viewEgdon Resources PLC

Egdon Resources sells stake in Hampshire oilfield, UK


Egdon Resources (LON:EDR) revealed today it has agreed to sell a 10 percent stake in its oilfield in Hampshire in the UK for £400,000 in cash.

The oil and gas firm, formed in 1997, said the funds will be used on Egdon's active UK and French projects.

The Avington oil field under licence PEDL070 is near Winchester, Hants, and is operated by Star Energy Oil UK Limited.

Oil is currently produced from there from two wells - Avington-2Z and Avington-3Z.

Production averaged around 70 barrels of oil per day in June this year.

Under the deal, Egdon Resources, through a subsidiary, will sell a 5 percent interest to IS E&P Ltd and a further 5 percent interest in the licence to IS NV Limited - together known as the IS companies.

Each firm will pay £200,000 in cash for the 5 percent stakes, payable on completion and the assumption of their pro-rata shares of a net profit interest payable to Heyco Energy Holdings S.L.

The NPI varies between 5 and 10 percent dependent upon oil price.  The effective date of the transaction is 1 June this year, said Egdon.

On completion Egdon will retain an aggregate 26.67 percent interest in the licence and the Avington oil field.

The sale is expected to reduce the firm's daily production by a maximum of 7 barrels of oil per day and reduce its proven and probable reserves by an estimated 23,000 barrels of oil.

The company's managing director Mark Abbott said: "These transactions realise a significant proportion of our expected future value from the transferred interest in cash at a time of strong oil price.

"Egdon believes it can utilise this cash on its higher potential projects in the UK and France to provide a better return for shareholders. We still retain a material interest in the Avington field and any upside which may be realised from future drilling."

Quick facts: Egdon Resources PLC

Price: 1.7 GBX

Market: AIM
Market Cap: £5.58 m

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