TIDMEDR
RNS Number : 6015F
Egdon Resources PLC
08 November 2022
8 November 2022 Embargoed for 7.00am
EGDON RESOURCES PLC
("Egdon" or "the Group" or "the Company")
Preliminary Results for the Year Ended 31 July 2022
Egdon Resources plc (AIM: EDR), a UK-based exploration and
production company primarily focused on the hydrocarbon-producing
basins of onshore UK, today announces its preliminary results for
the year ended 31 July 2022.
Operational and Corporate Highlights
-- Egdon net production during the period increased by 160% to
84,894 barrels of oil equivalent ("boe") equating to 233 boe per
day ("boepd") (2021: 32,686 boe, 90 boepd).
-- Wressle production has significantly exceeded forecast
expectations with average gross production during the period of 656
barrels of oil per day ("bopd") at rates constrained by the EA
Permit limits for gas disposal and with zero water production to
date.
-- The Ceres gas field is providing a late life renaissance due
to the high gas price and low operating costs.
-- Following the refusal of planning permission in November 2021
for the drilling of a side-track well, testing and long-term
production at the Biscathorpe project, an appeal was submitted in
April 2022.
-- On 8 March 2022 a revised incentive package was put in place
for all employees through the issue of new share options and the
cancellation of all historical share options.
-- On 14 March 2022, planning permission was refused to extend
the existing consents to drill the North Kelsey-1 exploration well
and an appeal was submitted in April 2022.
-- On 5 April 2022, the Government announced that it had
commissioned the British Geological Survey to advise on the latest
scientific evidence around shale-gas extraction. Report delivered
to BEIS on 5 July 2022.
-- During April 2022, Shell advised Egdon of its intention to
withdraw from licences P1929 and P2304, containing the Resolution
and Endeavour gas discoveries. Egdon applied to the NSTA for an
extension of time to complete the 3D seismic programme.
-- Egdon has assumed the operatorship of PEDL343, increased its
equity to 40% and agreed an extension to 20 March 2024. PEDL343
contains the Cloughton gas discovery.
-- Licences PEDL202 and PEDL130 were relinquished during the period.
Financial Performance
-- Oil and gas revenues increased by over 530% during the period
to GBP6.91 million (2021: GBP1.09 million) as a result of
significantly increased production and strengthening commodity
prices.
-- Earnings before interest, tax, depreciation, amortisation,
asset impairments, impairment reversals and write-downs were
GBP4.67 million (2021: loss of GBP0.72 million).
-- Post tax profit for the period of GBP3.30 million including
GBP1.40 million of impairment reversals, GBP1.80 million of
impairments and GBP0.15 million of write-downs and pre-licence
costs (2021: loss of GBP1.68 million including GBP0.48 million of
write-downs, pre-licence costs and impairments).
-- Basic earnings per share of 0.64p (2021: loss per share of
0.51p). Diluted earnings per share of 0.57p (2021: loss per share
of 0.51p).
-- Net current assets of GBP4.90 million (31 July 2021: GBP0.14)
of which cash and cash equivalents were GBP4.80 million (31 July
2021: GBP1.96 million).
-- The Company has no borrowings following the repayment of a
GBP1 million loan during May 2022.
Subsequent Events
-- On 8 August 2022 the North Kelsey Planning appeal documentation was submitted.
-- On 8 September 2022 the Government announced the lifting of
the moratorium on hydraulic fracturing for shale-gas.
-- Egdon was advised in October 2022 that the NSTA had consented
to Egdon's request for a twelve-month extension to the P1929
licence obligation to acquire the 3D seismic. Egdon will now engage
with the NSTA to confirm the detailed expectation in relation to
this and subsequent timelines. Should the 3D survey not be acquired
by April 2023, P1929 will determine in May 2023. Licence P2304 will
be relinquished.
-- A hearing was held on 11 October 2022 in relation to the
Biscathorpe planning appeal and we now await the Planning
Inspector's decision.
-- On 27 October 2022 the Government reintroduced the moratorium
on hydraulic fracturing for shale-gas.
-- Coincident with the release of its Preliminary Results, the
Company has updated its corporate identity and released a new
website (https://www.egdon-resources.com/).
Outlook
-- Post-period-end production and revenues have continued to be
strong with unaudited August to October 2022 revenues of GBP2.07
million.
The key operational focus for the coming period will be:
-- Maintaining and enhancing the strong production performance
at Wressle whilst progressing both the gas monetisation and
Penistone Flags development as priorities.
-- To add reserves, production and revenues through the drill-bit in both our exploration and development/re-development projects.
-- To progress energy storage, hydrogen and renewable generation projects.
Audiocast
The Company will host a live audiocast of the Results
Presentation via the Investor Meet Company at 10:00am on 8
November. Investors can sign up to Investor Meet Company for free
and add to meet EGDON RESOURCES PLC via:
https://www.investormeetcompany.com/egdon-resources-plc/register-investor
Commenting on the Results Egdon's Chairman, Philip Stephens
said;
" Egdon has been transformed over the past year through growing
revenues and with a significantly improved outlook and operating
environment.
The highlight has been the outstanding performance of the
Wressle oil field which along with production from our existing
fields and high oil and gas prices has resulted in a strong
financial performance.
Despite the reintroduction of the moratorium on shale-gas by the
Sunak led government, we will continue to make the case for the
strategic importance that shale-gas could make to the UK's economy
and security of supply.
In the meantime, Egdon will focus on progressing its
conventional oil and gas business and nascent energy transition
projects to continue delivering long term value to its
shareholders."
For further information please contact:
Egdon Resources plc
Mark Abbott, Martin Durham 01256 702 292
Buchanan
Ben Romney, Jon Krinks 020 7466 5000
Nominated Adviser & Joint Broker - WH Ireland Limited
Chris Hardie, Megan Liddell 020 7220 1666
Joint Broker & Financial Advisors - VSA Capital Limited
Andrew Monk (Corporate Broking) 020 3005 5000
Andrew Raca (Corporate Finance)
Qualified Person Review
In accordance with the AIM Rules - Note for Mining and Oil and
Gas Companies, this release has been reviewed by Mark Abbott,
Managing Director of Egdon, who is a geoscientist with over 30
years' experience and is a member of the Petroleum Exploration
Society of Great Britain and a Fellow of the Geological Society. Mr
Abbott has consented to the inclusion of the technical information
in this release in the form and context in which it appears.
Evaluation of hydrocarbon volumes has been assessed in
accordance with the 2018 Petroleum Resources Management System
(PRMS) prepared by the Oil and Gas Reserves Committee of the
Society of Petroleum Engineers (SPE) and reviewed and jointly
sponsored by the World Petroleum Council (WPC), the American
Association of Petroleum Geologists (AAPG), the Society of
Petroleum Evaluation Engineers (SPEE), the Society of Exploration
Geophysicists (SEG), the Society of Petrophysicists and Well Log
Analysts (SPWLA) and the European Association of Geoscientists
& Engineers (EAGE).
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the UK Market Abuse Regulations ("MAR"). Upon the publication of
this announcement via Regulatory Information Service ("RIS"), this
inside information is now considered to be in the public
domain.
