Egdon has reached agreement to farm-out an interest in Nottinghamshire license PEDL206 to Angus Energy Kelham Hills Limited ("Angus"). Under the terms of the agreement, Angus will acquire a 50 percent interest in the license from Egdon in return for carrying the Company for 15 percent of the costs of two well's or 25 percent of the cost of a single well. The wells or well are to be drilled during the initial term of the license, which ends on June 30, 2014. As part of the agreement Angus will also assume operatorship of the license. Following completion, Egdon will retain a 25% interest in the license.
PEDL206 was awarded in the 13th Onshore Licensing Round in 2008 and is located immediately to the east of PEDLs 118 and 201 which contain the Company's Dukes Wood-1 and Kirklington-3z oil wells that are due to resume production in 2012. The license contains the Kelham Hills abandoned oil field, which produced two million barrels of oil between 1941 and 1957. A number of leads and prospects have been defined on existing seismic data which will be the focus of future exploration activity.
The assignment and change of operatorship are subject to approval from the Department of Energy and Climate Change (DECC).
Egdon's Managing Director, Mark Abbott, commented, "While containing a number of leads and prospects close to known oil production, their potential size means that PEDL206 is not a priority for the Company. This transaction enables Egdon to maintain an interest in the area whilst limiting the required financial and management resources. This farm-out is an example of our stated strategy of concentrating our resources on fewer higher potential projects as the Company develops."
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