Egdon Resources plc (LON:EDR), a UK-based exploration and production company primarily focused on the hydrocarbon-producing basins of onshore UK, has announced its preliminary results for the year ended 31 July 2021.
Operational and Corporate Highlights
· Completion of site reconfiguration, facilities installation and well recompletion at the Wressle oil field, with test production ongoing since late January 2021 and the proppant squeeze operation successfully completed in July 2021
· Production during the period was 90 barrels of oil equivalent per day (2020: 145 boepd) against guidance of 110-130 boepd due to delays in undertaking the proppant squeeze at Wressle
· Planning application submitted for a side-track drilling operation, associated testing and long-term oil production at the Biscathorpe-2 well site
· Entered a memorandum of understanding with Creative Geothermal Solutions Limited in respect of geothermal projects with an initial focus on Egdon’s Dukes Wood-1 and Kirklington-3Z wells
· Completion of the farm-outs for the Resolution and Endeavour gas discoveries (P1929 and P2304) to Shell Oil U.K. Limited
· Continued refocussing and streamlining of the licence portfolio
Financial Performance
· Gross oil and gas revenues during the year increased by 13.4% to £1.09 million (2020: £0.96 million).
· Loss for the year ended 31 July 2021 of £1.68 million after write-downs, pre-licence costs and impairments of £0.48 million (2020: loss of £4.75 million after write-downs, pre-licence costs and impairments of £3.03 million)
· Basic loss per share of 0.51p (2020: 1.53p)
· Cash at bank £1.96 million as at 31 July 2021 (2020: £0.85 million)
· Net assets as at 31 July 2021 of £27.42 million (2020: £26.67 million)
· Refinancing of the business via a £1 million loan facility, the issue of £1.05 million convertible loan notes following shareholder approval at a General Meeting held on 22 January 2021, and an equity placing of £1.44 million gross in July 2021
Subsequent Events
· At Wressle, a coiled tubing operation, a follow-up to the proppant squeeze operation, was completed in August 2021, with test production recommencing and flow rates exceeding pre-operational expectations. During September, we reported facility constrained instantaneous flow rates of up to 884 barrels of oil per day (“bopd”) along with 480,000 cubic feet of gas (c. 80 barrels of oil equivalent per day). Wressle is already having a positive impact on the Group’s revenues.
· In September 2021 we were advised by Shell that the planned 3-D seismic survey across UK offshore licences P1929 and P2304 (Resolution and Endeavour gas discoveries respectively (Egdon 30%)) would not proceed on the originally expected timeframe of February 2022. Subject to regulatory and Shell approval, we now anticipate that this could go ahead in February 2023.
· On 1 November 2021 planning permission was refused for the Biscathorpe project. The Company will await the formal decision notice before taking advice and considering our options including an appeal.
Outlook
· Initial production guidance for 2021-22 is 240 boepd, with Wressle being the significant contributor.
· With the material cash flow expected from Wressle and Ceres in a significantly improved commodity price environment, and the breadth and quality of the opportunities within the portfolio, we look forward with confidence.
Audiocast
An audiocast of the Results Presentation will be available to view via the following link from 09.30:
http://webcasting.buchanan.uk.com/broadcast/61767494df7b150b81e93816
Commenting on the Results Egdon’s Chairman, Philip Stephens said;
“During what has been a challenging period as we continue to navigate the COVID pandemic and its macro-economic impacts, I can report that we have continued to make progress against our revised strategy and the business is in a significantly stronger place than a year ago. We have strengthened our financial position and are now operating in a higher commodity price environment as worldwide demand recovers.
Operationally the highlight is undoubtedly Wressle, where production has significantly exceeded our expectations and the material revenues from this asset will transform the cash flow for the business in the current period and beyond, providing optionality for near-term growth opportunities in line with our stated strategy.”