Chairman's Statement
I am delighted that your Company has been transformed over the
past year through growing revenues and with a significantly
improved outlook and operating environment.
The highlight of the year has clearly been the outstanding
production and financial performance of the Wressle oil field. The
year has seen the positive impact of Wressle combined with high oil
and gas prices which along with production from our existing fields
has translated into a robust financial performance for the
Company
The tragic events in Ukraine and the weaponization of energy by
Russia, have seen gas prices in Europe reach unprecedented levels,
leading to a renaissance of our Ceres gas field and heralding a
renewed focus by governments worldwide on energy security and cost
of supply.
The UK Government's Energy Security Strategy has belatedly
recognised the importance of UK oil and gas production. The
national and local benefits of indigenous oil and gas supplies are
clear and even more compelling in the context of the current energy
crisis. Without indigenous oil and gas, the UK will simply
'offshore' its emissions, employment, and fiscal benefits and be at
the mercy of international energy markets. This culminated in the
lifting of the moratorium on hydraulic fracturing for shale-gas by
the Government on 8 September 2022. Unfortunately, this was
reversed by the incoming Government on 27 October 2022.
Egdon remains well positioned to be at the forefront of any
development of shale-gas given its enviable acreage position in the
Gainsborough Trough and other shale-gas basins (151,742 net acres
(614 km2) and 37.6 TCF gas in place). We will continue to make the
scientific, environmental and commercial case that shale-gas should
be part of the long-term solution to the UK's energy needs and that
this can be done in a safe and environmentally sustainable
manner.
The UK is committed by law to reaching Net Zero carbon emissions
by 2050 and Egdon has put in place a Climate Change Policy to guide
and measure Egdon's progress in this critical area. Whilst oil and
gas are currently the Company's core focus, we are always looking
to the future and are reviewing and progressing a number of
opportunities in energy storage, hydrogen and renewable energy
spaces and expect to make further progress on these in the coming
period.
With these positive developments the Company believes the time
is right for the rebranding of Egdon as a modern, forward-looking,
energy business and we are pleased to present our new corporate
identity and website ( https://www.egdon-resources.com ).
Financial and Statutory Information
The period has seen a significant strengthening of the financial
position of the Company. This has been driven by over a 530%
increase in oil and gas revenues during the period to GBP6.91
million (2021: GBP1.09 million) as a result of significantly
increased production and strengthening commodity prices. The
average realised price per barrel of oil equivalent was 144% higher
at $81.40/boe (2021: $33.35/boe).
Earnings before interest, tax, depreciation, amortisation, asset
impairments, impairment reversals and write-downs were GBP4.67
million (2021: loss of GBP0.72 million).
The overall profit for the period was GBP3.30 million including
GBP1.40 million of impairment reversals in relation to Ceres,
Keddington, Avington, Waddock Cross and Kirkleatham, as well as,
impairments of GBP1.80 million in relation to the write down of
P1929 and P2304 and write-downs and pre-licence costs of GBP0.15
million (2021: loss of GBP1.68 million including GBP0.48 million of
write-downs, pre-licence costs and impairments).
Cash and cash equivalents as at 31 July 2022 were GBP4.80
million (2021: GBP1.96 million) and net current assets stood at
GBP4.90 million (31 July 2021: GBP0.14 million).
The Group has no borrowings (2021: GBP1.01 million) having
repaid a GBP1 million loan.
Whilst there were no fund-raising activities during the year
(2021: GBP3.35 million), a total of 8,465,000 warrants were
exercised during the period resulting in cash of GBP0.21 million
being introduced to the Company. Warrant exercises have continued
post year end at an accelerated rate.
Post-period end production and revenues have continued to be
strong with August to October 2022 revenues of GBP2.07 million.
Strategy
The Company's strategy takes account of the challenges and
opportunities presented by the UK's move to Net Zero carbon
emissions by 2050. This, taken together with the wider economic,
political and operating environment which has seen a renewed focus
on indigenous energy supplies.
Our strategy has been updated to reflect these realities as
follows:
1. Maintain geographical focus on the UK.
2. Focus on growth in production and revenue through
conventional production, appraisal and exploration projects.
3. Develop energy storage, hydrogen and renewable energy
projects utilising Egdon's existing assets, knowledge of the UK's
onshore geology and core technical skills and operating
experience.
4. Maintain our significant portfolio of shale-gas assets.
Environment and Social Governance, Climate and Emissions
Egdon wishes to build value through developing sustainable
long-term relationships with partners and the community and is
committed to the highest standards of health, safety and
environmental protection. The Company is committed to its
operations being Net Zero by 2050. These factors command equal
prominence with other business considerations. Egdon has
established a Climate Change Policy as detailed in the Corporate
Governance Statement. The Board is committed to reducing our
emissions from our operations and to monitoring and reporting
performance in this area.
Oil and Gas
Egdon holds interests in 36 licences in the UK (2021: 38
licences) with exposure to the full cycle of opportunities from
exploration through to development and production.
Production
Production during the period was 233 boepd (2021: 90 boepd),
being primarily from Wressle and Ceres as well as contributions
from Keddington and Fiskerton Airfield. This production was
achieved despite Wressle only recommencing flow on 19 August 2021
and the Ceres field being shut-in for annual maintenance for 20
days during September 2021 and for all of July 2022.
The standout asset for Egdon during the year has been Wressle
(Egdon 30%) where production has significantly exceeded our
expectations following the proppant squeeze operation. Production
is currently constrained by the Environmental Permit to between
700-725 bopd (210-218 bopd net). We have continued to make progress
on both the gas monetisation and planning for the development of
the Penistone Flags reservoir which are discussed in more detail in
the Operating Review.
The Ceres gas field (Egdon 10%) is undergoing a late-life
renaissance for the Company, contributing material revenues and
cash flow. A reassessment of the life of field economics has led to
the reversal of a previous impairment of GBP0.507 million during
the period and we now expect production to continue through at
least to 2024.
Keddington (Egdon 45%) has continued to contribute tangible
revenues during this time of high oil prices. A viable drilling
location in the east of the field has been identified targeting up
to 183,000 barrels of incremental production and this is likely to
be drilled during H2 2023.
At Fiskerton Airfield (Egdon 80%) our focus remains on
maximising production from the existing wells and managing costs.
In the medium term, there is potential for the site to be used to
manage any produced water from other Egdon sites through the
existing water injection well.
Other key near-term projects identified to increase production
and revenues include Waddock Cross (Egdon 55%) and Avington
(28%).
At Kirkleatham gas field (Egdon 68%) we are in advanced
discussions regarding a potential farm-out of a geophysical
programme and a side-track well and remain hopeful of concluding a
deal in the near future.
The improving operational and financial outlook for our
producing assets has resulted in a reversal of a total of GBP1.40
million of prior impairments.
Exploration/Appraisal
Exploration/Appraisal drilling in 2023 is conditional on the
outcome of the ongoing planning appeals at Biscathorpe and North
Kelsey. A planning hearing was held for Biscathorpe on 11 October
2022 and the appeal documentation for North Kelsey was submitted on
8 August 2022. Decisions for both appeals could be expected around
the turn of the year. Biscathorpe and North Kelsey are
volumetrically significant with each project having gross Mean
Prospective Resources of 6.5 million barrels.
