and Walter Roberts are also directors of InfraStrata plc and Walter Roberts and John Rix have shareholdings in the IS Companies. As such an independent committee of Egdon directors comprising Philip Stephens, Alan Booth and Mark Abbott was set up to consider the offers and negotiate and approve the transaction.

Commenting on the sale Egdon's Managing Director Mark Abbott said, "These transactions realize a significant proportion of our expected future value from the transferred interest in cash at a time of strong oil price. Egdon believes it can utilize this cash on its higher potential projects in the UK and France to provide a better return for shareholders. We still retain a material interest in the Avington field and any upside which may be realized from future drilling".

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Egdon Equalizes Interest, Completes Seismic Survey in UK

- Egdon Equalizes Interest, Completes Seismic Survey in UK

Tuesday, June 14, 2011
Egdon Resources plc

Egdon updated on changes to certain of its UK license interests as well as details of a recent seismic survey.

Egdon have reached agreement with Europa O&G and Celtique to equalize working interests across contiguous Petroleum Exploration and Production Licenses ("PEDL") 180 and 182 in the East Midlands. Egdon is the current operator of PEDL182 and will assume operatorship of PEDL180. On conclusion of the transaction, which is subject to approval from the Department of Energy and Climate Change ("DECC"), Egdon will hold a 33.33% interest in both licenses reducing from its current 50%. The transaction provides alignment for the planned exploration program for this area, which contains a trend of oil prone structures including the Broughton oil discovery and Wressle Prospect, which spans the two licenses. A joint 3D seismic survey is planned for later in 2011 to firm up drilling locations for the licenses. It is hoped to drill during 2012 as part of a planned multi-well drilling program in the East Midlands.

Egdon have also reached agreement with Celtique whereby Celtique will acquire a 25% interest in PEDL181 from Egdon, again subject to approval by DECC. Following completion, Egdon will hold a 25% interest. Europa is the operator of PEDL181 with a 50% interest.

Egdon's interests in PEDL180 and 181 were acquired from Valhalla Oil and Gas Limited ("Valhalla") earlier in 2011. The licenses are covered by an Area of Mutual Interest agreement between Egdon and Celtique. Celtique will assume 50% of the consideration to Valhalla. This will comprise the payment of a 10% Net Profit Interest ("NPI") on each 25% interest in PEDL180 and PEDL181 assigned to it by Egdon (2.5% net). The NPI is payable from revenues after recovery of pro-rata exploration, development and production costs.

Elsewhere in the East Midlands, Egdon reported the successful completion of a 13 kilometer 2D seismic program over the Burton on the Wolds Prospect in PEDL201 where Egdon holds a 50% operated interest. The Burton on the Wolds prospect is located on the southern margin of the Widmerpool Basin to the South-East of the Rempstone Oil Field and is a four-way dip-closed prospect associated with an underlying seismic anomaly. Indicative prospective resources are estimated by Egdon at around 1.5 million barrels.

Commenting on the recent developments, Egdon's Managing Director Mark Abbott said, "We are pleased to have reached agreement with Europa and Celtique in relation to PEDLs 180, 181 and 182 and to have assumed operatorship of PEDL180. We are now in a position to operate the forthcoming 3D seismic program and develop plans for drilling on this highly prospective trend with a uniform Joint Venture partnership. The early results of the seismic program over the Burton on the Wolds Prospect look encouraging and we hope will lead to a firm drilling location."

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Egdon Posts Initial Production Rates at Keddington

- Egdon Posts Initial Production Rates at Keddington

Friday, May 27, 2011
Egdon Resources plc

Egdon provided an update on production testing of the Keddington-4 well in Egdon's operated license PEDL005 (Remainder) located in Lincolnshire.

The Keddington-4 well was drilled as a re-entry and horizontal sidetrack from the Keddington-1Z "donor" well, during April 2011 and encountered a total of 120 meters of the primary reservoir Unit 1 sandstone and 65 meters of Unit 2.

Site reinstatement works have been completed and the Keddington-4 well commenced pumping operations on Monday, May 23, 2011 at 08.30 hours. After initial recovery of kill-brine and oil-based drilling mud, the well began free-flowing oil and gas through an adjustable choke and the pump was shut-off. The well has been shut-in periodically to observe pressure behavior. Free-flowing production over a flowing period of 68 hours to 07.30 on May 27, 2011 has yielded 647 barrels of oil along with 1,106,300 cubic feet of gas on a minimum choke setting. The production rate for the 24 hours to 07.30 hours on May 27, 2011 was measured at 234 barrels of oil per day ("bopd") and 518,000 cubic feet of gas per day ("cfg/d"). No formation water has been observed to date.

It is intended to continue to produce the Keddington-4 well over the coming few weeks to determine the optimum rate and methods of producing the well. Production from the adjacent Keddington-3z well, which was producing at constrained rates of 100 bopd and 650,000 cfg/d prior to being shut-in during the drilling operations, will resume in the coming weeks once stable production has been established from Keddington-4.

We will provide further updates once stable oil and gas rates for the field are established.

Egdon holds a 75% operated interest in PEDL005(Remainder). The joint venture partners are Terrain Energy Limited (15%) and Alba Resources Limited (10%), a wholly owned subsidiary of Nautical Petroleum.

