EGdon REsouRcEs plc
AnnuAL REPORT And AccOunTS
FOR THE yEAR EndEd 31 JuLy 2011
E
g
d
o
n
R
e
s
o
u
r
c
e
s
p
l
c
A
n
n
u
a
l
R
e
p
o
r
t
a
n
d
A
c
c
o
u
n
t
s
2
0
1
1
Oil and Gas
Exploration
and Production
in Onshore UK
and Mainland
Europe.
20870.04 09/11/11 Proof 11
Welcome to
Egdon Resources plc
Egdon Resources plc an
independent onshore focused
oil and gas exploration and
production business
• An established oil and gas exploration and production company focused on
onshore uK and mainland Europe
• A growing business with licences in proven oil and gas producing basins in the
uK and France
• A balanced portfolio of production, development, appraisal and exploration
projects positioning the company for future growth
• A proven operator with an experienced and respected management team
• A strong focus on safety, environmental and social responsibility in all aspects
of operations
Egdon’s strategy
The aim of the Group is to create shareholder value by
building a profitable and material full cycle exploration,
production and energy business with a focus on onshore
operations
The company will look to increase shareholder value by:
• Growing near-term revenues through investment in production, development
and appraisal projects
• A focus on fewer, higher impact exploration opportunities
• Broadening and strengthening the asset and opportunity base of the Group
through licence applications, targeted acquisitions and innovative deal making
• Proactively managing the portfolio to maximise returns and manage risk
• Looking to extract shareholder value from emerging non-conventional
hydrocarbon plays
20870.04 09/11/11 Proof 11 01
Business Review
01 Highlights
02 Chairman’s Review
04 Managing Director’s
Operational Review
07 UK Licences in Summary
10 French Licences in Summary
11 Oil and Gas Reserves and
Resources Estimates
12 Financial Review
Governance
16 Board of Directors
17 Corporate Governance
Statement
19 Directors’ Report
21 Statement of Directors’
Responsibilities
22 Independent Auditor’s Re-
port
Financial Statements
23 Consolidated Statement
of Comprehensive Income
24 Consolidated Statement
of Financial Position
25 Company Statement
of Financial Position
26 Consolidated Statement
of Cash Flows
27 Company Statement of
Cash Flows
28 Consolidated Statement of
Changes in Equity
28 Company Statement of
Changes in Equity
29 Notes Forming Part of the
Financial Statements
AGM Information
55 Letter from the Chairman
with Notice of Annual
General Meeting
57 Notice of Annual
General Meeting
ibc Licence Holdings
Operational Highlights
• Production up 73% to 46,919 barrels of oil equivalent (2010: 27,056
barrels of oil equivalent).
• Kirkleatham gas field brought on production in April 2011
• Oil discovery made at Markwells Wood-1 to be tested during
November 2011
• Drilled successful sidetrack at Keddington oil field
• Portfolio of 29 licences in UK and France as at 31 July 2011 (2010: 34)
Financial Highlights
• Profit for the year £4.08 million (31 July 2010: £0.24 million).
• Revenues during the period up 90% to £2.38 million (31 July 2010:
£1.25 million)
• Exceptional profit on disposal of subsidiary company and assets of
£4.3 million (31 July 2010: £0.4 million)
• Basic earnings per share of 3.12p (31 July 2010: 0.29p)
• Equity as at 31 July 2011 of £20.17 million (31 July 2010: £16.03 million)
• Net current assets as at 31 July 2011 of £3.28 million (31 July 2010:
£1.49 million)
Corporate Highlights
• Completed the acquisition of EnCore (E&P) Limited
• Farmed-out shale gas test well in PEDL139 and PEDL140
• Completed the sale of Egdon Resources (New Ventures) Ltd for
cash consideration of £4.5 million
• Acquired PEDL180 and PEDL181 from Valhalla Oil and Gas Limited
• Sold a 10% interest in Avington oil field for cash consideration
of £400,000
Oil and Gas revenues
for period up 90%
Profit for period
up 1600%
Total Licence holdings
(31 July 2011)
£2.38m £4.08m
(31 July 2010: £1.25m)
(2010: £0.24m)
29
(31 July 2010: 34)
n
o
i
t
a
m
r
o
f
n
I
M
G
A
20870.04 09/11/11 Proof 11Stock code: •••07Egdon Resources plc Annual Report and Accounts 2011Stock code: EDREgdon Resources plc Annual Report and Accounts 2011Business ReviewGovernanceFinancial Statements
02
Chairman’s Review
Philip Stephens
Developing a full
cycle exploration and
production business.
I am pleased to be able to report good progress
during the year ended 31 July 2011.
Despite frustrations caused by delays in the start of
production at the Kirkleatham and Ceres gas fields, year
on year production has grown by 73%. Net production at
the end of the period (July 2011) was 420 barrels of oil
equivalent per day (“boepd”) with Keddington, Avington
and Kirkleatham on production. Subsequent to the year
end, production has resumed at Ceres. However, with the
expected reduced production at Keddington and Kirkleatham
as detailed below we now expect average production of
around 400 boepd during the current financial year.
Financial
The Company recorded a profit after tax of £4.08 million
for the period (2010: £0.24 million). This includes a profit
on disposal of £4.3 million related to the sale of Egdon
Resources (New Ventures) Ltd which held some of our
French assets and exploration write-downs of £0.89 million.
Revenue from oil and gas production during the year was
up 90% to £2.38 million (2010: £1.25 million) on production
of 46,919 barrels of oil equivalent (“boe”) (2010: 27,056
boe). In line with last year the Directors do not currently
recommend the payment of a dividend.
Further details of the financial results are given in the
Financial Review on page 12 and Financial Statements and
notes pages 23 to 54.
Board Changes
Co-founder of Egdon, Andrew Hindle, stepped down from
the Board during the year and I would like to record our
gratitude for his significant contribution since 1997. I can
also advise that John Rix has informed the Board that he
intends to retire as a non-executive Director with effect
from the forthcoming AGM and I would again like to record
my appreciation for his contribution to the Company.
Corporate Activity and Portfolio Management
In October 2010 we completed the sale of some of our
French interests for £4.5 million in cash to eCORP Oil and
Gas UK Limited (“eCORP”) and in the same month we
completed the acquisition of EnCore (E&P) Limited (now
renamed Egdon (E&P) Limited) which holds two permits
in France for a cash consideration of £100,000. In July
2011 we agreed the sale of a combined 10% interest in
PEDL070 which contains the Avington oil field, for a cash
consideration of £400,000.
We have continued to rationalise and develop our licence
holdings as part of our wider strategy. During the year we
relinquished seven UK licences as they did not meet our
technical and commercial thresholds or had come to the
end of their current terms. During June 2011 we completed
the acquisition and normalisation of interests in two East
Midlands licences from Valhalla Oil and Gas UK Limited,
assuming operatorship of one of them. We have also
farmed-out interests in the Gainsborough Trough to eCORP
and we expect a shale-gas exploration well to be drilled
there during 2012.
