Egdon Resources plc (AIM:EDR) is pleased to announce it has signed a Farm-out Agreement in respect of a further 5% interest in PEDL253 with Humber Oil & Gas Limited ("Humber", a private company) under the same terms as the farm-out previously announced on 5 and 20 March.  PEDL253 is located in Lincolnshire and contains the Biscathorpe Prospect, scheduled for drilling around mid-2018.

Humber will acquire a further 5% of Egdon's interest in PEDL253 by paying their pro-rata share of the Biscathorpe-2 well cost plus an additional £50,000 (£10,000 per percentage point interest acquired).  Humber will also acquire an additional 5% from Montrose Industries Limited's interest in PEDL253 under the same terms.

The Biscathorpe Prospect is located on the southern margin of the Humber Basin on trend with, and to the west of, the producing Keddington oil field (Egdon operated).

The Biscathorpe-2 well will target a conventional sandstone reservoir of Westphalian (Carboniferous) age in an area of the structure where the sandstone is predicted to thicken away from Biscathorpe-1 (BP, 1987) which found oil in a 1.2 metres thick sandstone.  The Mean Gross Prospective Resources at Biscathorpe are estimated by Egdon to be ca. 14 million barrels of oil.

The transaction is subject to approval from the Oil and Gas Authority.  On completion, the interests in PEDL253 will become:

Egdon Resources U.K. Limited (Operator): 35.80% (22.53% share of well cost*)
Montrose Industries Limited: 22.20% (12.76% share of well cost*)
Union Jack Oil Plc: 22.00% (37.57% share of well cost*)
Humber Oil & Gas Limited: 20.00 % (27.14% share of well cost*)

* calculated at the current estimated well cost

Biscathorpe-2

In March 2015 Egdon Resources U.K. Ltd, as operator of the licence area PEDL253, received planning permission from Lincolnshire County Council to drill a conventional exploratory oil well on farmland to the west of the hamlet of Biscathorpe, approximately nine kilometres to the west of Louth in Lincolnshire. An application to extend the existing planning for a further 3 years has been submitted to Lincolnshire Council.  An Environmental Permit has been issued for the proposed drilling and testing operations at the site.

The activity will involve drilling for conventional oil trapped in a sandstone reservoir and for clarity the operations at the site will not either now or in the future involve the process of hydraulic "fracking" for shale-gas or shale-oil. This area of Lincolnshire does not have the specific rock-formation types that contain shale-gas or shale-oil.