Commenting on the production testing operations, Egdon's Managing Director Mark Abbott said, "We are pleased by these initial production results from the Keddington-4 well. The good oil rates, lack of any observed formation water and current gas production from the well are all encouraging. We will continue to flow and monitor the well over the next few weeks as we look to define the optimum production strategy for the well and the field as a whole."

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Egdon Updates Ops at Kirkleatham, Keddington

Egdon Updates Ops at Kirkleatham, Keddington

Wednesday, April 27, 2011
Egdon Resources plc

Egdon Resources provided an update on operations at two key UK projects.

Egdon reported that first gas flows were achieved on April 19, 2011 at the Kirkleatham gas development in PEDL068 where the Company holds a 40% operated interest. The joint venture partners are Sterling Resources (UK) Ltd (47%), Yorkshire Exploration Limited (8%) and Montrose Industries Limited (5%).

During the early stages of production from the field, gas flow rates and their duration will be restricted as system performance and gas quality is monitored and training undertaken of the site operatives. It is expected that flow rates will be gradually ramped up to the maximum of around 5 million cubic feet of gas per day and 24 hour operations will commence in the coming weeks.

The gas from Kirkleatham is sold to Sembcorp Utilities (UK) Limited, the operator of the Wilton site for use in their GT2 gas turbine power plant.

Egdon also reported that drilling operations have now been completed at Keddington-4 in Lincolnshire license PEDL005(Remainder) where Egdon holds a 75% operated interest. The joint venture partners are Terrain Energy Limited (15%) and Alba Resources Limited (10%), a wholly owned subsidiary of Nautical Petroleum.

The Keddington-4 well was drilled as a re-entry and horizontal sidetrack from the Keddington-1Z "donor" well, which was drilled by Candecca Resources in 1998. The British Drilling and Freezing Limited BDF28 drilling unit mobilized to site on April 1, and operations began on 4 April. The plugging-back of the existing well was completed and the drilling of the sidetrack commenced at 0700 hours on 9 April from a kick-off depth of 2080 meters. The well reached its total depth of 2468 meters at 1800 hours on April 22. A total of 120 meters of the primary reservoir Unit 1 sandstone with high gas readings indicative of the presence of oil was penetrated some 6 meters shallower than in the Keddington-1Z well. An additional 65 meters of Unit 2 was also drilled. Due to borehole stability concerns, it was decided not to deepen the well as planned to penetrate the "Namurian" sandstones, which had gas indications in Keddington-3. Keddington-4 has now been completed for pumped production with a slotted liner over the entire horizontal section of the well. Once the drilling rig has demobilized from site later this week all surface facilities will be reinstated and the well put into production. Production from the adjacent Keddington-3z well, which has been suspended for safety reasons during the drilling operations, will resume once Keddington-4 has been tested.

Commenting on these developments Egdon's Managing Director Mark Abbott said, "Having achieved the milestone of first gas at Kirkleatham, we now look forward to achieving optimum production rates in the coming weeks. The presence in Keddington-4 of a significant section of Unit 1 reservoir up-dip of the Keddington-1Z well is encouraging and we look forward to the results of production from this well during early May."

Egdon Commences Drilling Ops at Keddington Field

Egdon Commences Drilling Ops at Keddington Field

Monday, April 11, 2011
Egdon Resources plc

Egdon announced the start of drilling operations at the Keddington oil field on Lincolnshire License PEDL005(Remainder).

Egdon holds a 75% interest in and is operator of the PEDL005(Remainder) license. The joint venture partners are Terrain, holding a 15% interest and Alba, a wholly owned subsidiary of Nautical Petroleum, with a 10% interest.

The Keddington-4 well will be drilled as a re-entry and horizontal sidetrack from the Keddington-1Z "donor" well, which was drilled by Candecca Resources in 1998. This oil production well has been shut-in since the drilling of Keddington-3 and 3Z in April 2010. Keddington-4 is planned to penetrate approximately 200 meters of producing Unit 1 sandstone in a new horizontal section. The well is also planned to penetrate the deeper "Namurian" sandstones, which had gas indications in Keddington-3 to provide additional information on this potential gas bearing zone.

The British Drilling and Freezing Limited BDF28 drilling unit began mobilizing to the site on April 1, and operations began on April 4. The plugging-back of the existing well has been completed and the drilling of the sidetrack commenced at 0700 hours on April 9, from a kick-off depth of 2080 meters. The well is intended to be drilled directionally to a total measured depth of around 2750 meters. Drilling and completion operations are expected to last a total of around three weeks.

The well is expected to be completed for free-flowing or pumped production using the existing surface production facilities shortly after the rig is released from the site.

Keddington-4 is designed to increase total field production at a time of high oil prices and provide additional reservoir information in an untested part of the structure to factor into the investment decision on the scale of the gas to electricity generation project planned for the field. This is expected to provide an important additional revenue stream and eventually will enable unconstrained production of oil from the field.

Production from the adjacent Keddington-3z well has been suspended for safety reasons during the drilling operations and will resume once the rig has been demobilized from site and the flow characteristics of Keddington-4 has been determined.