VSA Morning Flow Test, 15/07/19

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Egdon Resources (LON:EDR)

Egdon Resources (EDR LN) has provided an update on the Biscathorpe 2 well following revised petrophysical analysis. Previously it was reported that oil shows were present in the Dinantian but the primary Westphalian sandstone target was interpreted as water wet. However, the revised data following the additional testwork has demonstrated oil shows in the Westphalian as well. In the Dinantian the results indicated hydrocarbon saturations in excess of 50% but the presence of oil in both intervals suggests proximity to an effective petroleum system and confirms the ongoing potential within the license area.

Applied Petroleum Technology Limited (APT) carried out analysis on five samples from the Westaphalian and 15 from the Dinantian confirming the presence of oil in the former and a significant column of good quality in the latter with a full suite of gases from methane to pentane (C1 to C5 and nC5). The column at the top of the Dinantian appears to extend 35m from 1,980m to 2,015m depth with possible additional hydrocarbons below 2,133m. The results from the analysis were compared to the nearby analogue field, Keddington, which produces from the Westphalian demonstrating favourable results. All hydrocarbons appeared to be non-biodegraded with APIs of 35° and 33-34° for the Westphalian and Dinantian respectively.  

These updated results confirm that although absent at the Biscathorpe 2 location there is likely a significant effective petroleum system in near proximity thereby validating EDR’s strategy to continue to assess the license potential through a possible sidetrack and reprocessing of the existing 3D seismic data. We continue to believe that the license offers significant potential which is not fully reflected in EDR’s current price given our Biscathorpe valuation of 3.5p/sh. Whilst in the near term the key catalyst is likely to be the additional results from Springs Road, this announcement highlights the ongoing positive progress being made elsewhere within EDR’s portfolio of conventional as well as unconventional assets.

We reiterate our Buy recommendation and 39p target price.     




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