Following the decision by Shell in April 2022 to withdraw from
P1929 and P2304, which hold the Resolution and Endeavour gas
discoveries, Egdon quickly put in place a plan to acquire a
modified 3D survey in the first quarter of 2023 and requested an
extension to the obligations on the licence. The NSTA initially
rejected this request and following further representations, has
belatedly, in October 2022, consented to Egdon's request for a
twelve-month extension to the P1929 licence obligation to acquire
the 3D seismic. Should the 3D survey not be acquired by April 2023,
which is now more than highly challenging, P1929 will determine in
May 2023. An impairment of GBP1.80 million has been made as a
result of this expectation of both licences lapsing in the coming
period.
During the year Egdon has assumed the operatorship of PEDL343,
increasing its interest to 40% and securing an extension to the
initial term of the licence to 20 March 2024. The licence contains
the Cloughton tight gas discovery, which flowed gas from a number
of different reservoirs when flow tested in 1984.
Energy storage, Hydrogen and Renewables including Geothermal
Egdon has focused on energy transition opportunities which
utilise the Company's core skills, knowledge, and operating
experience.
Our initial focus has been on the geothermal potential within
our existing wells and fields. A programme to plug and abandon the
existing Dukes Wood-1 oil well and recomplete it for geothermal
heat production has been developed and submitted to the NSTA. It is
anticipated that subject to regulatory approval, this work, which
is a proof of concept, will now form part of a larger programme of
work and commence during 2023. Egdon is working with Creative
Geothermal Solutions Limited (CGSL) on this and other geothermal
opportunities.
In parallel, Egdon is also reviewing a number of opportunities
for energy storage, hydrogen and renewable generation and hopes to
make material progress in relation to these in the coming period.
Like the rest of the Egdon portfolio, these projects have been
selected to contribute tangible additional value to the
Company.
Outlook
Production guidance for the full financial year 2022-23 is
225-245 boepd.
Operationally, our priorities for the coming year are
three-fold. Firstly, a focus on maintaining and enhancing the
strong production performance at Wressle whilst progressing both
the gas monetisation and development of the Penistone Flags.
Secondly, looking to add reserves, production and revenues through
the drill-bit in Egdon's exploration and development/redevelopment
projects. Thirdly, progressing our nascent energy storage, hydrogen
and renewable generation opportunities during the coming year.
With both Wressle and Ceres contributing significant cash flow
and the quality of our near-term exploration, appraisal and
development opportunities, we can look forward with renewed
confidence to the future.
As always, I would like to thank our shareholders for their
continued support and the unwavering effort of the Egdon team on
behalf of all stakeholders.
Finally, I wish to announce that after seventeen years as your
Chairman, I have informed the Board of my wish to retire. A process
is in train to recruit my replacement, and this is expected to be
completed during the first quarter of 2023. It has been an immense
privilege and pleasure to serve on the Board of Egdon and I am
pleased that my proposed retirement has coincided with your Company
occupying a financially strong, secure and sustainable position.
With its projects spanning the energy transition spectrum, I
believe shareholders can look forward to Egdon delivering further
growth in the years to come.
Philip Stephens
Chairman
7 November 2022
OPERATING REVIEW
I am pleased to provide shareholders with a more detailed review
of the Company's assets, operations and plans with a focus on
progress against objectives, key priorities, risks, and potential
growth drivers.
Health, Safety & Environment
Egdon is fully committed to high standards of Health, Safety and
Environmental ("HSE") management, protection and performance with
all operational activity performed under the umbrella of the
Group's HSE Management System ("HSEMS"). In line with our approach
of continual improvement, the HSEMS is subject to continuing review
and revision to ensure it remains fit for purpose. During the
reporting period there was one reportable health and safety
incident (2021: Nil). This was a hand tool related injury which did
not lead to any lasting health issues.
The Company was compliant with all of its environmental permits
and planning consents.
Communications
Egdon has today released an updated website
(www.egdon-resources.com) which provides stakeholders with
up-to-date information on the Company and its operations. Egdon
also has a community facing website (www.egdon-community.com) which
provides a portal for information related to Egdon's operational
sites. Summaries of press releases, non-price-sensitive information
and other relevant updates are also shared via the Company's
Twitter account (@EgdonResources).
To improve the efficiency of sharing corporate information with
shareholders, Egdon is now able to provide the option for
electronic communication.
Progress against objectives
As part of our preliminary results reporting (November 2021) and
Interim Results (April 2022) we set out objectives against which I
can report on progress.
Objective Set Progress Against Objective
----------------------------------------------------- -------------------------------------------------------------
1) Managing our operations to
ensure the continued safety * Successfully implemented COVID secure procedures and
of employees, contractors and systems with no adverse direct impacts
other stakeholders in response
to the evolving COVID-19 situation
----------------------------------------------------- -------------------------------------------------------------
2) Continuing to carefully manage
costs and cash through the current * Cost saving measures (including salary reductions)
challenging operating and macro-economic introduced during 2021 have been reversed as business
environment and ensuring the outlook has improved
business is capitalised for
the future
* Positive cash flow established through Wressle, Ceres
and other production significantly improving
financial status of the Company
* Company continues to focus on cost-control
----------------------------------------------------- -------------------------------------------------------------
3) Finalising the development
of the Wressle oil field for * Production start-up achieved in January 2021
production start-up in January
2021 and progressing the proppant
squeeze at the Wressle oil field * Proppant squeeze successfully undertaken in July 2021
to attain target production with coiled tubing completed in August 2021
of 150 bopd net to Egdon
* Production continues above expectation
----------------------------------------------------- -------------------------------------------------------------
4) Continuing to optimise oil
and gas production from the * Facilities upgraded on site including new gas
Ashover Grit reservoir at Wressle, incineration unit
building on the strong performance
to date
* Production constrained by Environmental Permit limits
on gas incineration
* No water produced to date
----------------------------------------------------- -------------------------------------------------------------
5) Progressing gas monetisation
at Wressle * Site micro-turbine to be installed for site power
* Up to 1.75 MW of electricity export to private local
grid to be progressed
----------------------------------------------------- -------------------------------------------------------------
6) Finalising plans for development
of the material Contingent Resources * Reservoir modelling completed and outline development
in the Penistone Flags at Wressle defined including well types
* Final well locations to be defined on reprocessed 3D
seismic volume before commencing planning application
process
----------------------------------------------------- -------------------------------------------------------------
7) Securing planning consent
via appeal for the Biscathorpe * Planning Appeal for Biscathorpe submitted in April
and North Kelsey projects 2022 and a Planning Hearing was held on 11 October
2022. Outcome awaited
* Planning Appeal for North Kelsey submitted in August
2022. Outcome awaited
----------------------------------------------------- -------------------------------------------------------------
8) Progressing a farm-out of * On hold pending planning appeal outcomes
North Kelsey-1 and Biscathorpe-2Z
with a view to drilling during
2022
----------------------------------------------------- -------------------------------------------------------------
9) Streamlining the conventional
resource portfolio to concentrate * Non-core and low prospectivity assets relinquished or
on a smaller number of key assets licences lapsed
whilst maintaining our position
in core unconventional resource
assets * Ongoing review of all assets
----------------------------------------------------- -------------------------------------------------------------
10) Progressing the acquisition
of the 3D seismic survey over * During April 2022, Shell advised Egdon of its
the Resolution and Endeavour intention to withdraw from licences P1929 and P2304
gas discoveries in February
2022
* Egdon was advised in October 2022 that the NSTA had
consented to Egdon's request for a twelve-month
extension to the P1929 licence obligation to acquire
the 3D seismic. Egdon will now engage with the NSTA
to confirm the detailed expectation in relation to
this and subsequent timelines. Should the 3D survey
not be acquired by April 2023, P1929 will determine
in May 2023. Licence P2304 will be relinquished
----------------------------------------------------- -------------------------------------------------------------
11) Subject to lifting of the
current moratorium on hydraulic * Moratorium lifted in September 2022 and then
fracturing operations for shale-gas, reinstated in October 2022
progressing the planning and
permitting for the drilling
and subsequent testing of the
Springs Road-2 well
----------------------------------------------------- -------------------------------------------------------------
12) Further developing the Company's
energy transition opportunities * A programme to recomplete Dukes Wood-1 for geothermal
including repurposing of the heat production has been developed and submitted to
Dukes Wood-1 well for geothermal the NSTA
heat
* Planned activity in 2023 as part of wider programme
of works
----------------------------------------------------- -------------------------------------------------------------
13) Progressing drilling plans
to target incremental oil production * Reprocessing of the Keddington 3D survey undertaken
/ near field exploration opportunities and ahead of finalising well target
at the Keddington oil field
and field redevelopment at Waddock
Cross * Progress made with extending site lease and
submission of revised Field Development Plan for
Waddock Cross
----------------------------------------------------- -------------------------------------------------------------
Assets & Operations
Egdon held interests in 36 licences in the UK at year end (2021:
38) with exposure to the full cycle of opportunities from
exploration through to development and production.
