Egdon Resources plc (LON:EDR) is the topic of conversation when Edison Research’s Analyst Elaine Reynolds caught up with DirectorsTalk for an exclusive interview.
Q1: Egdon Resources has seen a step change in production and revenues in the second half of 2021. What do you think is behind this?
A1: The step change has been partly due to the large, unexpected production rate seen from the Wressle-1 well. The company carried a proppant squeeze on this well in the second half of 2021 and expected the well to produce around 500 barrels of oil a day following this but it’s been closer to 760-800 barrels of oil a day so exceeding expectations.
If we combine this with the current high commodity prices we’re seeing, this has driven a 500% increase in revenues, going up from £0.42 million in the first half of 2021 to over £2.5 million for the second half of the year.
Q2: What more do you think can we expect from Wressle?
A2: Production is still constrained at Wressle by gas handling equipment so the company is planning to export gas via short tie into the local network which it hopes to have in place by wintertime. This would allow for flows rates of between 1,200-1,500 barrels of oil per day.
There’s also another reservoir at Wressle that’s yet to be produced and the Penistone Flags reservoir is estimated to hold mid-case contingent oil and gas resources of 1.53 million barrels of oil and 2 bcf of gas.
Q3: How do you think the geopolitical situation could impact Egdon Resources’ activities?
A3: I think particularly the situation of European countries trying to move away from Russian gas and an emphasis on domestic energy security could benefit the company.
They hold significant unconventional resources in the north of England and there’s currently a moratorium on activity there because the company would need to use hydraulic fracturing for that. In April, the UK government has asked the British Geological Society to advise on latest evidence for using hydraulic fracturing. If the moratorium on this was to be lifted, it could be transformational for the company, they hold net 37.6 tcf gas in place.
Also, apart from that, in the UK, planning permission process can be quite lengthy and at the moment there’s onshore projects the Biscathorpe side-track and an exploration well in North Kelsey that have had planning permission refused. We still need to see if local councils’ attitude to this will change in light of achieving domestic energy security.