As at 31 July 2011 Egdon holds interests in 29 licences
in the UK and France and is awaiting the award of two
further licences in the UK and one in France, including one
containing a potentially significant near-shore gas discovery.
Production
In spite of disruptions caused by the severe winter in
December, production shutdowns due to drilling at
Keddington and the delays in production at Kirkleatham
and Ceres, we achieved a 73% increase in production
volumes peaking in July 2011 at 420 boepd.
Keddington, which we originally purchased for just
£250,000 continues to perform well. The field produces
oil and significant quantities of associated gas from two
wells, Keddington-3Z and Keddington-4, which was
successfully drilled during April 2011. A decision has been
made to constrain overall field production in the short-
term to around 125–135 barrels of oil per day (“bopd”) (Net
Egdon c. 100 bopd) to conserve the significant volumes of
associated gas which is currently being flared until a longer
term commercial solution can be found to enable electricity
generation or gas export.
20870.04 09/11/11 Proof 11Egdon Resources plc Annual Report and Accounts 2011www.egdonresources.com Following a number of operational delays, the Kirkleatham
gas field achieved first production on 19 April 2011. The
well has produced gas at rates of up to 5 million cubic feet
of gas per day (“mmcfg/d”) but this has been gradually
reduced to manage reservoir pressure, match power output
from the Sembcorp owned gas turbine and maximise
recovery. In recent months the well has started to produce
some associated formation water. The well is currently shut-
in awaiting intervention to remove accumulated water from
the tubing. On resumption of production it is planned that
the well will produce between 1.5 and 2.0 mmcfg/d (Net
Egdon 0.6 to 0.8 mmcfg/d or 100 to 133 boepd) to manage
reservoir pressure and maximise recovery.
The Ceres gas field (in which Egdon holds a 10% interest)
was shut-in for all but seven days of production during the
year due to the maintenance of the BP Cleeton platform
through which gas is delivered to shore. Following a further
maintenance shut-down during July and August 2011 gas
production finally resumed on 17 September 2011. We have
experienced some additional issues and production down-
time during October which now appear to be resolved.
Long-term net Egdon production is expected to be around
1.2 mmcfg/d (200 boepd).
Avington, where Egdon now holds a 26.67% interest,
has continued to produce in line with expectations during
the year (Net Egdon c. 20 bopd).
Planning consent has been received for production at
Dukes Wood-1 and we anticipate production from the
combined Dukes Wood/Eakring/Kirklington production
unit early in 2012 (Net Egdon 25 bopd).
With the expected reduced production from Kirkleatham
and short-term scaling back of flows at Keddington we now
expect production to be around 400 boped for the coming
year from existing fields.
Exploration and Appraisal
The Best Estimate of our Prospective Resources as at
31 July 2011 in the UK and France is 248 million barrels
of oil equivalent (“mmboe”) which highlights significant
potential for growth through exploration for Egdon. We
plan an active exploration and appraisal drilling programme
in the coming years to evaluate the best of these prospects.
Further details of our UK and French drilling plans are set
out in the Operational Review which follows this statement.
period. We were disappointed by the refusal of planning for
the Holmwood prospect and expect to appeal this decision.
We are currently identifying suitable drilling sites and
developing a number of planning applications for the 2012
drilling programme.
An extended well test (“EWT”) is underway at the Waddock
Cross oil accumulation and we expect to be able to report the
results and a decision on future development early in 2012.
France remains a focus for Egdon although a new law in
France banning hydraulic fracturing has effectively curtailed
near-term oil-shale and shale-gas development in the
country. The planned well in the Mairy Permit is not now
expected until 2012. Elsewhere in France we continue to
progress exploration and expect to acquire seismic during
early 2012 in Pontenx and St Laurent with drilling possible in
Pontenx late in 2012.
We also expect to be an active participant in the UK’s long
awaited 14th Landward Licensing Round and are awaiting a
potential award in the 26th Offshore Round.
Outlook
Our strategy remains the same. We aim to develop a full
cycle onshore exploration and production business, with the
growing revenue stream from oil and gas production being
reinvested to facilitate growth in the underlying asset value
of the business.
Whilst we have achieved good progress in the last year,
the reduced production levels from Kirkleatham will result
in a reduction in our expected production target from
500 boepd to around 400 boepd during the coming year
from existing fields.
We have managed our cash position carefully and forecast
positive cash flow during the coming year. This will enable
us to embark on a more active exploration programme
during 2012.
Whilst our primary focus will be a multi-well programme
in the East Midlands where we are testing net Egdon
resource potential of 15 mmbo in five prospects, in total we
are planning to participate in up to 12 wells over the next
18 months targeting 33 mmboe (Net Egdon Prospective
Resources).
During the period Egdon participated in the Markwells
Wood-1 oil discovery drilled in West Sussex which is
currently being prepared for testing.
We will continue to look to build shareholder value by
strengthening the quality of our asset portfolio, the active
drilling programme highlighted above and looking to realise
value from assets at the appropriate time.
Seismic data has been acquired over the Burton on the
Wolds prospect and further seismic acquisition is planned
for later in 2011 over the prospective Broughton-Wressle
trend.
We have a small team of dedicated staff and on behalf of
the Board I would like to thank them for their continuing
efforts during the year.
Following award of planning consent we anticipate a re-
entry of the Nooks Farm-1 gas discovery during the coming
Philip Stephens
Non-Executive Chairman
4 November 2011
03
n
o
i
t
a
m
r
o
f
n
I
M
G
A
20870.04 09/11/11 Proof 11Stock code: •••07Egdon Resources plc Annual Report and Accounts 2011Stock code: EDREgdon Resources plc Annual Report and Accounts 2011Business ReviewGovernanceFinancial Statements
04
Managing Director’s Operational Review
Mark Abbott
The next 18 months could
see Egdon participating
in up to 12 wells.
For a summary of the Group’s licences please go to page 7
During the period the Group has maintained a
clear geographical focus on onshore operations
in the UK and France and made further
progress in increasing production and revenues
and developing our near-term exploration
opportunities to drive future growth.
A key objective for the past year has been getting the
Kirkleatham and Ceres gas fields into production. First
gas at Kirkleatham was achieved in April 2011 and Ceres
returned to production in September 2011. Both projects
were subject to delays in start-up which has had a
significant impact on Egdon’s production for the period.
However, we were still able to report a 73% year on year
production increase and during July 2011 we produced
420 boepd.
The last year has seen significant changes to our
asset portfolio including the sale of one of our French
subsidiaries, acquisitions in the UK and France and UK
relinquishments with Egdon now holding interests in a
total of 29 licences and awaiting the award of three further
licences, including one in the UK 26th Offshore licensing
round containing a potentially significant near-shore gas
discovery.
