UK's Egdon Progresses Farm-out Talks
London-listed Egdon Resources is in advanced talks to farm out a stake in a pair of gas discoveries in the UK North Sea.
The company reported on November 4 it had entered into an exclusivity agreement with “a large internationally recognised exploration and production company” to sell shares in its 100%-owned licences P1929 and P2304. They contain the Resolution and Endeavour gas discoveries respectively. Under the deal’s terms, a binding farm-out contract will need to be signed by January 19 2020 and closed by April 19 2020.
“In our view, the calibre of the proposed partner reflects the upside potential associated with these assets and validates our strategy to add them to our portfolio,” Egdon’s managing director Mark Abbott commented. “This represents a major step forward for these projects and results from the significant work undertaken by the team over a prolonged period.”
Egdon acquired P1929 in 2013 and in April, it reported that Schlumberger had estimated the Resolution discovery’s contingent gas resources at 231bn ft3. It went on to buy rights to P2304 from Arenite Petroleum and Europa Oil & Gas in late 2017. The licences are due to expire at the end of this month, but Egdon has requested extensions and said it was “hopeful” of receiving confirmation from the Oil and Gas Authority soon.
Egdon has interests in 44 licences in the UK, including for the Springs Road site in eastern England, where in March the company and its partner Igas drilled into a rich seam of shale gas. It had been seeking a permit to conduct hydraulic fracturing at the site – an option no longer on the table following the government’s decision to temporarily ban the technique on November 2.