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Summary
- Egdon Resources completed the farm-in agreement with Shell UK for Resolution and Endeavour gas discoveries.
- Egdon Resources would retain 30 percent interest in the Resolution and Endeavour gas discoveries.
- Egdon Resources announced the start of site work at Wressle Oil Field.
- Petroneft Resources reported 7.8 percent year on year increase in oil production at License 61 in July 2020.
- Petroneft Resources issued close to 10.4 million shares to settle liabilities of around USD 200,000.
- Petroneft Resources produced 589,165 barrels of oil at License 61 in 2019.
Egdon Resources PLC (LON:EDR) & Petroneft Resources PLC (LON:PTR) are two energy stocks listed on the FTSE AIM index. Based on 1-year return, shares of EDR were down by around 57.9 percent, whereas shares of PTR were up by around 13.0 percent. Shares of EDR were down by about 2.2 percent, whereas shares of PTR were up by close to 5.0 percent from their previous closing price (as on 26 August 2020, before the market close at 10:40 AM GMT+1).
Egdon Resources PLC (LON:EDR) – First oil from Wressle Oil Field expected in H2 FY2020
Egdon Resources PLC is a UK based company that is engaged in the exploration and the development of the onshore hydrocarbon projects. The Company has 44 licenses within its portfolio. Egdon Resources was incorporated in 1997, and it is included in the FTSE AIM All-Share index.
Recent Events
- On 25 August 2020, Egdon Resources reported that it completed the farm-in agreement with Shell UK for two licenses P1929 and P2304. Resolution gas discovery includes P1929 license, and it is expected to have mean contingent gas resources of 231 billion cubic feet (bcf) as per the report prepared by Schlumberger Oilfield UK PLC. Endeavour gas discovery includes P2304 license, and it is expected to have mean contingent gas resources of 18 billion cubic feet (bcf) as per Egdon's estimate. The Resolution and Endeavour gas discoveries are situated in the North Sea. Shell UK's 70 percent ownership in the two licenses has been approved by Oil & Gas Authority (OGA), and Egdon would own a 30 percent interest in the two licenses. The 85 percent cost for the acquisition and 3D survey of Resolution and Endeavour gas discoveries would be paid by Shell UK. As per the agreement, the process related work would be completed by 31 May 2021. The acquisition cost of the project is capped at USD 5 million, and 30 percent of the survey cost above it would be paid by Egdon Resources. The study and workforce-related costs for an investment decision on the licenses would be wholly paid by Shell.
- On 3 August 2020, Egdon Resources reported that the site work has started at the Wressle Oil Field. The Company holds 30 percent interest in the PEDL180 and PEDL182 license in North Lincolnshire where Wressle Oil Field is located. The development at the site includes finalizing of design, procurement of material, installation of groundwater boreholes and the start of production.
Share Price Performance Analysis
1-Year Chart as on August-26-2020, before the market close (Source: Refinitiv, Thomson Reuters)
Egdon Resources PLC's shares were trading at GBX 2.20 and were down by close to 2.22 percent against the previous closing price (as on 26 August 2020, before the market close at 10:40 AM GMT+1). EDR's 52-week High and Low were GBX 6.95 and GBX 1.50, respectively. Egdon Resources had a market capitalization of around £7.39 million.
Business Outlook
The Company stated that the acquisition of a marine 3D seismic survey for the two licenses at Resolution and Endeavour gas discoveries would be the primary target in Q1 FY21. Egdon Resources is hopeful of its new partnership with Shell on the project. The first oil production from the Wressle Oil Field is expected in H2 FY20 that would increase the oil production by 150 barrels per day.
Petroneft Resources PLC (LON:PTR) – Produced 1,679 barrels of oil per day in Q1 2020 at License 61
Petroneft Resources PLC is a UK based company engaged in the exploration and production of oil & gas. The Company operates at Tomsk Oblast in Russia and owns a 50 percent stake in License 61 and 67. License 61 includes Lineynoye, Arbuzovskoye, Tungolskoye, Sibkrayevskoye and Kondrashevskoye field. Petroneft Resources is included in the FTSE AIM All-Share index.
Operational update as reported on 25 August 2020
The Company highlighted that the production at License 61 has increased by 7.8 percent year on year to 1,589 barrels per day in July 2020. The increased production at License 61 was due to optimization of the waterflood programme at Lineynoye field and the year-round production at Sibkrayevskoye field. In Q1 2020, the Company improved the waterflood programme at Pad 1 in the Lineynoye field. The improvement was due to the low-cost data acquired across the field. Given the improved results, in Q2 2020 additional well was converted to an injector. Approximately 246 barrels of oil per day were produced at Sibkrayevskoye field. The Company has seen a decline in production rate at PAD-2 in the last two years after which it is currently focused on the Arbuzovskoye field. After reviewing the data at Arbuzovskoye field, the Company has converted one well to an injector and one well to water source well in Q1 2020. The field optimization programme and data gathering across portfolio assets performed last year have helped to achieve increased returns.
Operational update as reported on 29 June 2020
In 2019, Petroneft Resources produced 589,165 barrels of oil at License 61. The average daily production rate was 1,614 barrels of oil per day in 2019 and 1,679 barrels of oil per day in Q1 2020. The Company produced and sold 1,200 barrels of oil from C-4 well at License 67 in Q1 2020. As on 31 March 2020, Petroneft had cash of USD 0.7 million. On 11 May 2020, the Company issued close to 10.4 million shares to settle liabilities of around USD 200,000 as the Company owned the money to Dennis Francis.
Share Price Performance Analysis
1-Year Chart as on August-26-2020, before the market close (Source: Refinitiv, Thomson Reuters)
Petroneft Resources PLC's shares were trading at GBX 0.73 and were up by close to 5.00 percent against the previous closing price (as on 26 August 2020, before the market close at 10:40 AM GMT+1). PTR's 52-week High and Low were GBX 1.40 and GBX 0.45, respectively. Petroneft Resources had a market capitalization of around £5.88 million.
Business Outlook
The Company is monitoring the developments at Lineynoye field, and it would construct a well if required. Given the improved performance of two wells in the Sibkrayevskoye field, it is looking at further development of the field. Petroneft Resources wants to increase production via hydraulic fracturing or more wells by the end of 2020. The Company is looking for techniques such as fracturing and well re-entries to optimize water floods.