UK
In the UK, as part of a strategy of rationalising and
improving our portfolio we have relinquished seven licences
during the year (PEDLs 069, 071, 098, 138, 142, 144 and 154),
whilst acquiring two new licence interests via the acquisition
of PEDLs 180 and 181 from Valhalla. This has resulted in an
overall reduction in Best Estimate Prospective Resources
from 288 million barrels of oil equivalent (mmboe) in 2010
to 248 mmboe in 2011.
In the last year we participated in the drilling of an oil
discovery at Markwells Wood-1 a successful sidetrack
at Keddington and two coal bed methane (“CBM”)
investigation wells which maintained our Gainsborough
Trough shale gas licences (PEDLs 139 and 140) where
a deep well is planned for late 2012 with Egdon’s costs
carried. The non-operated Nooks Farm re-entry and Havant
exploration wells which had been anticipated during the
period are delayed and are now expected during 2012.
We anticipate participating in the drilling of up to 12 wells
in the UK in the next 18 months targeting net Egdon Best
Estimate Prospective Resources of 33 mmboe, as our
activity levels ramp-up on the back of the anticipated
increased revenues.
There have been continuing delays to the announcement
of the UK 14th Landward Licensing Round where Egdon
expects to be a participant.
Whilst we will continue to be active across our portfolio
and the key activity and prospectivity of each licence is
summarised on pages 7 to 9, the Group will have two main
focuses of activity in the UK during the next 18 months; oil
in the East Midlands and gas in North East England.
Developing oil prospects and growing
production in the East Midlands
The Keddington-4 well, drilled in April 2011, encountered
120 metres of the main Unit 1 reservoir and had stabilised
production of around 75 bopd. The Keddington Oil Field
produces dry oil and associated gas from two wells
(Keddington-4 and Keddington-3Z). We have recently taken
a decision to limit near-term production at Keddington to
125 to 135 bopd (Net Egdon c. 100 bopd) to reduce the
associated flared gas volumes until we have electricity
generating capacity in place. The key issue being addressed
is the cost and location of the connection to the local
electricity grid. We hope to finalise these plans to add a new
income stream and enable a return to higher oil production.
The results of the Keddington-4 well are being integrated
into a field model to determine the ultimate field reserves
and forward development plan with additional drilling
being considered. We currently carry 0.3 million barrels of
oil (“mmbo”) of Proven and Probable Reserves along with
around 0.7 billion cubic feet (“bcf”) of gas. Elsewhere in this
licence the North Somercotes Prospect to the north of the
Saltfleetby Gas Field is mapped from 3D seismic data as
containing Net Egdon Best Estimate Prospective Resources
of 7.26 bcf of gas.
We expect to put the Dukes Wood and Kirklington wells
back in production in 2012 and are evaluating additional
drilling locations in areas of the field not previously
produced including the Eakring North Lead. We anticipate
initial combined production of around 40 bopd (Net Egdon
25 bopd).
20870.04 09/11/11 Proof 11Egdon Resources plc Annual Report and Accounts 2011www.egdonresources.com In addition to these East Midland oil fields, Egdon has
developed a significant exploration position in the region
over recent years and has plans for drilling at a number of
locations in the next 18 months.
The Louth Prospect, which is defined by 3D seismic
data and located immediately adjacent to Keddington,
is mapped as containing 1.25 mmbo Net Egdon Best
Estimate Prospective Resources and is a priority well for the
Company.
The Biscathorpe Prospect is located approximately 15
kilometres to the west of Keddington. Oil was discovered
but not tested in a thin sand (1 metre) in the Biscathorpe-1
well drilled by BP in 1987. The sands are predicted to thicken
off the crest of the structure and there is also potential for
stratigraphic trapping which could increase the Expected
Prospective Reserves from a Net Egdon Best Estimate case
of 8.47 mmbo up to 25 mmbo in the upside case.
North Kelsey, Wressle and Broughton lie along an oil bearing
trend to the south-east of Scunthorpe with the Crosby
Warren Oil field at one end and the Brigg oil discovery at
the other. The Broughton Prospect is located immediately
up-dip of the Broughton-B1 well which was drilled by BP
in 1984 and tested oil at rates of up to 40 bopd prior to
being plugged and abandoned. The prospect is mapped as
having Net Egdon Best Estimate Prospective Resources of
1 mmbo. The nearby Wressle Prospect has Net Egdon Best
Estimate Prospective Resources of 1.3 mmbo. A 49 square
kilometres 3D seismic survey is planned over the Broughton
and Wressle prospects later in 2011 to define the bottom-
hole locations for one or more exploration wells. A drilling
decision at the 3D defined North Kelsey Prospect (Net
Egdon Best Estimate Prospective Resources 3.14 mmbo) will
be made during 2012.
The Burton on the Wolds Prospect is located on the
southern margin of the Widmerpool Gulf in Leicestershire.
A 2D seismic survey in May 2011 has enabled a shallow
prospect to be mapped with preliminary Net Egdon Best
Estimate Prospective Resources potential of 0.5 mmbo.
Landowner negotiations and the planning process
are progressing on all these locations with a view to
commencing a four to five well drilling programme by
mid-2012.
0
50
Km
100
P.1241
BROUGHTON
WRESSLE
GAINSBOROUGH TROUGH SHALE GAS
PEDL181
PEDL182
PEDL180
NORTH KELSEY
CERES
PEDL139
PEDL140
PEDL130
PEDL241
NORTH SOMERCOTES
PEDL005
KEDDINGTON
PEDL253
LOUTH
PEDL141
EAKRING NORTH
PEDL118
PEDL206
BISCATHORPE
EAKRING / DUKES WOOD
KIRKLINGTON
NOOKS FARM
PEDL201
BURTON ON THE WOLDS
- Gas Field
- Oil Field / Discovery
- Prospect
Egdon’s East Midlands Licences and Prospects
05
n
o
i
t
a
m
r
o
f
n
I
M
G
A
20870.04 09/11/11 Proof 11Stock code: •••07Egdon Resources plc Annual Report and Accounts 2011Stock code: EDREgdon Resources plc Annual Report and Accounts 2011Business ReviewGovernanceFinancial Statements
06
Managing Director’s Operational Review
(continued)
Exploiting Gas in Northern England
and Offshore
Egdon has a core area for gas production and exploration
in North-East England where the reservoir objectives are
sandstones or limestones of Permian age. In Egdon’s only
offshore licence, P.1241, offshore North Yorkshire, where we
have a 10% interest, gas production resumed in September
2011 following a major programme of repairs to a BP
platform during 2010-11 and has continued through October
with further production interruptions. This delay has been
highly frustrating but we now anticipate that the Ceres Gas
Field will begin to contribute the expected stable net Egdon
production of 1.2 mmcfg/d (200 boepd) in the coming year
(Net Egdon Proven and Probable Reserves of 3.7 bcf with
Best Estimate Prospective Resources of 1.7 bcf).
all licence holders to submit details of their proposed work
programmes for review with the possibility of cancellation
of those permits which did not meet the requirements of
the legislation. The short-term effect on Egdon of the ban
should be minimal as our primary focus remains exploration
for conventional reservoir targets. However, although we
have received confirmation that all the Group’s French
licences remain in force following the review, the resultant
regulatory delays have impacted on the timing of activity
(e.g. drilling of the Mairy well), and the award of the
Donzacq Permit.
