Further to our announcement of 20 January 2020, Egdon Resources plc is pleased to announce the signature of a Farm-In Agreement with Shell U.K. Limited (Shell) in relation to UK offshore licences P1929 and P2304 (“the Licences”) which contain the Resolution and Endeavour gas discoveries respectively.

Egdon subsidiary, Egdon Resources U.K. Limited (‘ERUK’) currently holds a 100% interest in both licences.

Under the terms of the farm-in agreement :

- Shell will acquire a 70% working interest in Licences P1929 and P2304, and be appointed as the licence operator
- ERUK will retain a 30% non-operated interest in the Licences
- As consideration, Shell will pay 85% of the costs of the acquisition and processing of a 3D seismic survey covering both the Resolution and Endeavour gas discoveries with the carry on the acquisition costs capped at US$5 million gross, beyond which it would pay 70% of the costs ; and
- Shell will also pay 100% of all studies and manpower costs up to a well investment decision on the Licences

The farm-in is conditional upon :

- Approval from the Oil & Gas Authority (“OGA”); and
- Agreement of a mutually acceptable forward work programme and timeline with the OGA

In December 2019 Egdon announced that the OGA had granted extensions to the Licences to 31 May 2020 subject to securing a farm-in agreement by 31 January 2020 (which this agreement fulfils) and to demonstrating by the 31 March 2020, that the Licensees are on track to deliver a future programme of 3D seismic data acquisition across both Licences (which is in progress). Egdon and Shell will now engage with the OGA to agree the nature and timing of the forward work programme which will enable further licence extensions to be granted to accommodate this.

A Competent Person’s Report prepared by Schlumberger Oilfield UK PLC (April 2019) reported Mean Contingent Gas Resources of 231 billion cubic feet of gas (“bcf”), with a P90 to P10 range of 100 to 389 bcf, attributable to the Resolution gas discovery (P1929). The Resolution discovery was made by Total in 1966 when well 41/18-2 flow tested gas from the Permian aged Zechstein carbonate (limestone) reservoir. Additionally, Egdon estimates that the Endeavour gas discovery (P2304) contains Mean Contingent Resources of 18 bcf, with a P90 to P10 range of 10 to 28 bcf.

Commenting on Shell’s farm-in to these licences, Mark Abbott, Managing Director of Egdon Resources plc, said:

“We are delighted to have signed a farm-in agreement with Shell in respect of these highly prospective licences. This transaction validates our views on the potential of these blocks and introduces a highly experienced and respected operator to progress appraisal activity on the Resolution and Endeavour gas discoveries. In difficult market conditions Egdon has secured a substantial carry on costs to the well investment decision whilst retaining a material 30% interest in the licences.

About Egdon

Egdon Resources plc (AIM:EDR) was formed in 1997 and awarded its first licence in 1998. In 2000 Egdon gained its first operated licence and listed on the OFEX market. In 2004 Egdon listed on AIM. In January 2008 Egdon demerged its gas storage business, Portland Gas plc (now renamed Infrastrata), and again became a focused exploration and production business with conventional and unconventional resources assets in the UK.

About Royal Dutch Shell plc

Royal Dutch Shell plc is incorporated in England and Wales, has its headquarters in The Hague and is listed on the London, Amsterdam, and New York stock exchanges. Shell companies have operations in more than 70 countries and territories with businesses including oil and gas exploration and production; production and marketing of liquefied natural gas and gas to liquids; manufacturing, marketing and shipping of oil products and chemicals and renewable energy projects.