The PEDL005 license is split into two sub-licenses; PEDL005 (Remainder), which is the subject of this acquisition; and PEDL005 (Saltfleetby) which contains the Saltfleetby gas field owned 100% by WINGAS Storage UK Limited ("WINGAS"), and which is not affected by this acquisition.
The Keddington Oil Field is located to the east of the town of Louth and was discovered by Roc in 1998. The field produces from a sandstone reservoir of Westaphalian (Carboniferous) age at a depth of around 2180 metres. The field has two production wells; Keddington-1, which is a pumped well which was producing around 20 to 30 barrels of oil per day ("bopd") with around a 60% water cut, and Keddington-2 which was free-flowing dry oil at 10?15 bopd along with up to 110,000 cubic feet of gas per day. The gas was being flared. Keddington has produced a total of 173,000 barrels of oil to date.
Keddington is not currently in production. The Keddington-1 well has been subject to ongoing tubing and pump problems in recent years and has been shut-in since June waiting on a work-over rig. The Keddington-2 well has not been put back on production since a pressure survey in March 2006.
Egdon plans to re-complete the Keddington-1 well with a deeper set pump to optimise pumped production and also to restore free-flowing production from the Keddington-2 well. This work-over program is planned for early 2007. Egdon will also investigate the potential to utilise the produced gas in a gas engine already installed at Keddington to generate electricity for use on site, thus reducing operating costs. WINGAS personnel from Saltfleetby provided operational support at Keddington for Roc on a contract basis and will continue to provide this service to Egdon.
PEDL005 (Remainder) also contains the North Somercotes Prospect which is mapped on 3D seismic data. Egdon will re-evaluate this prospect as part of its re-assessment of the remaining potential in the license. Planning approval has already been received for an exploration well on the North Somercotes Prospect.
The agreement is subject to DTI consent and completion of transfer documentation. On completion, Egdon will hold a 100% interest in PEDL005 (Remainder).
Commenting on the agreement, Mark Abbott, Joint Managing Director of Egdon said:
"We are delighted to have concluded this agreement with Roc which will add near-term production and cashflow in one of Egdon's core areas of the onshore UK. The acquisition provides the potential to re-develop the Keddington Oil Field to enhance and extend the producing life of the facility, giving Egdon an early opportunity to prove itself as a UK onshore production operator. The presence of a drill-ready prospect at North Somercotes identified on 3D seismic data and with planning consent already in place provides additional opportunities within the license and is a valuable addition to our prospect inventory."
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