In addition to potential drilling on the Mairy Permit the key
focus of activity for Egdon in the next 18 months will be on
the St Laurent and Pontenx Permits.
The Kirkleatham Gas Field in PEDL068 where the Company
has a 40% interest has been on production since April
2011. The Kirkleatham-4 well appears to be connected to
a limited volume of highly permeable rock being fed by a
larger volume of lower permeability rock. To manage this
type of reservoir behaviour and to match reduced output
from the GT2 gas turbine we have reduced overall flow
rates. Water production has been increasing in recent
months. The well is currently shut-in awaiting intervention
to remove accumulated water from the tubing. It is planned
to produce the well at between 1.5 and 2.0 mmcfg/d (Net
Egdon 0.6 to 0.8 mmcfg/d or 100 to 133 boepd). Our
pre-production estimate of Proven Reserves was 0.8 bcf
(Net Egdon) and we will be able to provide an update
on ultimate expected field reserves once we have further
production and pressure data.
Elsewhere in PEDL068 we are making good progress in
submitting a planning application for drilling of the Ralph
Cross/Westerdale gas discovery where we map Net Egdon
Best Estimate Prospective Resources of 6.2 bcf. A well is
planned for late 2012 conditional upon gaining planning
consent.
Egdon is awaiting a decision on the award of a licence in
the UK 26th Offshore Round which with others has been
subject to a further round of environmental scrutiny and
which contains a potentially significant near-shore gas
discovery. If successful with an award, this would become
a priority project for Egdon with plans to appraise and
hopefully develop the discovery from an onshore location.
France
The period saw a significant restructuring of Egdon’s
portfolio in France, with the sale of Egdon Resources (New
Ventures) Ltd to eCORP and completion of the acquisition
of EnCore’s French subsidiary. Egdon now holds interests
in four onshore licences, is awaiting the award of a fifth
and has back-in options on two permits and a pending
application. The French Parliament passed a law in May
2011 banning the use of hydraulic fracturing and requiring
The high impact Audignon Prospect within the St Laurent
Licence area (Net Egdon Best Estimate Prospective
Resources of 896 bcf) is a large sub-salt Triassic sandstone
prospect. The current work programme includes pre-stack
depth migration of existing 2D data and new seismic
acquisition planned for early 2012 with a view to drilling
prior to the end of the permit in 2013. A farm-in partner will
be sought for the drilling of this “company making” sized
prospect. We also anticipate award of the adjacent Donzacq
Permit which contains a possible western extension
of Audignon and also the adjacent Bastennes-Gaujaq
Prospect (Net Egdon Best Estimate Prospective Resources
of c. 300 bcf).
Recent technical work has highlighted a number of
prospective areas in the Pontenx Permit including the
Mimizan Nord abandoned heavy oil field which produced
a total of 3.5 mmbo and three other undeveloped oil
discoveries such as the Pontenx Prospect. Additional seismic
and geological evaluation will inform a decision on new
seismic acquisition and drilling which are planned in 2012.
Outlook
In the last year we have carefully managed a restructuring
of our asset holdings and despite delays we have
established a sound production base to fund future activity.
The next 18 months could see Egdon participating in up
to 12 wells and three seismic programmes across our UK
and French portfolios targeting 33 mmboe (Net Egdon
Prospective Resources). This should be an exciting time
for the company as we look to test many of the prospects
developed over recent years and look to increase the
reserves base production levels and value of the Group.
Mark Abbott
Managing Director
4 November 2011
20870.04 09/11/11 Proof 11Egdon Resources plc Annual Report and Accounts 2011www.egdonresources.com UK Licences in Summary
PL090 Waddock Cross
(45% Egdon Operated Interest)
• Located in Dorset in the Wessex Basin
PEDL070 Avington
(26.67% Egdon Interest)
• Located in the Weald Basin of Hampshire
• Waddock Cross - Bridport Sandstone (Jurassic) oil
discovery with in excess of 20 mmbo in place, and
Proven and Probable Reserves of 0.6 mmbo (Net Egdon)
• Avington - Great Oolite (Jurassic) oil field with two
producing wells – Net Egdon production of c. 20 bopd
• Net Egdon Proven and Probable Reserves of 120,000
• Extended well test currently ongoing to determine field
bbls
commerciality – results in early 2012
• Recently sold 10% interest in field for £400,000
• Significant Sherwood Sandstone oil prospects at Winfrith
(1.9 mmbo Net Egdon Best Estimate Prospective
Resources) and elsewhere (see PEDL237)
PEDL005 (Remainder) Keddington
(75% Egdon Operated Interest)
• Located in Lincolnshire in the East Midlands petroleum
province
• Contains the Keddington oil field which produces from
carboniferous sandstone reservoir at a depth of 2,200
metres
• Keddington-4 sidetrack drilled in April 2011 – stable
production of 75 bopd and 200,000 cubic feet of gas
per day
• Keddington-3 free-flowing production well constrained
by ability to utilise associated gas
• Plans for gas to electricity project
• 2P Field reserves currently estimated at 0.3 mmbo
• Louth Prospect – 3D defined prospect contiguous with
Keddington – c. 1.25 mmbo Net Egdon Best Estimate
Prospective Resources
• North Somercotes Prospect - 3D defined gas prospect
to the north of the Saltfleetby gas field – c. 7.26 bcf Net
Egdon Prospective Resources
PEDL068 Kirkleatham and Westerdale
(40% Egdon Operated Interest)
• Located in North Yorkshire and Cleveland in the
Cleveland Basin
PEDL118 Dukes Wood
(65% Egdon Operated Interest)
• Located in Nottinghamshire in the East Midlands
Petroleum Province
• Single well producing field Dukes Wood-1 – 20 bopd –
currently shut-in
• To be produced as part of Dukes Wood/Eakring/
Kirklington production unit in early 2012
PEDL125 Hedge End
(10% Egdon Interest)
• Located in the Weald Basin of Hampshire
• Great Oolite Prospect tested by 1988 Hedge End-1 oil
discovery - 330,000 bbls Net Egdon Best Estimate
Prospective Resources – Operator trying to secure a
suitable site and planning
PEDL126 Markwells Wood
(10% Egdon Interest)
• Located in West Sussex in the Weald Basin
• Oil discovered in the Great Oolite
• Pre-drill Net Egdon Best Estimate Prospective Resource
of 320,000 bbls
• To be tested in November 2011
PEDL130 Eakring West
(100% Egdon Operated Interest)
• Located in Nottinghamshire in the East Midlands
• Permian age carbonate gas plays
petroleum province
• Kirkleatham producing gas field – first production April
• Egdon holds 100% of the conventional exploration rights
2011
• Exploration for oil on the flanks of the Eakring-Dukes
• Current production of 1.5 to 2.0 mmcfg/d – Net Egdon
Wood oil field
Proven Reserves of 0.8 bcf
• Westerdale/Ralph Cross gas discovery in Brotherton
formation – Net Egdon Best Estimate Prospective
Resources of 6.2 bcf. Late 2012 well planned conditional
upon planning
07
n
o
i
t
a
m
r
o
f
n
I
M
G
A
20870.04 09/11/11 Proof 11Stock code: •••07Egdon Resources plc Annual Report and Accounts 2011Stock code: EDREgdon Resources plc Annual Report and Accounts 2011Business ReviewGovernanceFinancial Statements
08
UK Licences in Summary
(continued)
PEDL068
KIRKLEATHAM
WESTERDALE
- Gas Field
- Oil Field / Discovery
- Prospect
BROUGHTON
PEDL181
WRESSLE
P.1241
CERES
GAINSBOROUGH TROUGH SHALE GAS
PEDL182
PEDL180
PEDL139
PEDL140
PEDL141
EAKRING NORTH
PEDL130
PEDL118
PEDL206
PEDL253
NORTH KELSEY
NORTH SOMERCOTES
PEDL241
PEDL005
KEDDINGTON
LOUTH
NOOKS FARM
BISCATHORPE
EAKRING / DUKES WOOD KIRKLINGTON
PEDL201
BURTON ON THE WOLDS
NORTH AVINGTON
AVINGTON
WADDOCK CROSS
PEDL125
PEDL070
PEDL126
PEDL143
HOLMWOOD
MARKWELLS WOOD
BROADMAYNE /
CASTERBRIDGE
PEDL237
HEDGE END
PL090
PEDL256
PEDL155
PEDL240
HAVANT
LANGTON HERRING
WINFRITH
Egdon’s UK Oil and Gas Licences.