Licensing
Highlighted below are key changes to our licence portfolio
during and post-period.
Licence Changes
-------- --------------------------------------------------------------
PEDL343 Licence extended to 20 March 2024, Egdon assumed operatorship
and increased equity interest to 40%
-------- --------------------------------------------------------------
PEDL209 Egdon is in the process of increasing its interest to
100% due to withdrawal of other JV parties
-------- --------------------------------------------------------------
PEDL202 Interest in licence relinquished during August 2021
-------- --------------------------------------------------------------
PEDL130 Interest on licence relinquished during July 2022
-------- --------------------------------------------------------------
P1929 To determine in May 2023 if 3D seismic cannot be acquired
by April 2023 subject to NSTA discussions
-------- --------------------------------------------------------------
P2304 To be relinquished in Q4 2022
Production and Development Assets
Production during the period was 233 boepd, (2021: 90 boepd)
from Wressle, Ceres, Keddington and Fiskerton Airfield.
Wressle (PEDL180/182: Egdon 30% interest)
The Wressle Field has been independently audited (2016 Competent
Person's Report ("CPR" ERCE) with gross 2P Reserves of 0.62 million
barrels of oil ("mmbo") and 2C Resources of 1.53 mmbo.
A proppant squeeze operation on the Ashover Grit reservoir was
successfully completed in late July 2021 and the well resumed
production on the 19 August 2021. Oil production has significantly
exceeded Egdon's expectation. Since production commenced at
Wressle-1 in January 2021, the cumulative gross production through
to 31 July 2022 has exceeded 225,000 barrels of oil with no
formation water produced to date.
Environmental monitoring throughout the proppant squeeze and
subsequent production operations has shown no measurable impact on
water quality, no associated seismicity and that noise levels have
been within the permitted levels.
Over the last twelve months a series of improvements and
upgrades to the Wressle site production facilities have been
successfully undertaken. The implementation of a two-stage gas
utilisation scheme is currently being progressed, which will enable
the oil production limit to be lifted. For the first stage, we
intend to utilise the Ashover Grit gas for electricity generation
and export, for which planning is already in place. This will be
undertaken in two steps. Initially we will replace the site diesel
generator with a gas micro-turbine for site electrical power, and
secondly, we will install a separate gas engine to generate and
export up to 1.75 MW of electricity into a local private power
network.
We expect installation of the microturbine to be completed by
year end. In parallel we are expediting the sourcing of a gas
engine and equipment for step two and will update on timing once
confirmed. The additional revenue from monetisation of the Ashover
Grit gas, together with increased oil production rates will have a
positive impact on the value of the Wressle field development.
Stage two of the gas monetisation will focus on gas export from
the Penistone Flags reservoir.
We are finalising the reprocessing of the Wressle 3D seismic
data and interpretation of this will inform the final location of
new development wells that will target the Penistone Flags (Gross
1.53 mmbo plus 2 billion cubic feet 2C Resources (CPR, 2016)).
Drilling of the Penistone Flags will be progressed at the earliest
opportunity, subject to receipt of regulatory and planning consents
as we look to build on the successes that have been achieved to
date. In addition to the Penistone Flags, any new well will also
appraise other reservoirs that were proven hydrocarbon bearing in
the Wressle-1 discovery well.
A new CPR will be commissioned to provide updated reserve and
resource volumes for the Wressle field.
Ceres (P1241: Egdon 10%)
Ceres gas production during the period has declined to 38 boepd
plus 2 boepd of condensate net to Egdon (2021: 58 boepd plus 4
boepd of condensate). The recent strong gas prices make the asset
highly economic, and production is now expected to continue through
to at least 2024 with abandonment to follow.
Keddington (PEDL005R: Egdon 45%)
Keddington continues to produce at a net rate to Egdon of 15
bopd (2021: 8 bopd) from one well. A technical review of the
Keddington field and the surrounding licence area was completed
towards the end 2021. The results of this work confirmed that there
remains an undrained oil resource located on the eastern side of
the Keddington field. Planning consent for further drilling is
already in place, and this presents an opportunity to increase
production via a development side-track from one of the existing
wells. To facilitate confirmation of the target definition and well
design planning, Egdon has completed the re-processing of its
legacy 3D seismic data. Modelling indicates that a horizontal
side-track has the potential to increase the Keddington oil
production from between 113,000 barrels and 183,000 barrels.
Subject to finalising the sub-surface location, it is planned to
drill the well during 2023.
In addition, a near-field exploration opportunity exists at
Keddington South, which has a gross Mean Prospective Resource
Volume of 635,000 barrels of oil and at the Louth Prospect, with a
gross Mean Prospective Resource of 600,000 barrels of oil. It is
intended that the Louth prospect would now be accessed from the
existing Keddington site.
Fiskerton Airfield (EXL294: Egdon 80%)
Fiskerton Airfield is currently shut-in whilst it awaits a
workover programme to reinstate production. Our focus at Fiskerton
Airfield remains on maximising production from the existing wells
and managing costs. Longer term potential for the site is to use it
to manage produced water from other sites through the existing
water injection well on site and also for potential geothermal
repurposing.
