Egdon Resources has released an update on its UK operations and production at its year end of 31 July 2011.

Egdon's production during July 2011 from the Keddington, Kirkleatham and Avington fields was 420 barrels of oil equivalent per day (boepd).

Keddington

At the Keddington Oil Field in Lincolnshire (Egdon 75% interest), the Keddington-4 (K4) well was drilled as a re-entry and horizontal sidetrack from the Keddington-1Z "donor" well during April 2011, and a total of 120 metres of the primary reservoir Unit 1 sandstone was encountered along with 65 metres of Unit 2.

As reported in May, the K4 well initially free-flowed oil and gas at maximum rates in excess of 200 barrels of oil per day (bopd) and 518,000 cubic feet of gas per day with no associated formation of water. Following "bleeding- off" of the gas pressure, the well was put on pumped production using a down-hole sucker-rod pump and stabilised rates of around 75 bopd along with 200,000 cubic feet of gas per day were achieved by the end of June. Indications are that the pump is operating at low efficiency due to the high gas levels in the produced fluids and that the well is capable of delivering higher oil rates with greater drawdown. Options to resolve this are being investigated.

The Keddington-3z well (K3Z), which had been shut-in since March 2011, was put back on free-flow production, along with continued production from K4, from the beginning of July and total oil rates have steadily increased during the month from 120 to 180 bopd (Net Egdon 135 bopd) as the gas pressure in the well has gradually been "bled-off" in a controlled manner and has been constrained by flaring capacity. Average daily production during July was 158 bopd (Net Egdon 118.5 bopd) and 850,000 cubic feet of gas per day (Net Egdon 106 boepd currently being flared).

To date no formation water has been produced from either K3Z or K4 resulting in a decrease in project operating costs.

The company continues to pursue the best options for export of electricity from the site to minimise constraints on oil production and is integrating the results of the K4 well into a field model to enable a reassessment of the ultimate reserves for the field.

Kirkleatham

As previously reported the Kirkleatham gas field in PEDL068 (Egdon 40% interest) achieved first production on 19 April 2011. Following the resolution of a number of residual mechanical and control issues the field has been capable of 24 hour production since mid-May. Availability of the end-user power plant restricted production during June. However, production uptime during July has been high with production averaging 4.24 million cubic feet of gas per day ("mmcfg/d") (Net Egdon 1.7 mmcfg/d or 282 boepd). Levels of H2S have stabilised at 60 parts per million, well below design limitations.

The power plant was shut-in for 7 days for routine maintenance on 30 July during which time down-hole pressure data will be retrieved from the Kirkleatham-4 well for analysis.

It is planned to produce the well at between 3 and 3.5 mmcfg/d (Net Egdon 1.2 to 1.4 mmcfg/d or 200 to 233 boepd) on resumption of production to match expected power output and manage reservoir pressure.

Ceres

The Ceres field in block 47/9c (Egdon 10% interest) is now in a position to produce following completion of repair work on the damaged Eris umbilical and resolution of hydrate issues in the flow lines. The Ceres field was brought back on stream on 13 June 2011 and was produced with some interruptions until 26 June 2011 when the field was shut-in due to annual maintenance at the Cleeton platform. Egdon has been advised that this shut-down is likely to last for a period of around sixty days with the expectation of a restart of sustained production during September 2011. Production occurred over seven days during June 2011 and average net Egdon gas production for the period was 1.6 mmscfg/d (c. 260 boepd).

Waddock Cross

At the Waddock Cross oil discovery in Dorset licence PL090 (Egdon 45%), the site is in the final stages of preparation for commencement of an Extended Well Test. Test operations are expected to start within the next two weeks and to continue for a period of up to six months. The intention is to trial a number of techniques aimed at increasing oil production in this high water cut reservoir to enable a decision to be made over a future development of this field.

Markwells Wood

In West Sussex licence PEDL126 (Egdon 10%) the company has been advised that well test operations at the Markwells Wood-1 oil discovery are due to commence at the end of August, subject to final DECC approval. The test is planned to last a maximum of 40 days and will include acid stimulation of the reservoir. The outcome of the testing will help in determining the commerciality of the well.

Avington

The Avington oil field in Hampshire licence PEDL070 (Egdon owns 26.67% interest, following the recently announced sale of 10% interest in the field) continues to produce from the Avington-2z and Avington-3z wells. Net Egdon production for July was 20 bopd.

Dukes Wood/Kirklington

In Nottinghamshire licence PEDL118 (Egdon 65% interest) planning consent has been received for oil production at the Dukes Wood-1 well. Egdon is now in the process of securing the environmental permit and DECC field development approval prior to restarting the combined production from Dukes Wood-1 and Kirklington-3Z later in 2011.

PEDL201 Seismic Programme

In Leicestershire/Nottinghamshire licence PEDL201 (Egdon 50%) Tessla-IMC completed a 19 kilometre 2D seismic programme during May 2011 over the Burton on the Wolds Prospect which is located to the south-east of the Rempstone oil field. The processed data is currently being evaluated with a view to a drilling decision during 2012.

PEDL180/182 3D Seismic Programme

A contract has recently been signed with Tessla-IMC for the acquisition of a 45 square kilometre 3D seismic survey over the prospective Broughton-Wressle trend in Lincolnshire licences PEDL180 & PEDL182. On current timing the survey is expected to be completed by the year end.

Commenting on the recent developments, Egdon's managing director, Mark Abbott, said: "We have made further good progress towards our long stated target of 500 boepd and achieved net Egdon production of 420 boepd during July 2011. The resumption of production at Ceres which is currently expected on conclusion of the maintenance shut-down of the Cleeton platform during September, along with the EWT at Waddock Cross should enable us to exceed our production target at this time.

We also look forward to the commencement of the Markwells Wood-1 well test which will determine if the discovery is commercial."

Tags: Egdon Resources Plc