0
100
Km
200
PEDL139/PEDL140
(13.5% Egdon Interest; 10% interest in coal bed methane)
• Located in Nottinghamshire/Lincolnshire in the East
PEDL141 Nooks Farm
(46% Egdon Interest)
• Nooks farm-1A gas discovery made by Shell in
Midlands petroleum province
Staffordshire in 1982
• Significant Namurian “Bowland Shale” shale-gas potential
identified – 2012 exploration well planned – costs carried
• Planning consent received for re-entry of original well –
development plan = gas to electricity generation
• Coal Bed Methane potential in permit
• Operatorship transferred to Seven Star Natural Gas
Limited (Alkane Energy plc)
• Net Egdon Best Estimate Contingent Resources of 1 bcf
20870.04 09/11/11 Proof 11Egdon Resources plc Annual Report and Accounts 2011www.egdonresources.com PEDL143 Holmwood
(38.4% Egdon Interest)
• Located in Surrey in the Weald Basin
PEDL206 Kelham
(75% Egdon Operated Interest)
• Located in Nottinghamshire in the East Midlands
• Holmwood prospect - Jurassic carbonate and sandstone
petroleum province
prospect (Net Egdon Best Estimate Prospective
Resources of 16.6 bcf)
• Small low risk prospects identified on the flank of
abandoned Kelham Hills oil field
• Planning permission for exploration well refused – being
appealed
• Assuming successful planning appeal could be 2012-13
well
PEDL237 Weymouth
(45% Egdon Operated Interest)
• Located in Dorset in the Wessex Basin
PEDL155/256 Havant
(10%/7.5% Egdon Interest)
• Located in Hampshire in the Weald Basin
• Great Oolite Prospect – 160,000 bbls Net Egdon Best
Estimate Prospective Resources – possible
2012 well
PEDL180 Wressle
(33.33% Egdon Operated Interest)
• Located in Lincolnshire in the East Midlands petroleum
province
• Significant Sherwood Sandstone Prospects identified
– 31.5 mmbo combined Net Egdon Best Estimate
Prospective Resources
• Langton Herring Bridport Sandstone Lead – 3 mmbo Net
Egdon Best Estimate Prospective Resources
PEDL240 Isle of Wight
(7.5% Egdon Interest)
• Located on the Isle of Wight in the Wessex Basin
• A Jurassic and Triassic prospect has been identified –
M prospect
• Located between Crosby Warren, Broughton-B1 and
Brigg-1 oil wells – Net Egdon Best Estimate Prospective
Resources of 1.3 mmbo
PEDL241 North Kelsey
(50% Egdon Operated Interest)
• Located in Lincolnshire in the East Midlands petroleum
• 3D seismic programme in Q4 2011 and drilling planned
province
in 2012
PEDL181 Humber Basin
(25% Egdon Interest)
• Located in Lincolnshire and Humberside in the Humber
Basin
• 3D defined oil prospect with Net Egdon Best Estimate
Prospective Resource potential of 3.14 mmbo
PEDL253 Biscathorpe
(60% Egdon Operated Interest)
• Located in Lincolnshire in the East Midlands petroleum
• Underexplored basin with identified leads requiring
province
additional technical evaluation
• Oil discovered by BP in 1987 in a thin sand on a large 3D
defined regional structure
PEDL182 Broughton
(33.33% Egdon Operated Interest)
• Located in Lincolnshire in the East Midlands petroleum
• Net Egdon Best Estimate Prospective Resources of 8.47
mmbo, High Estimate of 25 mmbo where stratigraphic
trapping works
province
• Potential identified up-dip of 1984 well which produced
at 40 bopd – Net Egdon Best Estimate Prospective
Resources of 1 mmbo
• 3D seismic programme in Q4 2011 and possible drilling
in 2012
PEDL201 Widmerpool
(50% Egdon Operated Interest)
• Located in Nottinghamshire and Leicestershire in the
East Midlands petroleum province
• Burton on the Wolds Prospect – Potential 2012/13 well –
Net Egdon Best Estimate Prospective Resources of
0.5 mmbo
PEDL203 Kirklington
(65% Egdon Operated Interest)
• Located in Nottinghamshire in the East Midlands
petroleum province
• Single well producing field Kirklington-3z – 20 bopd –
currently shut-in
• To be produced as part of Dukes Wood/Eakring/
Kirklington production unit
• Egdon may look to farm-out interest prior to drilling
which is planned for 2012
P.1241 Block 47/9C Ceres
(10% Egdon Interest)
• Located offshore Yorkshire in the Southern Gas Basin
• Lower Permian Leman Sandstone reservoir gas field
• Production resumed in September 2011
• Expected production of 1.2 mmscfg/d Net Egdon during
2011-12
• Net Egdon 2P reserves of 3.7 bcf and Best Estimate
Prospective Resources of 1.7 bcf
26th Round
• Pending award of 26th Round Licence (Egdon 100%)
• Contains significant gas discovery
09
n
o
i
t
a
m
r
o
f
n
I
M
G
A
20870.04 09/11/11 Proof 11Stock code: •••07Egdon Resources plc Annual Report and Accounts 2011Stock code: EDREgdon Resources plc Annual Report and Accounts 2011Business ReviewGovernanceFinancial Statements
10
French Licences in Summary
- Oil Field / Discovery
- Prospect
- Egdon Licences
- Back-in option from eCORP
- Licence Pending Award
MAIRY
FRANCE
GEX
NAVACELLES
NIMES
MIMIZAN NORD
PONTENX
GRENADE
PONTENX
DONZACQ
ST LAURENT
AUDIGNON
BASTENES GAUJACQ
Egdon’s French Oil and Gas Licences.
