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

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.

http://www.interconnector.com/Enhancement/CapacityDemand.htm

cheers GF.

Excellent day for EDR after some pretty heavy falls recently:

Egdon Resources Plc (AIM : EDR), the UK focused energy Company is pleased to
announce its Preliminary Results, for the year ended 31 July 2005.

Operational Highlights

Confirmation of oil discovery at Waddock Cross
Multi-well drilling programme to commence in November 2005
Portland Gas Storage Project progressing well - now targeted to store
up to 35 Bcf
Avington drilling anticipated to recommence in near future
Transfer from OFEX to AIM completed in December 2004

Financial Highlights

Placing in December 2004 - raising 4.5 million
Loss for the period 420,617 (2004: 246,350)
Loss per share 0.92p (2004: 0.72p)
Net Cash position of 2.95 million (2004: 552,405)

Commenting on the results, Philip Stephens Chairman of Egdon, said:

'The Company has made good progress since joining AIM in December 2004, and we
are looking forward to an active phase of exploration and appraisal drilling
which should add material value to the Company.

'The potential of our gas storage project at Portland will also drive
shareholder value.'

Quote of the week in the Business section of the Sunday Times comes from Sir Digby Jones, blasting the Government for failing to ensure enough storage capacity for imported gas: "If there is a harsh winter...it will be back to the days of three and four-day week."

With heavyweights like SDJ highlighting the problem it can only be good for EDR...

queen1,

It certainly can!

Nice RNS for the holders here, well done to all.

Andy

Belief from the directors as well. I feel momentum building here:

Egdon Resources plc (the 'Company') was informed yesterday that Non-Executive
Director Walter Roberts yesterday purchased 150,000 ordinary shares in the
Company at a price of 63.83p each and 50,000 ordinary shares at 70.5p each. Mr
Roberts is now beneficially interested in 776,750 ordinary shares, representing
1.5% of the current issued share capital.

queen1,

a nice write up at oilbarrel.


Egdon Resources Share Price Perks Up On The Back Of A Multi-Well Drilling Programme

Shares in AIM-listed Egdon Resources, which is primarily a UK onshore oil and gas explorer and putative gas storage group, moved strongly ahead of the results announcement recently.

It was not anything in the results for the year ending July 31 which caused the stir however, but some announcements which accompanied the results. Losses for the period were 420,617 (2004: 246,350). These reflected the costs of graduating from the small Ofex market to the more liquid AIM.

Egdon now has 20 licences with 50 drillable prospects. The excitement in the share price was caused by three announcements.

First, the company was able to announce confirmation of an oil discovery at Waddock Cross, the third of its wells and the second successful one. The oil in place estimate at Waddock Cross has increased to 42 million barrels up from 20 million barrels.

Second, the company has announced an 11 well back-to-back drilling programme starting next month and beginning with Waddock Cross-3.

Third, the company has increased the target for its Portland Gas storage project to store up to 35 billion cubic feet of gas against 20 billion cubic feet originally. Also there is expected to be drilling on Avington, Egdons original discovery, after much delay due to a change of operator.

The company has added a major new area of business to its oil and gas operations through the entry into the UK gas storage market via the Portland Gas Storage Project. Gas would be stored under pressure in a series of caverns within a thick salt sequence approximately 2,000 metres below ground level. These caverns would be created by dissolving sale with seawater, circulated under controlled conditions. It is anticipated that 18 caverns would be created, with six caverns built in three phases.

The next stage in the process is to drill a well to confirm the thickness and properties of the salt sequence.

Returning to the companys conventional oil and gas activities, the Waddock Cross-1 well, onshore southern England was drilled over a year ago. This encountered a 24-metre column in the Jurassic Bridport Sandstone. The well pumped 31 barrels per day in August 2004. There were various delays. A 12 sq km seismic survey has been acquired and planning permission has been obtained for two horizontal wells: Waddock Cross-3, in which Egdon has a 45 per cent interest will be an appraisal of the Bridport Sandstone oil discovery; well number five in the programme will be Waddock Cross-4, which will test production in December. Equipment is constrained to 500 bpd of which the company expects 150 bpd to be oil.

