Egdon Resources plc
Preliminary Results for the year ended 31 July 2011 & Business Review
Preliminary Results for the year to 31 July 2011 Egdon Overview
• An AIM listed oil and gas exploration and production company focused on onshore UK and mainland Europe
• A balanced portfolio of production, development, appraisal and exploration projects positioning the Company for future growth
• Extensive European portfolio= 29 Licences in UK and France
• Approved operator in UK and France
• Shares Currently in issue: 130,969,094
• Market Cap : c. £17 million
• Oil & Gas Reserves and Resources
Category As at 31/07/2011 As at 31/07/2010
Proven & Probable (mmboe) 2 2
Best Estimate Contingent Resources (mmboe) 4 5
Best Estimate Prospective Resources (mmboe) 248 289
* Company Numbers
Slide 2 Preliminary Results for the year to 31 July 2011 Egdon Resources plc - Vision & Strategy
“The aim of the Group is to create shareholder value by building a profitable and material full cycle exploration, production and energy business with a focus on onshore European operations”
Strategy:
The Company will look to increase shareholder value by:
• Growing near-term revenues through investment in production, development and appraisal projects • A focus on fewer, higher impact exploration opportunities • Broadening and strengthening the asset and opportunity base of the Group through licence applications, targeted acquisitions and innovative deal making • Proactively managing the portfolio to maximise returns and manage risk • Looking to extract shareholder value from emerging non-conventional hydrocarbon plays
Slide 3 Preliminary Results for the year to 31 July 2011 Financial Highlights
• Profit for the year £4.08m (31 July 2010: £0.24m) • Revenues during the period up 90% to £2.38m (31 July 2010: £1.25m) • Exceptional profit on disposal of subsidiary company and assets of £4.3m (31 July 2010: £0.4m) • Basic earnings per share of 3.12p (31 July 2010: 0.29p) • Equity as at 31 July 2011 of £20.17m (31 July 2010: £16.03m) • Net current assets as at 31 July 2011 of £3.28m (31 July 2010: £1.49m)
Summary Consolidated Statement of Comprehensive Income Audited year Audited year Summary Statement of Financial Position Audited 31‐ Audited 31‐ ended 31‐July ‐ ended 31‐July‐ July‐2011 July‐10 2011 10 £'000 £'000 £'000 £'000 Non Current Assets Revenue 2,379 1,252 Intangible assets 7,105 7,033 Cost of sales ‐891 ‐65 Property, Plant & equipment 10,721 8,422 Cost of sales ‐ exploration costs written off and pre‐licence costs ‐1,207 ‐819 Total non‐Current Assets 17,826 15,455 Gross Profit 281 368 Current Assets Admin Expenses ‐687 ‐668 Inventory 10 0 Other operating income 226 175 Trade and receivables 2,258 1,039 Gain/loss on sale of propert, plant & equipment ‐1 389 Cash & Cash Equivalents 3,691 2,030 Gain on sale of subsidiary 4,338 0 Available for sale financial instruments 50 50 Finance Income 42 1 Assets held for sale 0 21 Finance cost ‐122 ‐28 Total Current Assets 6,009 3,140 Profit before taxation 4,077 236 Taxation 0 ‐1 Current Liabilities ‐2,725 ‐1,648 Total Comprehensive Income for the period 4,077 235 Net Current Assets 3,284 1,492 Basic Profit per share 3.12 p0.29 p Total Assets less current liabilities 21,110 16,947 Non‐Current Liabilities Provisions ‐940 ‐916 Net Assets (Equity) 20,170 16,031
Drilling operations at Keddington-3, Louth Lincolnshire Slide 4 Preliminary Results for the year to 31 July 2011 Operational Highlights
• Production up 73% to 46,919 barrels of oil equivalent (2010: 27,056 boe) • Kirkleatham Gas Field brought on production in April 2011 • Oil Discovery made at Markwells Wood-1 to be tested during November 2011 • Drilled successful sidetrack at Keddington oil field in April 2011 • Portfolio of 29 licences in UK and France as at 31 July 2011 (2010: 34) = asset rationalisation in line with strategy
Slide 5 Preliminary Results for the year to 31 July 2011 Corporate Highlights