St Laurent
(33.423% Egdon Operated Interest)
• Located in the Aquitaine Basin of South-West France
• Contains multi-TCF Audignon gas prospect (896 bcf Net
Pontenx
(40% Egdon Operated Interest)
• Located in the Parentis Basin South-West France to the
south of the Parentis Oil Field, the largest in France
Egdon Best Estimate Prospective Resources)
• Contains the abandoned Mimizan Nord field which
• Seeking to farm-out to de-risk prospect ahead of drilling
produced 3.5 mmbls of 12 API oil
• Seismic acquisition planned for 2012
• Contains the Grenade heavy oil accumulation – Net
Egdon 2.06 mmbo Best Estimate Contingent Resources
• Three additional undeveloped oil discoveries identified in
Cretaceous age carbonate sequences
• Seismic and drilling planned for 2012
20870.04 09/11/11 Proof 11Egdon Resources plc Annual Report and Accounts 2011www.egdonresources.com 11
Mairy
(50% Egdon Interest)
• Located in the Paris Basin of Northern France
• Contains Triassic age oil prospects including Le Petit
Pierere which produced oil from the Rhaetic sandstone
reservoir
Gex, Navacelles and Gex Sud
Application Options
(eCORP Operated)
• Egdon has back in options of 6% (Gex and Gex Sud
Application) and 9% (Navacelles)
• Egdon contracted to undertake exploration work on
• Contains non-conventional oil-shale potential in Jurassic
behalf of eCORP
age (Lower Liassic) shales
• Gex contains Triassic and Jurassic conventional reservoir
• Exploration well now planned for 2012
targets
• Gravity survey completed over main prospects
• Navacelles contains Cretaceous and Jurassic carbonate
prospects
• Gravity survey over permit planned for 2011
• 2D seismic programme planned for 2012
• Drilling expected 2012-13 on Gex and Navacelles
• Gex Sud (awaiting award) contains Triassic and Jurassic
conventional reservoir targets
Nimes
(100% Egdon Operated Interest)
• Located in the South-East basin of Southern France
• Potential for conventional oil and gas prospects in
Tertiary and Cretaceous plays
• Permit evaluation ongoing
Donzacq Application
(33.423% Egdon Operated Interest)
• Located in the Aquitaine Basin of South-West France
adjacent to St Laurent
• Awaiting award
• Contains the Bastennes-Gaujacq Prospect (c. 300 bcf
Net Egdon Best Estimate Prospective Resources)
Oil and Gas Reserves and
Resources Estimates
Class of Reserve/Resource
Net Oil Reserves
Proven
0.62
Proven +
Probable
1.01
Proven +
Probable +
Possible
Units
Field/Prospect Name
1.60
MMstb
Keddington, Avington, Waddock
Cross
Low Estimate Best Estimate High Estimate
Net Oil Contingent Resources
1.07
3.08
5.76
MMstb
Grenade, Broughton, Eakring/
Dukes-Wood/Kirklington
Net Oil Prospective Resources
29.49
80.40
155.56
MMstb
Other blocks
Total Oil
31.18
84.49
162.92
MMstb
Class of Reserve/Resource
Net Gas Reserves
Proven
3.30
Proven +
Probable
6.71
Proven +
Probable +
Possible
11.06
Units
Bscf
Field/Prospect Name
Kirkleatham, Ceres, Keddington
Low Estimate Best Estimate High Estimate
Net Gas Contingent Resources
3.21
7.36
13.13
Net Gas Prospective Resources
298.29
1,008.45
2,275.13
Bscf
Bscf
Nooks Farm, Keddington Namurian
Audignon, North Somercotes,
Westerdale, etc.
Total Gas
Total boe
304.8
81.974
1,022.52
254.916
2,299.32
Bscf
546.137
Mmboe
Note: All resource numbers are Company estimates
n
o
i
t
a
m
r
o
f
n
I
M
G
A
20870.04 09/11/11 Proof 11Stock code: •••07Egdon Resources plc Annual Report and Accounts 2011Stock code: EDREgdon Resources plc Annual Report and Accounts 2011Business ReviewGovernanceFinancial Statements
12
Financial Review
Ken Ratcliff
Group revenue from oil
and gas was up 90% to
£2.38 million.
For the detailed financial statements please go to page 23
Results
The Group recorded a profit after tax of £4.08 million
for the period (2010: £0.24 million). This includes a profit
on disposal of £4.3 million related to the sale of Egdon
Resources (New Ventures) Ltd. to eCORP.
Revenue from oil and gas production during the year was
up 90% to £2.38 million (2010: £1.25 million).
Adjusted operating profit, which is defined as Gross Profit,
excluding the cost of exploration write offs, impairments
and pre-licence expenditure, less administrative expenses,
plus other operating income, was £710,020 (2010: loss of
£61,007). This is primarily as a result of an improvement in
the Gross Profit margin, excluding exploration write offs and
pre-licence costs, to 49% (2010: 34%).
Earnings per share for the period were 3.12p (2010: 0.29p).
Exploration costs written off, impairments and pre-licence
costs of £890,699 (2010: £64,786) include impairments
recognised in respect of two producing assets totalling
£230,000 (2010: nil) and write offs in respect of seven
relinquished licences totalling £586,063 (2010 £nil).
During the year, the Group acquired EnCore (E&P) Limited
for cash consideration of £100,000.
The sale of a 10% interest in PEDL070 containing the
Avington oil field which was agreed in July 2011 has resulted
in a small loss on disposal. This sale has an economic
transfer date of 1 June 2011.
Taxation
No taxation charge arises on the result for the year.
The Group has been advised that no taxation liability should
arise out of the sale of Egdon Resources (New Ventures)
Ltd owing to the availability of the Substantial Shareholders
Exemption.
The changes to oil and gas taxation announced in the
April 2011 budget are not expected to have a significant
impact on the Group as all but the Keddington oil field will
continue to benefit from the Field Allowance for small fields.
Statement of Financial Position
As at 31 July 2011 the Group had Net Assets of £20.17
million (2010: £16.03 million). This comprises of the Group’s
investments in intangible exploration and appraisal assets
of £7.10 million (2010: £7.03 million), Property, Plant and
Equipment (our producing assets) of £10.72 million
(2010: £8.42 million), net current assets of £3.28 million
(2010: £1.49 million) and non-current liabilities of £0.94
million (2010: £0.92 million).
The Group currently has debt of £1 million (31 July 2010: Nil).
This attracts interest of 10% per annum and is repayable
by 28 July 2012. It is intended to repay the loan out of cash
flow and this has been modelled in our going concern
considerations.
