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VSA CAPITAL MARKET MOVERS - Egdon Resources

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VSA Morning Flow Test, 18/12/18

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Egdon Resources (LON:EDR)

We note from the IGas (LON:IGAS) announcement that having reached the target depth of 1,810m the Tinker Lane well, spudded in late November, did not encounter the Bowland shales; the key target for shale gas. Although Egdon Resouces (LON:EDR) has significant interest in the central part of the Gainsborough Trough it does not have an interest at Tinker Lane as this well was always designed to test the lateral extent of the Bowland shale and was therefore a bull case well for IGAS if successful.

In our view, we see this as a vindication of EDR’s strategy to focus on the central areas of the play highlighting why EDR is our preferred exposure to UK shale potential. Indeed, EDR have a 14.5% interest at Spring’s Road in the central areas of the Gainsborough Trough; IGAS is also the operator. With the Tinker Lane well completed ahead of schedule the focus will now be on Spring’s Road which IGAS expect to spud in Q1 2019.

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


 

 

 

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