Basal Westphalian sandstones targeted at Biscathorpe-2 were found high to prognosis and poorly developed. Elevated gas readings and oil shows in the Dinantian Carbonate provide indication of an effective petroleum system and Egdon sees the potential for a better developed reservoir to the north and north-east of Biscathorpe-2, a potential target for a future side-track. Our last published conventional asset value for Egdon was 12.7p/share and included 3.6p/share of risked value for Biscathorpe-2, which we expect to remove. Valuation of Egdon’s net shale resource (188,000 net acres) remains uncertain but, in our view, has potential to be worth risked c 100p/share based on the current expectation of well cost, type curves and forward gas prices, assuming a supportive political and planning backdrop.
Egdon holds a 35.8% interest alongside partners Montrose, Union Jack and Humber with company-estimated net well costs at c £0.75m (pre-drill). Biscathorpe-2 was drilled to total depth of 2,133m within the Dinantian Limestone. The well targeted a combined structural/stratigraphic trap down-dip from the 1987 BP crestal well that discovered oil shows in 1.2m of basal Westphalian sand but encountered this high to prognosis. Sands were thin and poorly developed at the well location – Egdon now believes the sands have potential to be more thickly developed to the north and north-east, which may be the target of a future sidetrack. We had valued Biscathorpe at risked 3.6p/share based on a 20% commercial chance of success; this equated to 28% of our conventional valuation.
Egdon is fully carried on its 14.5% interest in the IGasoperated Springs Road-1 well targeting Bowland shale in the Gainsborough Trough. Coring operations have commenced in the Bowland Shale, and logs are expected to provide some detail of shale thickness, gas content and suitability for hydraulic stimulation.