Between now and then, Egdon is going to be involved in Westerdale-1 on PEDL068 in which it has a 20 per cent interest, as well number 3 in its programme. This is an exploration well looking at a gas prospect in the North Moors National Park. The well is a 35 metres updip, 3.7 metres step out from Ralph Cross-1 well drilled in 1966 which flowed at 6 million cubic feet of gas per day from fractured limestone (Brotherton). The potential net to Egdon if it assumes a 5 per cent option to increase its equity to 25 per cent is put at 8.8 bcf.

Well number 2 in the programme will be Kirleatham-4 on PEDL068 where Egdon again has a 20 per cent interest of which 10 per cent is carried. This is a gas prospect to the east of the Wilton petrochemical works. Drilling will be updip of 1940s wells, which found gas.

Well number 4 is the Portland-1 well, which is subject to planning permission being granted and is expected to start towards the end of 2005.

Thereafter stretching into 2006 a further 6 wells are planned on various licences including Grenade in southern France and Avington, which is near Winchester in southern England. Grenade is a heavy oil prospect and Egdon has farmed out a 22 per cent interest in the field to Masefield Energy Holdings, a company with proprietary technology in heavy oil operations. This leaves Egdon with a 33.4 per cent stake.

Avington on PEDL070, in which Egdon has a 20 per cent stake, is a Greater Oolite play. Avington-2 was drilled in August 2003. The well flowed at 700 barrels per day. There was thought to be 100 million barrels of oil in place, of which 10 million barrels could be recoverable. Further appraisal has been much delayed because of the protracted sale of Pentex the operator. This has now been resolved. The new operator, Star Energy, hopes to drill the Avington-3 appraisal well early in 2006.

As things stand Egdon has no debt and a net cash position of 2.95 million. It has 1 million barrels of proved and probable reserves, 6.8 million boe of estimated contingent reserves and 104 million boe of prospective resources (unrisked). The company is looking forward to first production and thus cash flow from Waddock Cross later this year.

Then there is the Portland Gas Project to look forward to. It will take three years at least to come onstream if all goes well but as the UK runs out of gas, storage is expected to be big business.

The companys reasoning is as follows. The UK is the worlds third largest gas consumer and with North Sea output in decline, is expected to become a net importer in 2006. Despite this, at present the countrys gas storage facilities are equivalent to just 4 per cent of annual demand, a figure which compares with 25 per cent in France and 21 per cent in Germany.

Gas consumption is significantly higher in winter than in summer and storage facilities can provide swing capacity to help meet peak demand. In the last week of last April gas for this winter was trading at a price approximately 26p/therm higher than then current prices. It is by exploiting such differentials that income can be generated.

Before Egdon upgraded its storage possibility to 35 bcf, broker Seymour Pierce made some estimates on the project. It assumed the first cavities are operational by 2009 and the facility is fully commissioned by 2011. It also assumed it is filled and depleted twice a year and uses inflation rates varying between 2 and 10 per cent. On that basis the broker said if a gas price differential of just 10p a therm could be achieved, such a development could be worth 43 million, or more than twice the companys market capitalisation.

Andy - thanks, a splendid article. A lot of good stuff in there but I guess 2 things jump out from an initial reading. Firstly, EDR has no debt which is unusual and extremely healthy. And secondly the final paragraph gives a tantalising glimpse of EDR's long-term potential. If you can afford to squirrel these away they could make a small fortune in the not-too-distant future.

Another cracking day for EDR. Saw the headline on the front of the Mail today that screamed, "Gas prices to triple over the winter." Not good for those of us who use gas to heat our homes but potentially lucrative for those that deal in gas and its supply going forward.

queen1,

That was the Express, and they always sensationalise their headlines.

I think that a 300% rise in the price of gas would create a crisis, and result in many deaths, and politically would not be acceptable.

It would cause severe political problems IMO.

Mail/Express, whatever. My point is not that I belive the headline and expect the 300% rise, more that the environment at present, and the way it will inevitably head over time, seems to be conducive to success for EDR.