VSA Morning Flow Test, 19/07/21
Egdon Resources (LON:EDR)
Egdon Resources (LON:EDR) has announced the results from a carbon intensity study in relation to the planned development at Biscathorpe; one of the company’s key development assets in which it has a 35.8% stake. A planning application was submitted earlier this year and further documentation was submitted in July 2021 to support this; a consultation period has commenced with a Committee review due in September/October 2021.
EDR previously published an NPV10 of £55.6m for the project and the study carried out by Gaffney, Cline & Associates demonstrates that as well as strong economics Biscathorpe fits into the lowest category of carbon intensity for the long term production of oil based on the Consultancy’s rating system. The AA rating is for carbon intensity ranges of 5gCO2Eq/MJ and Biscathorpe scored 3.06gCO2Eq/MJ and could be optimised to just 1.49gCO2Eq/MJ.
As a UK based project Biscathorpe scores well as it is onshore and supplying a local market which does not require complex or lengthy shipping and logistics. The benefits of domestic sources of hydrocarbons are often overlooked in this regard and today’s announcement serves to quantify this significant positive attribute. As the energy transition progresses we expect such practical considerations to increasingly come to the fore in development decisions.
We reiterate our Buy recommendation and 22.3p target price.
Oliver O'Donnell, CFA, Head of Research & Natural Resources Analyst | T: +44 (0)20 3617 5180 | E: oodonnell@vsacapital.com
Taro Kiley, Energy Analyst | T: +44 (0)20 7096 9581 | E: tkiley@vsacapital.com
#Indicates VSA house stock.
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VSA Capital Research | T: +44 (0)20 3005 5000 | E: research@vsacapital.com
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