Egdon Resources reaches agreement over Weald Basin farm out

Hydrocarbons explorer Egdon Resources has reached an agreement with UK Oil & Gas Investments for the exploration company’s Weald Basin petroleum licence PEDL143.

The licence, which is operated by Europa Oil & Gas, contained the Holmwood Prospect, which the PEDL143 partnership planned to test with the Holmwood-1 exploration well.

Under the deal UKOG would pay a 40% share of the Holmwood-1 drilling costs to acquire 20% working interests in Edgon’s licence, with UKOG's well costs capped at £1.2m net.

Upon completion, Edgon’s interest in UKOG’s licence would be 18.4%, the company said in an announcement.

Egdon managing director Mark Abbott said it is pleased to have completed the deal.

“The transaction means that should planning consent be granted for the well, Egdon will retain a material interest in the Holmwood Prospect whilst minimising the company's financial exposure and managing our technical risk while evaluating the prospect's potentially significant prospective resource."

Shares in Egdon were down 7.08% to 15.10p at 14:30 on Monday.