Waddock Cross (PL090: Egdon 55%)
Waddock Cross is currently shut-in. Independent reservoir
modelling has shown that a new horizontal well on the field could
yield commercial oil production (500-800 bopd). Given the large in-
place oil volume (Mean oil in place of c. 57 million barrels of
oil) this asset has been high graded by the Company as planning
consent and facilities are in place to test this significant
opportunity.
Kirkleatham (PEDL068: Egdon 68%)
The Kirkleatham gas field remains shut in. Potential exists for
a side-track to access a volume of gas in the attic of the
structure. Furthermore, additional upside may exist for a tight gas
resource in the underlying Carboniferous. The Company is engaged
with a Third Party who has expressed an interest in farming into
PEDL068 by undertaking a small geophysical work programme and the
drilling of a side-track up dip of the Kirkleatham-4 well. Egdon
would be carried through these operations.
Avington (PEDL070: Egdon 28%)
The Avington field remains shut-in. In December 2021, the field
operator was advised that planning consent had been awarded on
appeal. The forward plan is to undertake a phased scope of works to
redevelop the field which includes establishing on site water
handling facilities.
Conventional Exploration and Appraisal Assets
The Company continues to progress those conventional resource
opportunities that offer maximum impact via the drill-bit.
Key projects are:
Biscathorpe (PEDL253: Egdon 35.8%)
Evaluation of the results of the Biscathorpe-2 well, together
with the reprocessing of 264 square kilometres of 3D seismic data
identified a possible material and commercially viable hydrocarbon
resource remaining to be appraised. The planned side-track would
target the Dinantian Carbonate, where a 68-metre oil column was
discovered in Biscathorpe-2. The Dinantian Carbonate has been
assessed by Egdon to have a gross Mean Prospective Resource volume
of 2.55 mmbo. The overlying Basal Westphalian Sandstone has the
potential to add gross Mean Prospective Resources of 3.95 mmbo.
Commercial screening conducted by Egdon indicates break-even full
cycle economics to be US$18.07 per barrel.
In November 2021, Egdon's planning application to undertake
side-track drilling, well testing and long-term oil production was
rejected by Lincolnshire County Council (LCC). In April 2022, Egdon
submitted an appeal against LCC's decision which was heard by the
Planning Inspectorate on the 11 October. We would expect to hear
the outcome of the Appeal around the turn of the year.
North Kelsey (PEDL241: Egdon 50%)
The North Kelsey Prospect has been mapped from 3D seismic data
and has potential for oil in up to four stacked conventional
Carboniferous reservoir targets: the Chatsworth Grit, Beacon Hill
Flags, Raventhorpe Sandstone and Santon Sandstone. North Kelsey is
geologically analogous to the Wressle field. Egdon has calculated
the gross Prospective Resources to range from 4.66 mmbo up to 8.47
mmbo, with a Mean Resource volume of 6.47 mmbo.
Egdon's application to extend the planning consent to drill the
North Kelsey prospect was rejected by LCC in April 2022. In August
of this year, Egdon submitted an appeal to the Planning
Inspectorate with a decision expected early in 2023.
Resolution and Endeavour (P1929 & P2304: Egdon 30%)
In April of 2022, licence operator Shell advised Egdon and the
NSTA that it had decided to withdraw from P1929 and P2304, which
cover the Resolution and Endeavour gas discoveries. Shell's
technical assessment of the Resolution discovery concluded that it
has Gross Mean Contingent Gas Resource volume is in excess of 500
bcf; this is 250 bcf more than the Resolution CPR (2019). Given its
considerable size, Resolution has the potential to make a material
contribution to the UK's future gas supply. Egdon submitted a
request to the NSTA that the licence obligations be extended and
responsibility for the commitment work programme over P1929 be
transferred from Shell. Unfortunately, the NSTA initially rejected
this request, but following further representations has belatedly
in October 2022, consented to Egdon's request for a twelve-month
extension to the P1929 licence obligation to acquire the 3D
seismic. Should the 3D survey not be acquired by April 2023, which
is now more than highly challenging, P1929 will determine in May
2023. An impairment of GBP1.80 million has been made as a result of
the expectation of both licences lapsing in the coming period.
Cloughton (PEDL343: Egdon 40%)
Egdon has assumed the operatorship of PEDL343 from Third Energy
and has also increased its equity in the Licence to 40%. We have
agreed a Retained Area Work Programme with the NSTA that includes
an assessment of the conventional and unconventional resource
potential. Work is underway to model the risks attached to induced
seismicity across the licence area. Cloughton-1, a discovery
drilled in 1984 confirmed the presence of gas in a number of low
porosity Carboniferous aged sandstone reservoirs.
Shale-gas
The Group's unconventional resources acreage position in
Northern England is 151,742 net acres (614km2 net) (2020: 164,280
net acres (664km(2) net)). This remains a significant and
potentially highly valuable position with estimated Mean volumes of
undiscovered GIIP of 37.6 TCF net to Egdon, independently assessed
by ERCE (2019: 47.6 TCF).
Egdon's core area is the Gainsborough Trough of Nottinghamshire,
Lincolnshire and Yorkshire where the Group holds interests in
71,361 net acres (2021: 71,361 net acres).
The results from the 2019 Springs Road-1 well ("SR-01" - Egdon
14.5%), compare favourably with some of the best US commercial
shale-gas operations and highlight a potentially world class
resource in the Gainsborough Shale. Activity remains paused
following the chaotic lifting and then reintroduction of the
moratorium on hydraulic fracturing for shale-gas.
Egdon also retains interests in the Widmerpool Basin and Humber
Basins of the East Midlands, the Cleveland Basin of NE England and
the Blacon Basin of NW England.
Energy Transition Opportunities
The energy transition will present a number of challenges and
opportunities for Egdon. The Company recognises the potential for
repurposing of its fields, sites and wells for renewable purposes
as well as with additional new stand-alone projects in geothermal,
hydrogen, energy storage and renewables.
Egdon is also reviewing and progressing a number of
opportunities for energy storage, hydrogen and renewable generation
and hopes to make material progress in relation to these in the
coming period.
Dukes Wood Geothermal
Egdon's initial focus has been on geothermal opportunities
within our existing well stock. A detailed review has highlighted
an anomalously high geothermal gradient local to our shut-in wells
at the Dukes Wood and Kirklington oil fields.
Working with Creative Geothermal Solutions Limited (CGSL) we
have developed and submitted to the regulators (NSTA and HSE) a
programme of works to plug and abandon the existing Dukes Wood-1
oil well and recomplete it for a test programme measuring its
geothermal heat production. It is anticipated that work on this
proof of concept project will commence during 2023 as part of a
wider programme of well interventions.
Outlook and Priorities
Initial production guidance for the 2022/2023 financial year is
225-245 boepd from Wressle, Ceres, Keddington and Fiskerton
Airfield.
The key operational priorities for the Company during the coming
year are:
-- Maintaining and enhancing the strong production performance
at Wressle whilst progressing both the gas monetisation and
Penistone Flags development
-- Add reserves, production and revenues through the drill-bit in both our exploration and development/re-development projects
-- Progress energy storage, hydrogen and renewable generation projects.
