Egdon Snaps Up UK Co, Ups the Ante in Avington Oil Field
The Directors of Egdon Resources have reached agreement to acquire the entire issued share capital of YCI Resources Limited ("YCIR") from the Heyco Energy Group ("Heyco").
YCIR is a UK registered private company whose principal asset is a 16.667% interest in PEDL070, which contains the Avington oil field and is located in the Weald Basin of Southern England. YCIR also has a 33.334% interest in adjacent license PEDL069 which Egdon maps as containing a possible northerly extension to the Avington field. This transaction will increase Egdon's interests to 36.667% in PEDL070 and to 66.667% in PEDL069.
The consideration for the transaction will be the issue to Heyco of 6,861,434 Ordinary shares in Egdon. In addition Egdon will grant Heyco a Net Profit Interest ("NPI") on current and future production from the licenses. The NPI, which is related to oil price, will range between 5% and 10% of Egdon's net revenues realized from the licences after subtracting allowable costs.
The acquisition is subject to review by the Secretary of State for Business Enterprise and Regulatory Reform following which the transaction will be completed and application will be made for the consideration shares to be admitted to AIM.
The Avington oil field was discovered in 2003 with the drilling of the Avington-2 well which tested light oil from the Jurassic age Great Oolite reservoir. During 2007 the drilling and extended production testing of the Avington-3z well established the commerciality of the field with production of 63,000 barrels of oil during the six months test. During 2008 the operator, Star Energy, obtained the required planning and other consents to improve the surface facilities and restart production from the Avington-3z and Avington-2z wells. In addition consent was granted to drill two further appraisal wells on the accumulation. As previously reported by the Company, production commenced at Avington on 23 January 2009 at an initial free-flowing rate of around 300 barrels per day.
Commenting on the proposed transaction, Mark Abbott, Managing Director of Egdon said, "The acquisition of YCIR increases our interest in the Avington oil field to a more material level of 36.667% and will provide an important additional source of revenue and enable us to make further progress towards our near term production targets. We have worked closely with the management of Heyco over a number of years and look forward to their involvement as shareholders in the Company."
George Yates, President of Heyco Energy Group commented, "This transaction allows Heyco to gain exposure to the wide range of quality projects within Egdon's portfolio while retaining a financial interest in the Avington Field."
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