• Completed the acquisition of EnCore (E&P) Limited • Farmed-out shale gas test well in PEDL139 and PEDL140 • Completed the sale of Egdon Resources (New Ventures) Ltd for cash consideration of £4.5 million • Acquired PEDL180 and PEDL181 from Valhalla Oil and Gas Limited • Sold a 10% interest in Avington oil field for cash consideration of £400,000
Slide 6 Preliminary Results for the year to 31 July 2011 UK Licences & Prospects
• Strategy of rationalising and improving Egdon’s portfolio = Relinquished 7 UK licences during period (write down of £594K & reduction of 40 mmboe in Prospective Resources)
• All Egdon’s licences in proven producing areas
• Egdon will be active across its entire UK portfolio, however, there will be 2 main focuses in the next 18 months:
1. Developing oil prospects and growing production in the East Midlands
and
2. Exploiting gas in Northern England and Offshore
• Reinvestment of cash resources into exploration/appraisal during coming period
• Drilling of up to 12 wells over the next 18 months targeting 33 mmboe (Net Egdon Best Estimate Prospective Resources)
• Possible farm-out of part of programme to manage risk
Slide 7 Preliminary Results for the year to 31 July 2011 Developing Oil Prospects & Growing Production in the East Midlands
• Production = Keddington, Dukes Wood/Kirklington • Appraisal = Nooks Farm, Broughton • Exploration = multi-well drilling campaign planned starting in mid-2012 • Targeting 15 mmbo (Net Egdon Best Estimate Prospective Resources) in 5 prospects
• Louth Prospect • Biscathorpe Prospect • North Kelsey Prospect • Wressle Prospect • Burton on the Wolds
• Gainsborough Deep shale-gas test
• Additional prospects identified: • North Somercotes • Eakring North
• CBM Potential
Slide 8 Preliminary Results for the year to 31 July 2011 Keddington Oil Field
PEDL005 (remainder): Egdon 75% and operator
• Egdon looking to maximise value of “greater Keddington area” • Keddington-4 drilled in April 2011 – 120 m horizontal section – production of c. 50 bopd and 200,000 cfg/d • Field review should result in upward revision to field reserves from current 0.3 mmbo • Production choked back to limit gas flaring whilst plans are finalised for electricity generation and export = new revenue stream – location and cost of connection is key issue being addressed • Target production in short term of 125-135 bopd (Net Egdon c.100 bopd)
• Louth Prospect – 3D defined prospect contiguous with Keddington = 1.25 mmbo prospective resources (Net to Egdon) • Planned as initial well in E. Mids multi-well programme
Drilling operations at Keddington-4
Slide 9 Preliminary Results for the year to 31 July 2011 Eakring/Dukes Wood/Kirklington
Eakring/Dukes Wood/Kirklington: PEDL’s 118 & 203 – Egdon 65% operated
• To be jointly developed as a single production unit high water- cut production from both Kirklington-3z and Dukes Wood-1 • Dual completion of DW-1 well to produce from Ashover Grit-5 and inject water into the “SAC” unit • Planning received, other consents being sought for 2012 production start-up at c. 40 bopd (net Egdon 26 bopd) • Further independent drilling targets at Eakring and Dukes Wood including un-produced highs – e.g. Eakring North Lead
DukesDrilling Wood operations Statue commemorating at Markwells Wood-1, the US December Roughnecks 2010 Slide 10 Preliminary Results for the year to 31 July 2011 Broughton/ Wressle / North Kelsey
• 49 km2 3D survey planned for late 2011 to determine final well locations on one of both prospects • Area located between Crosby Warren oil field and Brigg oil well
Broughton Prospect: PEDL182 – Egdon 33.33% operated
• Broughton-B1 flowed oil (40 bopd) from well drilled by BP in 1984 • Up-dip potential identified with Net Egdon best estimate prospective resources of 1.0 mmbo • Previous drill site still exists • Additional reservoir targets • Net Egdon Best Estimate Prospective Resources :1.0 mmbo
Wressle Prospect: PEDL 180– Egdon 33.33% operated
• Up-dip potential identified • Previous drill site still exists • Net Egdon Best Estimate Prospective Resources: 1.3 mmbo
North Kelsey Prospect: PEDL241 - Egdon 50% operated
• 3D defined prospect (experimental 3D volume) • Net Egdon Best Estimate Prospective Resources: 3.14 mmbo