Mark Abbott
Managing Director
7 November 2022
EGDON RESOURCES PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 31 JULY 2022
2022 2021
Notes GBP GBP
------------------------------------------------------------------------------------- ----- ----------- -----------
Continuing operations
Revenue - continuing 6,907,865 1,092,735
Cost of sales - exploration costs written-off and pre-licence costs (151,490) (206,156)
Cost of sales - impairments of intangible fixed assets 2 (1,801,790) (276,362)
Cost of sales - impairments of property, plant and equipment 3 1,396,903 -
Cost of sales - depreciation (1,521,170) (183,711)
Cost of sales - direct production costs (1,257,226) (918,689)
Cost of sales - other, including shut-in fields (205,034) (190,573)
Total cost of sales (3,539,807) (1,775,491)
------------------------------------------------------------------------------------- ----- ----------- -----------
Gross profit/(loss) 3,368,058 (682,756)
Administrative expenses (914,681) (862,060)
Other operating income 142,926 156,616
2,596,303 (1,388,200)
Finance income 46,369 50,616
Finance costs (235,729) (344,051)
------------------------------------------------------------------------------------- ----- ----------- -----------
Profit/(loss) before taxation 2,406,943 (1,681,635)
Taxation 890,667 -
------------------------------------------------------------------------------------- ----- ----------- -----------
Profit/(loss) for the year 3,297,610 (1,681,635)
Other comprehensive income for the year - -
------------------------------------------------------------------------------------- ----- ----------- -----------
Total comprehensive income/(loss) for the year attributable to equity holders of the
parent 3,297,610 (1,681,635)
------------------------------------------------------------------------------------- ----- ----------- -----------
Basic earnings/(loss) per share 4 0.64p (0.51)p
Diluted earnings/(loss) per share 4 0.57p (0.51)p
------------------------------------------------------------------------------------- ----- ----------- -----------
EGDON RESOURCES PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 JULY 2022
Notes 2022 2021
GBP GBP
-------------------------------------- ------ ------------ ------------
Non-current assets
Intangible assets 19,562,165 21,241,378
Property, plant and equipment 9,823,494 8,719,310
Right-of-use asset 487,736 617,808
Trade and other receivables 661,274 384,831
---------------------------------------------- ------------ ------------
Total non-current assets 30,534,669 30,963,327
---------------------------------------------- ------------ ------------
Current assets
Inventory 17,019 -
Trade and other receivables 2,685,043 1,084,992
Cash and cash equivalents 4,800,472 1,959,728
---------------------------------------------- ------------ ------------
Total current assets 7,502,534 3,044,720
---------------------------------------------- ------------ ------------
Current liabilities
Trade and other payables (2,493,573) (1,772,284)
Other financial liabilities (112,292) (1,135,804)
Net current assets 4,896,669 136,632
---------------------------------------------- ------------ ------------
Total assets less current liabilities 35,431,338 31,099,959
Non-current liabilities
Lease liabilities (900,261) (1,012,553)
Provisions (3,459,142) (2,669,107)
---------------------------------------------- ------------ ------------
Net assets 31,071,935 27,418,299
---------------------------------------------- ------------ ------------
Equity
Share capital 17,203,299 17,118,649
Share premium 27,640,047 27,513,071
Share based payment reserve 144,400 122,254
Retained earnings (13,915,811) (17,335,675)
---------------------------------------------- ------------ ------------
31,071,935 27,418,299
--------------------------------------------- ------------ ------------
EGDON RESOURCES PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 31 JULY 2022
2022 2021
GBP GBP
---------------------------------------------------------------- --------------------- -----------------------------
Cash flows from operating activities
Profit/(loss) before tax 2,406,943 (1,681,635)
Adjustments for:
Depreciation and impairments of non-current assets 1,948,770 594,131
Increase in decommissioning provision - written off to cost of
sales 49,125 28,908
Foreign exchange (gains)/loss (217,665) 4,525
(Increase)/decrease in inventory (17,019) 5,466
(Increase)/decrease in trade and other receivables (832,295) 696,675
Increase/(decrease) in trade and other payables 563,507 (1,057,412)
Finance costs 235,729 344,051
Finance income (46,369) (50,616)
Share based payment expense 144,400 -
Net cash flow generated from/(used in) operating activities 4,235,126 (1,115,907)
---------------------------------------------------------------- --------------------- -----------------------------
Cash flows from investing activities
Payments for exploration and evaluation assets (216,061) (384,827)
Purchase of property, plant and equipment (349,460) (719,288)
Sale of property, plant and equipment - 209,872
Redemption of redeemable preference shares - 50,000
---------------------------------------------------------------- --------------------- -----------------------------
Net cash used in capital expenditure and investing activities (565,521) (844,243)
---------------------------------------------------------------- --------------------- -----------------------------
Cash flows from financing activities
Issue of convertible loan notes - 1,051,035
Costs associated with issue of convertible loan notes - (67,236)
Issue of shares 211,626 1,440,350
Costs associated with issue of shares - (78,203)
Redemption of redeemable preference shares - (50,000)
Principal paid on lease liabilities (102,946) (77,071)
Interest paid on lease liabilities (59,745) (74,748)
Interest paid (11) -
Interest received 52 -
Loan (repayment)/drawdown (1,000,000) 1,000,000
Interest paid on loan (100,420) (66,948)
---------------------------------------------------------------- --------------------- -----------------------------
Net cash flow (used in)/generated from financing (1,051,444) 3,077,179
---------------------------------------------------------------- --------------------- -----------------------------
Net increase in cash and cash equivalents 2,618,161 1,117,029
Cash and cash equivalents at beginning of year 1,959,728 847,224
Effects of exchange rate changes on the balance of cash held in
foreign currencies 217,665 (4,525)
---------------------------------------------------------------- --------------------- -----------------------------
Cash and cash equivalents at end of year 4,795,554 1,959,728
---------------------------------------------------------------- --------------------- -----------------------------
Cash and cash equivalents comprise:
Cash at bank and in hand 4,800,472 1,959,728
Bank overdrafts (4,918) -
---------------------------------------------------------------- --------------------- -----------------------------
Cash and cash equivalents at end of year 4,795,554 1,959,728
---------------------------------------------------------------- --------------------- -----------------------------
In 2022 significant non-cash transactions included the recognition of the NPI provision of
GBP608,000 which is included in other provisions, the share based payment charge of GBP144,400
and the recognition of the deferred tax asset of GBP1,043,531.
In 2021 significant non-cash transactions included the recognition of the decommissioning
provision of GBP80,000 and the convertible loan which was subsequently converted to equity.
