Egdon Resources plc (LON:EDR), a UK-based exploration and production company primarily focused on the hydrocarbon-producing basins of onshore UK, today announced its preliminary results for the year ended 31 July 2022.
Operational and Corporate Highlights
· Egdon net production during the period increased by 160% to 84,894 barrels of oil equivalent (“boe”) equating to 233 boe per day (“boepd”) (2021: 32,686 boe, 90 boepd).
· Wressle production has significantly exceeded forecast expectations with average gross production during the period of 656 barrels of oil per day (“bopd”) at rates constrained by the EA Permit limits for gas disposal and with zero water production to date.
· The Ceres gas field is providing a late life renaissance due to the high gas price and low operating costs.
· Following the refusal of planning permission in November 2021 for the drilling of a side-track well, testing and long-term production at the Biscathorpe project, an appeal was submitted in April 2022.
· On 8 March 2022 a revised incentive package was put in place for all employees through the issue of new share options and the cancellation of all historical share options.
· On 14 March 2022, planning permission was refused to extend the existing consents to drill the North Kelsey-1 exploration well and an appeal was submitted in April 2022.
· On 5 April 2022, the Government announced that it had commissioned the British Geological Survey to advise on the latest scientific evidence around shale-gas extraction. Report delivered to BEIS on 5 July 2022.
· During April 2022, Shell advised Egdon of its intention to withdraw from licences P1929 and P2304, containing the Resolution and Endeavour gas discoveries. Egdon applied to the NSTA for an extension of time to complete the 3D seismic programme.
· Egdon has assumed the operatorship of PEDL343, increased its equity to 40% and agreed an extension to 20 March 2024. PEDL343 contains the Cloughton gas discovery.
· Licences PEDL202 and PEDL130 were relinquished during the period.
Financial Performance
· Oil and gas revenues increased by over 530% during the period to £6.91 million (2021: £1.09 million) as a result of significantly increased production and strengthening commodity prices.
· Earnings before interest, tax, depreciation, amortisation, asset impairments, impairment reversals and write-downs were £4.67 million (2021: loss of £0.72 million).
· Post tax profit for the period of £3.30 million including £1.40 million of impairment reversals, £1.80 million of impairments and £0.15 million of write-downs and pre-licence costs (2021: loss of £1.68 million including £0.48 million of write-downs, pre-licence costs and impairments).
· Basic earnings per share of 0.64p (2021: loss per share of 0.51p). Diluted earnings per share of 0.57p (2021: loss per share of 0.51p).
· Net current assets of £4.90 million (31 July 2021: £0.14) of which cash and cash equivalents were £4.80 million (31 July 2021: £1.96 million).
· The Company has no borrowings following the repayment of a £1 million loan during May 2022.
Subsequent Events
· On 8 August 2022 the North Kelsey Planning appeal documentation was submitted.
· On 8 September 2022 the Government announced the lifting of the moratorium on hydraulic fracturing for shale-gas.
· Egdon was advised in October 2022 that the NSTA had consented to Egdon’s request for a twelve-month extension to the P1929 licence obligation to acquire the 3D seismic. Egdon will now engage with the NSTA to confirm the detailed expectation in relation to this and subsequent timelines. Should the 3D survey not be acquired by April 2023, P1929 will determine in May 2023. Licence P2304 will be relinquished.
· A hearing was held on 11 October 2022 in relation to the Biscathorpe planning appeal and we now await the Planning Inspector’s decision.
· On 27 October 2022 the Government reintroduced the moratorium on hydraulic fracturing for shale-gas.
· Coincident with the release of its Preliminary Results, the Company has updated its corporate identity and released a new website (https://www.egdon-resources.com/).
Outlook
· Post-period-end production and revenues have continued to be strong with unaudited August to October 2022 revenues of £2.07 million.
The key operational focus for the coming period will be:
· Maintaining and enhancing the strong production performance at Wressle whilst progressing both the gas monetisation and Penistone Flags development as priorities.
· To add reserves, production and revenues through the drill-bit in both our exploration and development/re-development projects.
· To progress energy storage, hydrogen and renewable generation projects.
Commenting on the Results Egdon Resources’ Chairman, Philip Stephens said;
“Egdon has been transformed over the past year through growing revenues and with a significantly improved outlook and operating environment.
The highlight has been the outstanding performance of the Wressle oil field which along with production from our existing fields and high oil and gas prices has resulted in a strong financial performance.
Despite the reintroduction of the moratorium on shale-gas by the Sunak led government, we will continue to make the case for the strategic importance that shale-gas could make to the UK’s economy and security of supply.
In the meantime, Egdon will focus on progressing its conventional oil and gas business and nascent energy transition projects to continue delivering long term value to its shareholders.”
