Egdon Resources (LON:EGRE) retains several value catalysts over the course of 2017/2018; these encompass the company’s conventional as well as unconventional asset portfolio. Key catalysts include exploration and appraisal at Springs Road, Holmwood, Resolution, Biscathorpe, and North Kelsey as well as Wressle development. Capital commitments are being kept to a minimum through existing cost-carry arrangements and planned farm-outs.
Planning consent approvals continue to hinder the pace of activity; however, central government appears to be supportive of unconventional gas development, attracting sector investment from the likes of Total, Centrica (LON:CNA) and Ineos. Our Egdon valuation has increased slightly to 21.5p/share risked conventional value and 26.0p/share for indicative unconventional upside potential.
Five key conventional projects in 2017/2018
Egdon is investing in five key conventional projects in 2017/2018: Wressle field development, Holmwood and North Kelsey exploration, as well as appraisal of Resolution and Biscathorpe. Capital commitments are being kept to a minimum with Egdon’s net capital budget for 2018 estimated at £3m, subject to completion of farm-outs and receipt of government approvals. Holmwood in particular has attracted recent industry interest after further Weald Basin (Kimmeridge limestones) exploration success. The addition of Fiskerton Airfield to the company’s asset base, announced recently, is a small positive adding c $0.5m to core NAV.
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