EGDON RESOURCES PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 JULY 2022
Group Share based Convertible
Share Share payment debt option Retained Total
capital premium reserve reserve earnings equity
GBP GBP GBP GBP GBP GBP
-------------- --------------------- --------------------- ----------------------- ----------- --------------------- -----------------
Balance at 1
August 2020 15,234,035 26,967,656 122,254 - (15,654,040) 26,669,905
--------------
Loss for the
year - - - - (1,681,635) (1,681,635)
--------------
Total
comprehensive
income/(loss)
for the year - - - - (1,681,635) (1,681,635)
Issue of
shares 1,152,280 288,070 - - - 1,440,350
Share issue
costs - (78,203) - - - (78,203)
Issue of
convertible
loan notes - - - 28,406 - 28,406
Issue costs of
convertible
loan notes - - - (1,817) - (1,817)
Transfer on
conversion of
loan notes to
equity - debt
element 732,334 374,378 - - - 1,106,712
Issue costs of
convertible
loan notes - (65,419) - - - (65,419)
Transfer on
conversion of
loan notes to
equity -
equity
element - 26,589 - (26,589) - -
-------------- --------------------- --------------------- ----------------------- ----------- --------------------- -----------------
Balance at 31
July 2021 17,118,649 27,513,071 122,254 - (17,335,675) 27,418,299
--------------------- --------------------- ----------------------- ----------- --------------------- -----------------
Profit for the
year - - - - 3,297,610 3,297,610
Total
comprehensive
income/(loss)
for the year - - - - 3,297,610 3,297,610
Issue of
shares -
exercise of
warrants 84,650 126,976 - - - 211,626
Cancellation
of share
options - - (122,254) - 122,254 -
Issue of new
share options - - 144,400 - - 144,400
Balance at 31
July 2022 17,203,299 27,640,047 144,400 - (13,915,811) 31,071,935
-------------- --------------------- --------------------- ----------------------- ----------- --------------------- -----------------
EGDON RESOURCES PLC
Notes to the Financial Statements
FOR THE YEARED 31 JULY 2022
1. Basis of Accounting and Presentation of Financial
Information
The financial information set out in this announcement does not
constitute the statutory accounts of the Group for the years ended
31 July 2022 or 31 July 2021. The financial information has been
extracted from the statutory accounts of the Group for the years
ended 31 July 2022 and 31 July 2021.
The auditor, CLA Evelyn Partners Limited, has reported on the
statutory accounts for the year ended 31 July 2022 and 2021; the
audit reports were unqualified and did not contain statements under
either section 498(2) or 498(3) of the Companies Act 2006. However,
in their report on the statutory accounts for the year ended 31
July 2022 and 31 July 2021, the auditor drew attention, by means of
an emphasis of matter, to the potential effect on the carrying
value of unconventional assets of the Government moratorium on
hydraulic fracturing.
The statutory accounts for the year ended 31 July 2021 have been
delivered to the Registrar of Companies; those for the year ended
31 July 2022 were approved by the Board on 7 November 2022 and will
be delivered to the Registrar of Companies following the Annual
General Meeting. The Annual Report for the year ended 31 July 2022,
including the auditor's report, will be posted to shareholders who
have requested a hard copy during the week commencing 14 November
2022 and will be available to be downloaded from the Company's
website at www.egdon-resources.com for shareholders who have
accepted electronic communications from the same date. Hard copies
can be requested from Egdon Resources plc, Blackstable House,
Longridge, Sheepscombe, Stroud, Gloucestershire, GL6 7QX. This
preliminary announcement was approved by the Board on 7November
2022.
Basis of preparation and statement of compliance with IFRS
The Group's and Company's financial statements have been
prepared in accordance with UK-adopted International Accounting
Standards and with those parts of the Companies Act 2006 applicable
to companies reporting under IFRS. IFRS comprises the Standards
issued by the International Accounting Standards Board (IASB) and
Interpretations issued by the International Financial Reporting
Interpretations Committee (IFRIC) in conformity with the
requirements of the Companies Act 2006.
Going concern
The Directors have prepared the financial statements on the
going concern basis, which assumes that the Group and the Company
will continue in operational existence without significant
curtailment of its activities for the foreseeable future.
2021-22 has seen beneficial operating and macro-economic
conditions for the oil and gas industry and the Group has seen a
resultant improvement in trading and cash-flow coming from Wressle
and increased profitability from Ceres.
Forward cash flows necessarily include assumptions as to the
timing and value of production from the Group's assets. Whilst
there is currently no evidence that the timing or value of these
revenues is unrealistic, the Directors acknowledge that disruptions
to production, along with changes in both oil and gas prices give
some level of uncertainty in respect of the timing of future cash
flows. The Directors have undertaken stress testing of the forward
commodity price assumptions with particular focus on oil and gas
price and determined that these assumptions remain valid
notwithstanding a possible reduction in forecast 2023 realised oil
price by 10% and gas price by 46% without impacting planned
expenditure. The Group also has flexibility in relation to the
timing and quantum of future expenditures, with 75% of these being
discretionary, and by deferring certain costs the forecast remains
valid under circumstances where a material fall in commodity prices
is experienced. In addition, although not assumed in the going
concern forecasts, the Group also has options to access additional
sources of funding if required via farm-out, sales, new lending or
the issue of new equity.
After preparing cash flow forecasts and considering the results
of stress tests to certain assumptions, and having made enquiries,
the Directors have a reasonable expectation that the Group and the
Company will have access to adequate resources to continue in
operational existence for the foreseeable future and have prepared
the financial statements on that basis.
Impact of new international reporting standards, amendments and
interpretations
New standards, interpretations and amendments
New standards impacting the Group that have been adopted in the
financial statements for the year ended 31 July 2022, but have not
had a significant effect on the Group are as follows:
-- Interest Rate Benchmark Reform - IBOR 'phase 2 (Amendments to
IFRS 9, IAS 39 and IFRS 7); and
-- Covid-19-Related Rent Concessions beyond 30 June 2021 (Amendments to IFRS 16).
EGDON RESOURCES PLC
Notes to the Financial Statements (CONTINUED)
FOR THE YEARED 31 JULY 2022
Impact of new international reporting standards, amendments and
interpretations (continued)
New standards, interpretations and amendments not yet
effective
There are a number of standards, amendments to standards, and
interpretations which have been issued by the IASB that are
effective in future accounting periods that the Group has decided
not to adopt early. The following amendments are effective for the
period beginning 1 August 2022, but will not have a significant
effect on the Group are as follows:
-- Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37);
-- Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16);
-- Annual Improvements to IFRS Standards 2018-2020 (Amendments
to IFRS 1, IFRS 9, IFRS 16 and IAS 41);
-- References to Conceptual Framework (Amendments to IFRS 3); and
-- Insurance Contracts (Amendments to IFRS 17).
The following amendments are effective for the period beginning
1 August 2023, but will not have a significant effect on the Group
are as follows:
-- Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2);
-- Definition of Accounting Estimates (Amendments to IAS 8); and
-- Deferred Tax Related Assets and Liabilities arising from a
Single Transaction (Amendments to IAS 12).
2. Impairments - Exploration and evaluation costs
Current year
The Directors considered the potential impact of the moratorium
on hydraulic fracturing for shale-gas on the Group's unconventional
asset portfolio, including the core area of the Gainsborough
Trough. No impairments were considered necessary as a consequence
of the moratorium in 2022.
The Directors remain of the view that it would be possible to
demonstrate that hydraulic fracturing can be undertaken in a safe
and environmentally responsible manner. As at 31 July 2022, the
book value of the Group's unconventional assets was GBP16.3 million
(2021: GBP16.3 million).
