AIM-listed oil and gas producer Egdon Resourceshas agreed terms with Blackland Park Exploration (Blackland Park) and Stelinmatvic Industries (Stelinmatvic) for a farm-in to UK Onshore Petroleum Exploration and Development Licence PEDL209 located in Lincolnshire.
Under the terms of the farm-in agreement, Egdon said that it would earn a 60% interest in the licence in return for paying 100% of the cost of the planned Laughton-1 exploration well to the point of completion of the well for testing or, in the case that the well was a dry hole, abandonment and restoration of the site.
Egdon said that it would also assume operatorship of PEDL209.
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At completion, the group reported that Egdon Resources UK would hold a 60% licence interest, Blackland Park Exploration would have a 28% stake, Stelinmatvic Industries would have a 12% stake.
PEDL209 covers a total area of 64 square kilometres and adjoins Egdon's existing Licences PEDL139 and PEDL140 in the eastern part of the Gainsborough Trough geological basin of the East Midlands Petroleum Province.
The Laughton Prospect has multiple conventional Carboniferous sandstone reservoir targets with the primary objective being the Silkstone Rock, an approximately 15 metres thick sandstone interval which is productive in the Corringham oil field 5 kilometres to the South East.
Mark Abbott, Managing Director of Egdon Resources, commented: "We are pleased to have concluded this farm-in in one of our core business areas. The initial focus will be the drilling of the Laughton-1 exploration well, which will target a conventional prospect with gross best estimate prospective resources in the primary reservoir target of around 1.0m barrels of oil close to existing production."
He added: "Importantly the farm-in also delivers on our stated strategy of providing Egdon with increased exposure to shale-gas potential in an area identified by Egdon as containing an extension of the 'sweet spot' of the Pendleian Shale play identified in our adjoining Gainsborough Trough licences PEDL139 and PEDL140."
Egdon Resources' share price was up 2.90% to 8.88p at 08:42 on Tuesday.
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