Cuadrilla Resources is to give up operation of one of its Yorkshire licences, under an agreement announced today.

The news follows an confirmation last week that Cuadrilla had relinquished three shale gas licences in Yorkshire.

Today’s announcement centres on PEDL347, operated with a 100% stake by the company’s subsidiary, Cuadrilla North Cleveland. The licence area includes Scarborough in North Yorkshire and land to the south into East Yorkshire.

Under a deal with Egdon Resources and York Energy, Cuadrilla will give up the operation of PEDL347 and reduce its stake to 25%.

In return, Cuadrilla will take a 25% stake in the neighbouring licence, PL81, previously held by Third Energy, now York Energy.

If the agreement goes ahead, Cuadrilla will be the operator of just two licences in Lancashire and four in Yorkshire. None of these licences is currently producing oil or gas.

Cuadrilla also has stake in PEDL244, the Balcombe licence, now operated by Angus Energy. The Balcombe site, which is mothballed, is the subject of a legal challenge.

Last week, Cuadrilla’s parent company reported it had secured a one-year extension to the initial term of PEDL347 from the industry regulator. PEDL347 was granted to Cuadrilla in 2016. At the time, it was described as a shale gas licence.

Weaverthorpe gas prospect

Today’s announcement centres on the Weaverthorpe gas prospect, which spans PEDL347 and PL81, and is described as a “shallow Sherwood sandstone conventional prospect”.

In a statement, Egdon Resources said it would become the operator of PEDL347 and take a 52.5% interest. It also said it had exercised an option to farm-in to PL81 under an agreement announced earlier this year. This would also give Egdon a 52.5% stake in PL81.

Egdon said it has reprocessed and interpreted 214km of 2D seismic data and has carried out further studies, which confirmed that Weaverthorpe was a “material, commercially-viable prospect”.

The company will pay 100% of the costs of a well, to be drilled in the next three years, to test the prospect. It will also pay all the 2023 licences fees for PL81 and the regulatory and legal costs of transferring the licence interests.

Mark Abbott, managing director of Egdon, described Weaverthorpe as “a robust and commercially attractive conventional gas prospect”.

He said:

“This has triggered the exercise of the Option on PL081 and an agreement with Cuadrilla in respect of PEDL347, which when concluded, will cover the entire prospect area and allow the optimal appraisal and development of Weaverthorpe on behalf of the new Joint Venture.

“Indigenous gas resource like Weaverthorpe provide local employment and generate taxes whilst having compelling environmental and security of supply benefits by reducing the UK’s increasing reliance on imports of LNG which carry significantly higher pre-combustion emissions. Producing gas from Weaverthorpe would be fully aligned with the Government’s Energy Security Strategy and Net Zero targets.”

Egdon said the three companies aimed to complete the farm-in and equalisation of interests between the two licences within six weeks. They aimed to agree a joint operating agreement in a further six weeks.