Development & Production Assets
During the year the Kirkleatham gas field was brought
into production and costs of £2,610,136 were transferred
from exploration and evaluation costs to development and
production assets.
The above Avington interest sale resulted in the disposal
of exploration and evaluation assets with a net book
value of £447,256, the release of a proportion of the
decommissioning provision amounting to £18,823 and the
partial release of the provision to make payments under a
Net Profit Interest agreement of £22,742 resulting in a loss
of £5,692.
20870.04 09/11/11 Proof 11Egdon Resources plc Annual Report and Accounts 2011www.egdonresources.com Key Performance Indicators
The Board considers both financial and non-financial Key Performance Indicators (“KPI’s”) in measuring the performance
of the business as summarised in the table below.
KPIs
Revenue
y/e 31 July 2011
y/e 31 July 2010
Change
£2.38 million
£1.25 million
+ 90%
Total comprehensive income (net profit)
£4.08 million
£0.24 million
+ 1600%
£3.28 million
£1.49 million
+220%
£20.17 million
£16.03 million
+ 26%
46,919 boe
27,056 boe
+ 73%
29
34
- 15%
- 14%
Net current assets
Equity
Production Volumes
No of Licences
Reserves and Resources (most likely)
255 mmboe
295 mmboe
Reportable Health and Safety Incidents
0
0
0%
Receivables
Receivables have increased to £2,258,276 (2010: £1,038,896).
Trade receivables have increased by £1,097,405 to £1,604,317
reflecting the significant increase in revenues during the year
and, in particular, the volume of gas sold at Kirkleatham prior
to the year end.
The increase of £289,851 in other receivables reflects
proceeds of £400,000 due in respect of the Avington
interest sale and the inclusion in the prior year of amounts
paid in respect of the acquisition of EnCore (E&P) Limited
(which completed within the current year). The reduction in
prepayments to £92,720 (2010: £185,402) is primarily due
to the inclusion in the prior year of prepaid costs relating
to the disposal of Egdon Resources (New Ventures) Ltd. to
eCORP and the timing of licence fee renewal payments.
Payables
Payables have increased to £2,725,717 (2010: £1,639,667)
following the draw down of the EnCore and Carbon Trust
loans. Further details are shown in note 25.
Cash Flow
The Group ended the year with £3.69 million of cash and
cash equivalents (2010: £2.03 million). Cash and cash
equivalents include restricted cash of £296,027 (2010:
£295,527).
In line with last year the Directors do not currently
recommend the payment of a dividend.
Risk Management
Like all exploration and production businesses the Group
is exposed to a range of technical, geological, operational,
political, environmental, health and safety and financial
risks in the conduct of its operations. The Group seeks to
manage and mitigate these risks through maintaining a
spread of exploration and production interests, through
compliance with the terms of its licences, through adopting
policies appropriate to the Group’s size and by the use of
skilled personnel.
The table below sets out the principal risk factors that may
affect the Group’s business, their potential impact and
mitigation strategies developed. Risks are grouped into
four main categories: strategic; financial; operational; and
external. Such risk factors are not intended to be presented
in any assumed order of priority. The risks as set out are
not exhaustive and additional risks and uncertainties, not
presently identified or considered material by the Group,
may arise or become material in the future. Any of the risks
and uncertainties could have a material adverse impact on
the business and all are continuously monitored. The Board
considers and highlights those risks which could have the
most significant impact on the Groups business during a
specific period and devotes the most attention to mitigating
these. In the year under review, four particular areas have
been the focus of our attention:-
13
n
o
i
t
a
m
r
o
f
n
I
M
G
A
20870.04 09/11/11 Proof 11Stock code: •••07Egdon Resources plc Annual Report and Accounts 2011Stock code: EDREgdon Resources plc Annual Report and Accounts 2011Business ReviewGovernanceFinancial Statements
14
Financial Review (continued)
A key risk is the operational, financial and reputational risk
associated with a Health, Safety or Environmental incident
in any of the Group’s operations. Egdon employs a full-time
HSE Manager and operates using best-practice in all of its
operations. The Group also maintains appropriate levels of
insurance for all of its operations to ensure adequate cover
in the case of any incident.
As the Group has become involved in field development
(e.g. Kirkleatham) it has become more exposed to risks
associated with project delays and cost overruns. In
addition as production and revenues have increased and the
Group’s reliance on cash flow for future work programme
has increased the performance of assets has become a
more material risk.
Commodity price fluctuations have an impact on revenues
and forward investment decisions as they affect project
economics. The Group does not currently hedge any
production due to the limited number of producing assets/
wells and low level of debt within the Group. We carefully
monitor the forward commodity prices and review our
projects using a range of commodity prices and continue to
keep the use of hedging under review.
Regulatory changes in both the UK and France have had
an impact on the business during the year. In the UK there
were changes to the fiscal regime with the introduction of
an increased Supplementary Tax on oil company profits
in the April 2011 budget. In France a law has been passed
during the year banning the use of “hydraulic fracturing” in
the country.
Strategic risk
Ineffective or poorly executed strategy fails to create shareholder value
Risk Category
Mitigation
— Ineffective mix of oil and gas interests
— Organic and acquisition led-growth
Interests in two countries and several sedimentary basins.
Regular review of capital investment programmes. Board approval
required for exploration programmes, acquisitions and divestments.
— Ineffective or inadequate management processes
Policies and procedures appropriate for an exploration and production
group of Egdon’s scale and size.
— Loss of key staff/succession planning
Remuneration policies to attract and retain staff.
Financial risk
Failure to meet financial obligations to stakeholders
Risk Category
Mitigation
— Industry cost inflation
— Oil and gas price volatility
— Inadequate or excessive hedging
— Uninsured events
— Underperforming assets
— Cost overrun
Rigorous contracting procedures with competitive tendering.
Use range of commodity prices in forecasting. Look to hedging as
production volumes and number of fields increase.
Limited opportunity for hedging with current producing assets. Review
hedging policy as production volumes and number of fields increase.
Comprehensive insurance policies.
Range of production forecasting in budget process. Increase number and
breadth of producing assets.
Main capital expenditure is in drilling operations. Look to farm-out projects
where significant risk of cost over-run exists to limit exposure.
— Mis-priced corporate acquisitions
Board approval required for acquisitions. Conservative valuation of assets.
20870.04 09/11/11 Proof 11Egdon Resources plc Annual Report and Accounts 2011www.egdonresources.com Operational risk
Operational event impacts staff, contractors, communities or the environment leading to loss of
reputation and revenue
Risk Category
— HSE incident
— Development failure
— Sustained exploration failure
Mitigation
HSE standards set and monitored across the Group.
Technical, Financial and Board approval of development projects with
regular reporting of field performance.
Robust technical review of all projects. Board approval of exploration
budgets and regular reporting of exploration results.
— Corruption or reputation failure
High level of ethical standards apply to all Group activity.
