Losses rise at Egdon – preliminary results

Egdon Resources reported a £4.75m loss today, along with falling production and revenues.

The preliminary results, for the year to July 2020, blamed the Covid-19 lockdown in spring 2020 for a severe impact on commodity prices, which badly affected Egdon’s revenues and profitability.

The loss for the year, after write-downs, pre-licence costs and impairments, was 176% greater than the equivalent in 2019 (£1.72m).

Egdon’s production was down to 145 barrels of oil equivalent per day (boepd). 81% of this was from the offshore Ceres field. Production was above the company’s guidance level of 130-145 boepd but 26% down on 2019.

Oil and gas revenues fell 56% to £0.96m, from £2.20m in 2019. The accounts said this was caused by a 20% decline in overall production (2020: 53,070 barrels of oil equivalent, compared with 2019’s 66,430 boe) and 58% reduction in oil and gas prices.

Egdon said it had responded by cutting costs. All employees and directors had taken a temporary 20% salary reduction.

The results suggest that plans at Wressle, near Scunthorpe, and Biscathorpe, in Lincolnshire, are even more critical to the company’s success.

Egdon confirmed today that work had begun to prepare the Wressle well for production. Wressle oil was predicted to flow during January 2021, more than doubling the company’s production total. The results also said a planning application was being prepared to drill and test a sidetrack well at Biscathorpe, followed by long-term production.

Chairman Philip Stephens said:

“The current low oil and gas price environment makes our existing late life producing assets marginal or uneconomic and, as such, we have continued to focus on reducing costs and on progressing near term high impact projects such as Wressle and Biscathorpe. Progress in developing our unconventional resources in Northern England has been impacted by the current moratorium [on fracking in England].”

Other plans listed in the results included:

  • Seeking to farm-out and drill North Kelsey-1, Lincolnshire. Planning permission runs until 31 December 2021.
  • Subject to lifting the English fracking moratorium, joint venture partner will seek planning permission and environmental permits to drill and test the Springs Road-2 well at Misson in north Nottinghamshire.
  • Review repurposing existing wells for geothermal energy

Onshore production sites

The preliminary results gave details of other onshore sites where Egdon has an interest:

Avington, Hampshire: Remains shut in after planning consent refused for continuing production. Decision to be appealed by IGas, the operator.

Dukes Wood/Kirklington, Nottinghamshire: £1.15m full impairment of these assets. Sites likely to restored, with options to repurpose for geothermal energy

Fiskerton Airfield, Lincolnshire: Net rate to Egdon of 13 bopd (2019: 15 bopd).

Keddington, Lincolnshire: Net rate to Egdon of 8 bopd in 2020 (2019: 11 bopd). The company said production could be increased by a sidetrack from an existing well.

Waddock Cross, Dorset: Currently shut in. Work underway on a redevelopment plan.

Licences and deals

Yesterday (5 January 2021), Egdon announced it had finalised a £1.05m convertible loan notes with Petrichor Holdings BV.

In June last year, Egdon resolved a dispute and received £775,000 from Humber Oil & Gas over PEDL253 (Biscathorpe).

Three licences continued to second terms during the year: PEDL180/182 (Wressle, North Lincolnshire) and PEDL253 (Biscathorpe, Lincolnshire).

Terms were extended to PEDLs 191, 201, 202, 241, 273, 306 and 334.

Egdon increased its interest in PEDL209 (Laughton, Lincolnshire) to 100% following the withdrawal of other joint venture partners. In PEDL241 (North Kelsey, Lincolnshire), the company and Union Jack Oil plc reached agreement on a 50:50 interest.  

Key figures

Oil and gas revenues: £0.96m; (2019: £2.20m) in 2019

Loss for the year: £4.75m after write-downs, pre-licence costs and impairments of £3.03m. The equivalent loss in 2019 was £1.72m.

Operating loss: £1.79m; 2019 £1.26m

Cash at the bank: almost halved to £0.85m, down from £1.62m in 2019.

Net current liabilities: £0.33m (2019: £1.91m)

Production: 145 boepd; (2019: 182 boepd)

Impairments: £2.191m made to Ceres, Dukes Wood/Kirklington and non-core unconventional licences PEDLs 001, 130, 202 and 039 and EXL253.

Licence interests: 42 licences (2019: 44)

Unconventional acreage: 164,280 net acres (2019: 186,600 net) with undiscovered gas in place of 47.6 trillion cubic feet (TCF) net to Egdon (2019: 509.TCF)

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