I have been watching Egdon Resources for a while, and think they may prove to be worth an investment.

I like the idea of a British company finding oil and gas on UK soil, and as Egdon have a site at Waddock X, fairly close to where I live, I have decided to follow their progress.


Egdon has interests in 19 licences in the hydrocarbon producing basins of the UK and France, containing two oil discoveries and a further 48 prospects.

The Company's shares are traded on the Alternative Investment Market of the London Stock Exchange.




OIL AND GAS ASSETS

Egdon holds 19 licences, all of which lie within proven oil and gas producing basins and contain a mix of oil and gas prospectivity. The assets and technical management of the Company are divided into four geographically defined business areas; Southern England, Northern England (and adjacent offshore areas), East Midlands and France.





Company website : http://www.egdon-resources.com

Andy & Q1: How do you imagine you can keep this one secret after mentioning Laurence's cottage and so conjuring up images of Arabian nights and Arab oil. We are watching carefully and wondering if EDG can outpace our front runners, AEX and ULT. And as Kimmeridge is one of my favourite beauty spots, I might easily be tempted to back EDR as well. Meanwhile, will keep watching.
sd.

squidd, welcome! A slightly slower day today but still blue. It's been a marvellous week.

Queen1, squidd,

Here's the map of the area, showing Waddock Cross on the left hand side, and the road junction at Clouds hill, where Lawrence of Arabia's former cottage is located, on the right.

Thanks for the colour Andy. Well, EDR ran out of puff today which I guess is only to be expected. I'm hoping for more blue next week although feel we could stabilize around the 60-65p mark for a while.

Stonking day today so far and over the recent 60-65p range of the last 2 weeks. Is this the start of the next leg upwards?

queen1

No idea, but I will probably buy a few tomorrow or Tuesay, as I feel I should have a stake in a local oil and gas explorer, and there must be a decent chance of a find given the proximity to Wytch Farm.

Bought this one a few months back Andy. Cant see how you are going to keep it a quiet one as Evil K is buying by the lorry load. (star energy is worth a look at too)

Sees you when I get back of holiday. Good luck to holders and potential holders.

cheers GF.

Up again so far today. Definately something in the air. Get in while you can....after having DYOR of course!

GF,

Have a good time!

IF EK is buying as you say, then yes, Egdon won't be quiet for long, as T1ps will mention it at some point.

Tip from Citywire............................

Shrewd Tip: gas storage deal may inflate share price

By: Patrick Sherwen, Deputy Editor

Egdon Resources is an AIM-listed oil & gas explorer that focuses on the area surrounding the UK but has moved into the gas storage market and made some shrewd fans in the process.

In its interim results in April losses tripled to 296,000 from 97,000, which was partly down to the one-off costs of moving from Ofex to AIM. Turnover grew from 61,000 to 203,000. It expects to achieve operating profit in 2006 by which time its UK oil fields, Avington and Waddock Cross, should be in production.

The shares have risen from 30p to 64p this year but a recent deal to enter the burgeoning gas storage market could boost the share price further.

One investor who sees potential is AAA-rated fund manager Giles Hargreave. He added to his Marlborough Special Situations fund's (Marlborough Special Situations) holding at the end of July. As a result it owns 800,000 shares or 1.6% of the company. He also controls 1.69% through his UK Microcap Growth fund (Marlborough UK Micro Cap Growth).

In April Egdon (EDR) announced plans to develop a 10-20 billion cubic feet natural gas storage site in salt caverns on the Isle of Portland in Dorset. It hopes the first cavern will be operation by 2008 subject to permission.

Such a facility would increase the UK's gas storage capacity by 60%. Gas storage is a developing market in the UK, the third largest consumer of gas in the world, as we start to import more gas and produce less. We are expected to be a net importer of gas by 2006 according to Egdon.

The company plans to buy gas when price is low, store it and sell it when it is higher on seasonal and shorter-term cycles.

An interesting benchmark for the value of this project is provided by a recent Scottish Power deal. On 27 July Scottish Power sold a six billion cubic foot gas storage facility at Byley, in Cheshire, for 96 million. Egdon's facility is less advanced in its development and still subject to permission but given its size, a rough calculation suggests it has a potential value of 320 million. This looks interesting when compared with a market capitalisation of 33 million.

There is a risk this facility will not be completed but the company is debt free and has 3.7 million cash on the books, raised in the move to AIM so it has a strong balance sheet. Buy.

cheers GF.

Im suprised no ones buying into this, perhaphs its a little long term.

cheers GF.

GF, excellent City Wire article and spot-on with the risk/reward equation. I've held since the anouncement in April and will continue to do so. Although it's a fairly big "if", if it does get permission and everything goes to plan this really will be a 10-bagger.

Yes It does look like it could be a big bagger Queen1, I just wish they would come out with some news regarding getting this permission. If thats positive watch this one roar ahead.

cheers GF.

The recent big rise in sp of Egdon, is that justified on the licenses or is it speculation of permission for the gas storage & that a big player might pay a good some of money for it? Sorry if I sound ignorant on this but I have been tipped this and need to understand more. What is the likely sp if permission is refused?

Andysmith,

If permision were refused, I would see an immediate substantial fall, unless of course thay have announced some good drilling results form somewhere first.

They are due to drill at Waddock Cross in Dorset anytime now, and I may drive down to check on progress as I live nearby. and know where the site is.

I would have thought that the gas situation in the UK would mean a good chance of a favourable outcome for the gas storage site, but you can never tell.

Any chance of knowing where you received the tip from? (you can use the private message facility if you prefer)

With gas coming increasingly into the frame, I was getting quite excited about EDR until I looked at their web site, only to find that their gas storage caverns do not actually exist at present. They propose to create a series of cavities, each up to 3 billion cu ft, in a layer of salt at 2000m depth, by washing out the salt with sea water. This is a subject I know nothing about, but as a layman, that sounds like a huge tonnage of salt to be removed, possibly with the prospect of increased salinity in the sea around Portland and I can already hear the environmentalists shouting, among other things, about the word heritage status of the surrounding coastline. Is anyone able to give a technical view.

Any ideas why the drop today?

Queen1,

I've been watching, and can'd find anything untoward, I wonder if they have commenced drilling at Waddock X yet?

Andy, not that I've picked up yet. Longer term, I'm still trusting my gut on this one and think it will make me a lot of money. In the current climate I would be very surprised (and a lot poorer!) if they don't get the go-ahead for the gas storage.

Queen1,

Me too!

And that has the real potential here, albeit sometime further down the line in around two years I believe.