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VSA CAPITAL MARKET MOVERS - Egdon Resources

VSA CAPITAL MARKET MOVERS - Egdon Resources

VSA Morning Flow Test, 07/12/18

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Egdon Resources (EDR LN)#

Egdon Resources (EDR LN) has provided an update on conventional appraisal drilling at Biscathorpe where strong progress is being made and with the site close to completion the drilling rig is expected to mobilise in early January 2019. Well completion will likely be in mid-February 2019.

EDR holds a net interest of 35.8% and 22.5% share of the well cost. Currently we value the asset at 6.7p/sh. on a risked basis using a 40% CoS against the mean prospective resources of 14mmbo (5mmbo net to EDR). This highlights once again how undervalued the company currently is trading at 7.4p/sh.  
 
This appraisal well will test whether the geology at Biscathorpe is comparable to that of the Reepham oilfield around 20km south west of Biscathorpe. At Reepham the Basal Westphalian sandstone reservoir experiences significant lateral thickening down dip, however, this is not directly visible on seismic data. From this well EDR will therefore aim to establish the extent of reservoir thickening beyond a small known local fault. Once the extent of thickening is better understood EDR will be better able to determine the quality and extent of the reservoir; currently the resource ranges from 1.8mmbo (P90) to 35.3mmbo (P10).

We reiterate our Buy recommendation and target price of 50p.


 

 

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