Tessla-IMC vibroseis tractors in operation - UK Slide 11 Preliminary Results for the year to 31 July 2011 Biscathorpe
Biscathorpe Prospect: PEDL253 – Egdon 60% operated
• Large 3D defined prospect to the west of Keddington • Oil discovered but not tested in 1 m sand in well drilled by BP in 1987 • Sands expected to thicken down-dip on structure • Net Egdon Best Estimate Prospective Resources of 8.47 mmbo • High Estimate Prospective Resources of 25 mmbo due to stratigraphic trapping potential
Slide 12 Preliminary Results for the year to 31 July 2011 Exploiting Gas in Northern England & Offshore – Kirkleatham Gas Field
PEDL068: Egdon 40% and operator
• Discovered by Egdon in 2006: gas in Permian limestone (Cadeby Formation) at depth of 800 m • Gas sold to Sembcorp at Wilton for use in Gas Turbine • Maximum Gross design production of 5-6 mmcfg/d • Net Egdon Best Estimate Resources of 2.03 bcf with Proven of 0.8 bcf • Operational delays (weather and equipment) = first gas in April 2011 • Reservoir behaviour indicates small highly permeable volume fed by larger volume of lower permeability rock • Production reduced to manage reservoir – planned production of 1.5 to 2.0 mmcfg/d (Net Egdon 0.6 to 0.8 mmcfg/d or 100-133 boepd) • Increasing water production observed – well currently shut-in awaiting intervention to remove accumulated water from tubing
Kirkleatham process site, Redcar
Slide 13 Preliminary Results for the year to 31 July 2011 Ceres Gas Field
P.1241 (47/9): Egdon 10% - non-operated
• Sub-sea tieback to Mercury and then via Neptune and Cleeton to Dimlington onshore terminal • Significant maintenance shutdown in 2010-11 (7 days production) and again from July 2011 • Re-commencement of production on 17 September 2011 – continuing issues since restart have impacted production – now resolved • Net Egdon Proven & Probable Reserves of 3.7 bcf • Upside in 47/9-3 fault block • Expected gross production of c. 20 mmscfg/d (after “back-out” Net Egdon expected to be 1.2 mmscfg/d or 200 boepd)
47/9c-4 47/9c-11x 47/9c-3
Top Zechstein
Top Rotliegend
Slide 14 Preliminary Results for the year to 31 July 2011 Westerdale/Ralph Cross & New Offshore Project
Ralph Cross/Westerdale: PEDL068 – Egdon 40% operated • Gas tested in fractured Permian limestone in two wells (Westerdale-1 & Ralph Cross-1) • Net Egdon Best Estimate Prospective Resources of 6.2 bcf • Drilling 2012 conditional upon planning consent
26th Round: Egdon 100% operated (awaiting award) • Awaiting possible award of near-shore block in 26th Round • Contains substantial gas discovery in Permian carbonates • Plan is to appraise and hopefully develop from onshore location if awarded
Drilling operations at Westerdale-1 North Yorkshire Moors National Park
Slide 15 Preliminary Results for the year to 31 July 2011 Well Testing Operations & Appraisal 2011-12
Waddock Cross: PL090 – Egdon 45% operated • Testing of Bridport Sandstone oil discovery deferred from 2010 • 6 month extended well test (EWT) commenced in August 2011 • Results to be advised in January 2012 at end of testing • Net Egdon Proven and Probable Reserves of 0.6 mmbo
Markwells Wood-1: PEDL126– Egdon 10% non-operated interest • Oil proven in Great Oolite reservoir in possible eastern continuation of Horndean oil field • Oil seen in cuttings, core and calculated from log data • Gross reservoir interval of 275 feet, net pay of up to 192 feet with porosity of 13-14% • EWT to be undertaken during 2011 to determine flow rates, commerciality and development plan • EWT expected to commence in November
Nooks Farm: PEDL141 – Egdon 45% non-operated interest • Operatorship transferred to Seven Star (Alkane Energy) • Planning Consent received to re-enter Nooks Farm-1A well which flowed gas at 1 mmcfg/d in 1982 • Net Edgon Best Estimate Contingent Resources of 1 bcf
Drilling operations at Markwells Wood
Slide 16 Preliminary Results for the year to 31 July 2011 Other UK Exploration
Holmwood: PEDL143 – Egdon 38.4% non-operated • Between known oil and gas accumulations in Surrey • Net Egdon Best Estimate Prospective Resources of 16.6 bcf • Drilling in 2012 conditional upon success of planning appeal – original planning application refused
