Egdon Resources (LON:EDR)
Egdon Resources (LON:EDR) has provided an update regarding the Wressle development, Licences PEDL180 and PEDL182 where the Company holds a 30% operated interest. Having discharged all planning conditions at the site, the focus is on completing the development schedule, targeting first oil in H2 2020, and in line with this a contractor has now commenced works to reconfigure the Wressle production site. These initial works include the installation of a new High Density Polyethelene (HDPE) impermeable membrane, French drain system, an approved surface water interceptor with additional infrastructure which includes the construction of a purpose-built storage area.
After planning permission was received, we increased our valuation of Wressle to £4.8m (US$6.1m), which implies 1.6p/sh. based on production of 150bopd net to EDR. Our valuation is underpinned by recent analysis highlighting the low cost base of the asset implying robust margins even in the current oil price environment.
We reiterate our Buy recommendation and 35.2p/sh. target price.
Oliver O'Donnell, CFA, Head of Research & Natural Resources Analyst | T: +44 (0)20 3617 5180 | E: [email protected]
Samuel Green, Equity Analyst | T: +44 (0)20 3005 5010 | E: sgree[email protected]
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