Egdon Resources plc (LON:EDR), the UK Energy Company, has advised that it has entered into a Farmout Option Agreement with York Energy (UK) Holdings Limited relating to onshore Production Licence PL081 in North Yorkshire.
The Licence contains the Weaverthorpe Prospect. Weaverthorpe is a relatively shallow Bunter Sandstone (Triassic) prospect located immediately up-dip of interpreted gas pay in the Fordon-2 well (drilled by BP in 1974). Egdon’s initial evaluation indicates an estimated Mean prospective gas resource of 58 billion cubic feet.
Under the terms of the Agreement Egdon has a period of six months from 3 February 2023 to elect to farm into the Licence (the “Option”). During the Option period, Egdon will undertake additional technical and operational work to de-risk the opportunity, including reprocessing of the vintage 2D seismic data and integration of this with the existing 3D seismic data which defines the western part of the prospect.
As consideration for the grant of the Option, Egdon will pay 100% of the 2023 licence fees.
Should Egdon exercise the Option, it will earn a 70% interest in the Licence and assume operatorship. As consideration Egdon will pay 100% of the costs associated with the planning, drilling, logging, and either short term testing and completion or plugging and abandonment of a well to test the Weaverthorpe Prospect.
In addition, on exercise of the Option, Egdon will pay York a cash sum of £100,000, less any licence fees that were paid by Egdon for 2023.
York has an agreement with the current operator, Third Energy UK Gas Limited (“Third”), entitling it to be assigned the entire legal and beneficial interest in PL081. Egdon will pay 100% of the costs associated with the transfer of the Licence from Third to York and to Egdon (Such transfer being subject to NSTA approval.)
Commenting on the Agreement Mark Abbott, Managing Director of Egdon, said:
“This farmout option for the Weaverthorpe Prospect represents a significant opportunity for Egdon to increase its exposure to a potentially material gas resource at a time when the UK’s reliance on imported energy has come into sharp focus.
The deal structure secures the opportunity at low cost whilst we undertake additional technical due diligence through the application of modern seismic processing technology.
We look forward to updating shareholders on this exciting opportunity over the coming period.”