During April 2022, Shell advised Egdon of its intention to
withdraw from licences P1929 and P2304, containing the Resolution
and Endeavour gas discoveries. Egdon applied to the NSTA for an
extension of time to complete the 3D seismic programme. The NSTA
initially rejected this request during August 2022 and following
further representations has belatedly in October 2022, consented to
Egdon's request for a twelve-month extension to the P1929 licence
obligation to acquire the 3D seismic. Should the 3D survey not be
acquired by April 2023, which is now more than highly challenging,
P1929 will determine in May 2023. We have decided to fully impair
these assets at this time resulting in a total impairment charge of
GBP1,801,790.
During the year GBP0.25 million of data associated with the
P1929 and P2304 licences was transferred to licence PEDL334
(Cloughton) where it remains of critical use in evaluating that
licence.
Prior year
An impairment charge of GBP276,362 was recognised in relation to
licences PL161 and PL162. The impairment arose as these licences
were no longer deemed to have value following the lapse of the
related farm-out.
Exploration write offs totalling GBP112,554 were recognised in
relation to licences PEDL339, PEDL258, PEDL259 and PEDL202. These
licences were relinquished during the year.
During the year the Company recognised disposals of GBP109,872
and GBP100,000 in relation to the farm out of licence interests.
The disposal of GBP109,872 was recognised following the farm out
agreement with Shell U.K. Limited for 70% of the UK offshore
licence interest held on P1929 and P2304 which contain the
Resolution and Endeavour as discoveries respectively. The disposal
of GBP100,000 related to the agreement to align the equity interest
in PEDL241 on a 50:50 basis between the Company and its partner
Union Jack Oil plc.
EGDON RESOURCES PLC
Notes to the Financial Statements (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2022
3. Impairments - Property, Plant and Equipment
Current year
An impairment credit of GBP506,903 has been recognised in
relation to the Ceres Gas Field as the current high gas price
assumptions render Ceres economic until 2025. Based on the
impairment review, the pre-tax value in use of the Ceres Gas Field
as at 31 July 2022 is GBP4.72 million.
An impairment credit of GBP127,000 has been recognised in
relation to the Keddington Oil Field as it is assumed that there
will be production in late 2023. Based on the impairment review,
the pre-tax value in use of the Keddington Oil Field as at 31 July
2022 is GBP2.39 million.
An impairment credit of GBP133,000 has been recognised in
relation to Avington Oil Field as restoration of production is
anticipated during 2023. Based on the impairment review, the
pre-tax value in use of the Avington Oil Field as at 31 July 2022
is GBP2.36 million.
An impairment credit of GBP300,000 has been recognised in
relation to Waddock Cross Oil Field as production will be
reinstated in 2023. Based on the impairment review, the pre-tax
value in use of the Waddock Cross Oil Field as at 31 July 2022 is
GBP19.67 million.
An impairment credit of GBP330,000 has been recognised in
relation to Kirkleatham Gas Field as drilling is expected in late
2023. Based on the impairment review, the pre-tax value in use of
the Kirkleatham Gas Field as at 31 July 2022 is GBP3.27
million.
Prior year
No impairment charges were recognised in the prior year.
4. Earnings/(loss) per share
Basic earnings/(loss) per share
2022 2021
GBP GBP
------------------------------------------ --------------------------- ---------------
Profit/(loss) for the financial year 3,297,610 (1,681,635)
Basic weighted average Ordinary shares in
issue during the year 518,951,908 331,615,357
------------------------------------------ --------------------------- ---------------
Pence Pence
-------------------------------- --------------------------------------------- -----------------------------
Basic earnings/(loss) per share 0.64 (0.51)
-------------------------------- --------------------------------------------- -----------------------------
Diluted earnings/(loss) per share
2022 2021
GBP GBP
----------------------------------------- --------------------------- ---------------
Profit/(loss) for the financial year 3,297,610 (1,681,635)
Diluted weighted average Ordinary shares
in issue during the year 581,343,086 331,615,357
----------------------------------------- --------------------------- ---------------
Pence Pence
---------------------------------- --------------------------------------------- -----------------------------
Diluted earnings/(loss) per share 0.57 (0.51)
---------------------------------- --------------------------------------------- -----------------------------
The share options were not dilutive in 2021 as a loss was
incurred.
5. Share Capital
In the current year a total of 8,465,000 warrants to subscribe
for new Ordinary 1p shares were exercised for total cash
consideration of GBP211,626 at an issue price of 2.5p. The nominal
value of the shares was GBP84,650 and the additional share premium
created was GBP126,976.
In the prior year, on 20 July 2021, following an open offer, the
Company issued 115,228,000 new Ordinary 1p shares for total cash
consideration of GBP1,440,350. The nominal value of the shares was
GBP1,152,280 and the additional share premium created totalled
GBP288,070. In addition, each subscription share was granted a
right to subscribe for 0.5 of a new Ordinary Share at a price of
2.5p per share, exercisable at any time until the date of the
second anniversary of their issue.
In the prior year, on 20 July 2021, the convertible loan notes
were converted to 73,233,406 new Ordinary 1p shares at an issue
price of 1.55p. The nominal value of the shares was GBP732,334 and
the additional share premium created was GBP402,784 with issue
costs of GBP67,236.
EGDON RESOURCES PLC
Notes to the Financial Statements (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2022
5. Share Capital (continued)
In the prior year, on 28 July 2021, Infrastrata plc fully paid
the previously part-paid GBP1 Redeemable Preference Shares held by
it in Egdon Resources plc. These shares were then redeemed. On the
same day Egdon Resources U.K. Limited fully paid the previously
part-paid GBP1 Redeemable Preference Shares held by it in
Infrastrata plc. These shares were then redeemed. As a result these
reciprocal cross-holdings, which date from the division of the
original company in 2007, have been eliminated at no net cost to
the Group.
6. Subsequent Events
On 8 August 2022 the North Kelsey Planning appeal documentation
was submitted.
On 8 September 2022 the Government announced the lifting of the
moratorium on hydraulic fracturing for shale-gas.
Egdon was advised in October 2022 that the NSTA had consented to
Egdon's request for a twelve-month extension to the P1929 licence
obligation to acquire the 3D seismic. Egdon will now engage with
the NSTA to confirm the detailed expectation in relation to this
and subsequent timelines. Should the 3D survey not be acquired by
April 2023, P1929 will determine in May 2023. Licence P2304 will be
relinquished.
A hearing was held on 11 October 2022 in relation to the
Biscathorpe planning appeal and we now await the Planning
Inspector's decision.
On 27 October 2022 the incoming Government announced the
re-imposition of the moratorium on hydraulic fracturing for
shale-gas.
7. Annual General Meeting
The Annual General Meeting will be held at the offices of Norton
Rose Fulbright, 3 More London Riverside, London, SE1 2AQ at 11.30
hours on Tuesday 13 December 2022. Further details of the
arrangements for the meeting will be contained in the Notice of the
AGM and Chairman's Letter which will be available in due
course.
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END
FR EAAFXEDAAFAA
(END) Dow Jones Newswires
November 08, 2022 02:00 ET (07:00 GMT)
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