Yesterday North Yorkshire County Council approved planning permission for Third Energy’s appraisal of Kirby Misperton-8 (KM-8) in the Cleveland Basin. We understand that work to hydraulically fracture and test KM-8 could be carried out as early as Q4 CY16. The read-across to Egdon is two-fold: first, planning success at KM-8 should help pave the way for planning approval at IGas-operated Springs Road where Egdon retains a 14.5% carried interest in a two-well exploration programme. Second, appraisal success could be a positive read-across for Egdon’s unconventional gas potential at the Cloughton tight gas field to the North East of KM-8 as well as Teesside to the North. Please see our report of 16 May 2016 for further details and a full breakdown of our Egdon valuation.
Planning applications up next: A planning appeal decision for Cuadrilla-operated shale gas exploration sites Roseacre Wood and Preston New Road in Lancashire is expected on 4 July 2016. Key planning objections include visual impact, noise and traffic. Cuadrilla has since proposed modifications to mitigate the potential impact. Springs Road: The IGas-operated Springs Road site does not appear to be contentious from a planning perspective with a planning recommendation and committee decision expected over the summer. Ease of site access, distance from areas of high population density and access to a decommissioned missile facility, provide the foundations for a well pad, making the selected site well suited for shale gas exploration.
Egdon valuation: Our valuation stands at 3.4p/share for core production and development assets, including cash and net of G&A, and 18.6p/share for risked E&A. We also include net unconventional acreage at 22p/share.