Egdon Resources plc announced the farm-out of a further 5 percent interest in Petroleum Exploration and Development Licence 201 ("PEDL201") located in Nottinghamshire and Leicestershire to Union Jack Oil plc.
Under the terms of the agreement, Union Jack will pay 10 percent of the cost of the planned Burton on the Wolds-1 exploration well to earn a 5 percent interest from Egdon. As a result Egdon's exposure to the well is reduced to 15 percent of costs. Union Jack has also agreed the same terms with Celtique Energie Petroleum Ltd. ("Celtique") to result in a 10 percent total license interest.
On completion the license interests in PEDL201 will be as follows:
The transfer of interests is subject to approval by the Department of Energy and Climate Change.
PEDL201 was awarded in 2008 and is located on the southern margin of the Widmerpool Gulf geological basin. The Burton on the Wolds Prospect has been mapped on proprietary 2D seismic data, which was acquired by Egdon in May 2011. Evaluation has highlighted a prospect with targets at two distinct stratigraphic levels. The shallower target, the Rempstone Sandstone, is productive at the nearby Rempstone oil field. A seismic anomaly, possibly indicative of a carbonate reef, underlies the Rempstone Sandstone. The mean combined Prospective Resources for the primary and secondary objectives, as calculated by Egdon are estimated to be 3.8 million barrels of oil.
The planned well will be shallow with a drilled depth of around 3,281 feet (1,000 meters) to test both targets. A planning application has been finalized and is expected to be submitted shortly. Subject to planning it is intended that the Burton on the Wolds-1 well will commence drilling late in the second quarter of 2013.
Commenting on the farm-out Managing Director of Egdon Mark Abbott said:
"We look forward to working with Union Jack in exploring the Burton on the Wolds Prospect. The prospect combines a lower risk reservoir target offsetting nearby production with a higher risk, higher potential play at present untested in the basin. This further farm-out agreement enables Egdon to manage both the technical and financial risks associated with this project.
As part of our stated strategy to manage risk and accelerate activity, we have embarked on a more active marketing campaign and I am pleased to report that we are in advanced discussions regarding further farm-outs on a number of our projects. I hope to be able to report further progress with these in the coming weeks."
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