The consideration for the acquisition is £100,000 in cash and £25,000 in Egdon Ordinary shares. In addition Egdon has granted a Gross Overidding Royalty of 5% of future production from the licenses.
License PEDL 118 (Egdon 100%) contains the Eakring-Dukes Wood abandoned oil field which produced from a number of stacked shallow sandstone reservoirs of Carboniferous age from 1940 until 1966. The field was discovered in 1939 and extensively drilled and produced during the second world war, where production peaked at 1600 barrels of oil per day in 1941. A water flood was initiated in 1947 and total production at abandonment in 1966 was 6.5 million barrels of oil (mmbo) out of mapped 25.6 mmbo in place. However, extensive studies by BP during the 1980's indicated that the water flood resulted in some reservoirs being prematurely "killed" and unswept. As such there is potential to rejuvenate the field to take advantage of increased oil price, improved technology and the recognition of undrilled and undrained parts of the field.
Planning approval is in place for the drilling of the Eakring North prospect which will test an undrained culmination at the north of the Eakring-Dukes Wood structure. Options will be investigated for the restoration of production from some of the existing abandoned wells on the field. Reservoir modelling will be undertaken to determine the potential to access undrained areas of the field and for enhnaced oil recovery from the un-produced Wingfield Flags reservoir.
The PEDL094 license (Egdon 100%) is located between producing oil fields at Gainsborough, Corringham and Glentworth and contains identified prospective structures.
License PEDL130 is located to the north and west of the Eakring-Dukes Wood oil field and contains a continuation of the Eakring structural trend. Egdon has 100% of the conventional oil and gas rights over the license with Alkane Energy Plc having the rights to the mine gas and coal bed methane.
The PEDL132 license (Egdon 100%) is located to the east of Eakring-Dukes Wood and to the south and east of the Egmanton oil field. Structural leads are recognised to the east and south of Egmanton on existing 2D sesimic data.
The license transfers are subject to approval by the Department for Business, Enterprise and Regulatory Reform (formerly the DTI).
Commenting on the acquisition, Mark Abbott, Joint Managing Director of Egdon said:
"We are pleased to have reached agreement with STAG for the acquisition of these four licenses which significantly expands our acreage holdings in one of our core areas and has the potential of adding material reserves and resources to the Egdon business. Our initial focus will be on the Eakring-Dukes Wood structure where we have identified potential un-drilled areas, by-passed oil pay and enhanced oil recovery opportunities. We will also be undertaking further technical evaluation of a number of prospective areas currently identified within the other licenses with a view to future drilling."
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