Sherwood Sandstone Oil Play Dorset: PEDL237/PL090 – Egdon 45% operated interest • Analogous to the Wytch Farm oil field • Prospects with combined potential of 33 mmbo Net Egdon Best Estimate Prospective Resources • Possible 3D seismic acquisition and drilling 2013 • Farm-out to be undertaken
Langton Herring Prospect: PEDL237 – Egdon 45% operated interest
• Bridport Sandstone Prospect with possible oil pay in Langton Herring-1 well drilled in 19 • Net Egdon Best Estimate Prospective Resources of 3 mmbo
The Kirklington oil field in winter 2010/11
Slide 17 Preliminary Results for the year to 31 July 2011 French Licences & Prospects
• Major restructuring of French assets in 2011 with sale of Egdon Resources (New Ventures) Ltd to eCORP for £4.5m • Ban on hydraulic fracking in France
Audignon: St Laurent – Egdon 33.423% operated interest • Very large Triassic gas prospect to north of giant Lacq gas field • Net Egdon Best Estimate Prospective Resources of 896 bcf • Seismic acquisition in 2012 with drilling planned for 2013
Pontenx: Egdon 40% operated interest
• Mimizan Nord abandoned oil field and four other oil discoveries in block • Seismic planned for 2012 and possible drilling
Mairy: Egdon 50% non-operated interest – possible drilling in 2012
eCORP Licences: back-in options of 6-9%
• Egdon technical consultant on licences = generates revenue • Conventional gas targets in Gex, Navacelles and Gex Sud Application– active 2012 work programme including gravity acquisition, seismic and geological studies
Slide 18 Preliminary Results for the year to 31 July 2011 Future Developments & Outlook
• Production target reduced from 500 boped to 400 boepd for coming period due to reduced production from Kirkleatham • Production from Keddington, Kirkleatham, Ceres, Avington, Dukes Wood/Kirklington expected during period • Two key UK focuses: • Developing oil prospects and growing production in the East Midlands (Drilling programme targeting 15 mmbo in up to 5 prospects commencing in 2012) • Exploiting gas in Northern England and Offshore (Kirkleatham, Ceres, Westerdale and 26th Round application) • Key focus in France is developing Audignon Prospect for drilling and evaluation of the Pontenx Permit • Potential for Egdon to participate in up to 12 wells and 3 seismic programmes over next 18 months exposing the Company to 33 mmboe (Net Egdon Best Estimate Prospective Resources) • Extended well tests at Markwells Wood and Waddock Cross • Non-Conventional opportunities in UK and France (CBM, shale-gas, oil-shale and tight-gas reservoirs) • Potential carried well to test Bowland Shale in Gainsborough Trough of East Midlands
Slide 19 Preliminary Results for the year to 31 July 2011 2011-13 Planned Work Programme
Slide 20 Preliminary Results for the year to 31 July 2011 Future Developments & Outlook
“The expected growth in UK production and revenues combined with an increased level of drilling activity means that the coming period could be transformational for Egdon”
• Balanced onshore Exploration and Production portfolio in politically stable countries • Trading profitably and with growing production and cash flow through 2011-12 = profitable self-funded business going forward – revised 400 boepd production target through next period • A focus on high impact exploration opportunities • Quality exploration inventory to facilitate material growth in NAV in medium term through active exploration programme • Rationalise expanded portfolio = concentrate on assets which best achieve Egdon’s strategic objective • Well positioned to extract shareholder value from emerging non-conventional hydrocarbon opportunities • Maintain a strong focus on safety, environmental and social responsibility in all aspects of operations
www.egdon-resources.com
Slide 21 Preliminary Results for the year to 31 July 2011 Disclaimer
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Slide 22 Preliminary Results for the year to 31 July 2011