— Loss of key staff
Remuneration policies to attract and retain staff.
— Failure to secure equipment, services and resources Rigorous contracting and procurement procedures applied to all operations.
Long-term planning of required resources. Maintain intelligence on
availability of equipment, services and materials in areas of operation.
— Corporate and social responsibility
Maintain good community relationships.
External risk
Failure to manage and grow the business caused by external political, industry or market factors
Risk Category
Mitigation
— Political risk and fiscal change
— Oil and gas price volatility
— Lack of control of key assets
— Corporate governance changes
— Shareholder sentiment
Ken Ratcliff
Chairman of Audit Committee
4 November 2011
Develop sustainable relationships with government ministries and
collaborate with industry bodies to communicate interests to government
authorities.
Use range of commodity prices in forecasting. Look to hedging as
production volumes and number of fields increase.
Proactive formal and informal communications with joint
venture partners.
Review of compliance requirements and ongoing consultation with legal
and financial advisors and audit committee.
Maintain good communications with shareholders. Present timely and
transparent information. Maintain website. Effectively convey and execute
corporate strategy.
15
n
o
i
t
a
m
r
o
f
n
I
M
G
A
20870.04 09/11/11 Proof 11Stock code: •••07Egdon Resources plc Annual Report and Accounts 2011Stock code: EDREgdon Resources plc Annual Report and Accounts 2011Business ReviewGovernanceFinancial Statements
16
Board of Directors
1
4
2
5
3
6
The Egdon Board of Directors has wide-ranging experience in the oil and gas sector.
1. Philip Stephens MA (Oxon.)
(Non-Executive Chairman) Aged 69
4 Ken Ratcliff JP, BSc FCA
(Non-Executive Director) Aged 61
Philip is a corporate financier with 38 years of City
experience. He is currently Non-Executive Chairman of
Neptune-Calculus Income and Growth VCT plc. He is
also a Non-Executive Director of Foresight 4 VCT plc. He
was Joint Head of the Corporate Finance Department
of stockbrokers Williams de Broë for four years until
his retirement in 2002 and before that was Head of UK
Corporate Finance at UBS from 1995, having joined in 1989.
2. Mark Abbott
(Managing Director) Aged 50
Mark is an experienced geophysicist and founding Director
of Egdon Resources plc. He graduated from the University
of Nottingham in 1985 with a degree in Exploration
Sciences (Geology/Geophysics/Mining Engineering). He
worked for the British Geological Survey from 1985 to 1992
in the UK and overseas. Between 1992 and 1996 he worked
in the International Division of British Gas Exploration
and Production Limited and was employed by Anadarko
Algeria Corporation from 1996 to 1997. He is also a Non-
Executive Director of MA Exploration Services Limited,
Bishopswood Pavilion Limited and a Trustee of the UK
Onshore Geophysical Library.
3. Walter Roberts
(Non-Executive Director and Company Secretary) Aged 60
Walter is an oil and gas lawyer with an engineering
background. He qualified as a solicitor with Simmons &
Simmons before joining Phillips Petroleum in 1980. In 1986
he set up the legal department for Lasmo in Australia and
later became the principal UK joint venture negotiator for
Talisman. Walter is currently the Commercial Director of
Infrastrata plc, an Executive Director of Pinnacle Energy
Limited and a Non-Executive Director of Bow Valley
Petroleum (UK) Limited.
Ken is a chartered accountant with extensive finance
and business experience. He is currently the College
Accountant at Epsom College and is the co-founder and
former Accountant at Geokinetics Processing UK Limited.
Ken is non-executive Chairman of Infrastrata plc and has
previously held senior management positions with GDC
UK Limited, Ensign Geophysics Limited, Seismic Geocode
Limited, Tenneco Corporation and Merlin Geophysical
Limited.
5. John Rix FCA
(Non-Executive Director) Aged 77
Following five years abroad with Shell International, John
worked in the City as an Investment Analyst specialising
in the oil industry, holding positions in N.M. Rothschild, de
Zoete & Bevan and Greig Middleton. Since retiring in 1994,
he has continued to be actively involved with investment,
mainly related to the Oil Industry. John is Chairman and
Managing Director of both Dorset Exploration Limited and
Yorkshire Exploration Limited.
6. Alan Booth
(Non-Executive Director) Aged 53
Alan is a highly experienced geoscientist. He holds a BSc
degree in Geology from Nottingham University, and a
Masters Degree in Petroleum Geology from the Royal
School of Mines, Imperial College London. Alan is founder
and Chief Executive Officer of EnCore Oil plc having
previously held senior management positions in EnCana,
Amerada Hess and Oryx Energy. Alan has previously
served as President of the United Kingdom Offshore
Operators Association, as a Director of Oil and Gas UK
and was a member of PILOT. He is a past-president of
the Petroleum Exploration Society of Great Britain. Alan
is also currently a director of the Oil & Gas Independents
Association (“OGIA”).
20870.04 09/11/11 Proof 11Egdon Resources plc Annual Report and Accounts 2011www.egdonresources.com Corporate Governance Statement
The Egdon Resources plc Board is committed to running its
business with integrity and high ethical standards across all
of the Group’s activities. The Directors recognise the value
of the UK Corporate Governance Code and whilst under the
AIM rules compliance is not required, the Directors believe
that the Company applies the recommendations in so far as
is practicable and appropriate for a public company of its
size.
This statement explains how the Directors applied the
principles of the code during the year ended 31 July 2011.
The Board
The Board comprises of one Executive Director and five
Non-Executive Directors.
The background and experience of the Directors are
relevant to the Group activities and are summarised on
page 16 of this report. As such, the Directors are of the
opinion that the Board comprises a suitable balance and
that the recommendations of the Combined Code have
been implemented to an appropriate level.
The Board is responsible for formulating, reviewing and
approving the Group’s strategy, financial activities and
operating performance. Day-to-day management of the
Company is devolved to the Executive Director who is
charged with consulting the Board on all significant financial
and operational matters. Consequently, decisions are made
promptly and following consultation amongst the Directors
concerned where necessary and appropriate.
The Board meets regularly throughout the year and met
seven times in the year to 31 July 2011. All meetings were
attended by all Directors, except for one from which two
Directors were absent. In addition there were six meetings
to approve administrative resolutions which were only
partly attended although all the Directors had approved the
business. There was also a meeting of a committee of the
Board, consisting of three directors, to deal with matters
arising from the sale of an interest in Avington to IS E&P
Limited and IS NV Limited. The committee was formed as
the other directors had a potential conflict of interest (see
note 34).
A statement of the Directors’ responsibilities in respect of
the accounts is set out on page 21.
The Company has established Audit and Remuneration
Committees which are discussed further below.
Audit Committee
An Audit Committee has been established and currently
comprises Ken Ratcliff (Chairman), Philip Stephens and
John Rix. The Audit Committee is responsible for ensuring
that the financial performance of the Group is properly
reported on and monitored. This includes reviewing
significant financial reporting issues and accounting policies
and disclosures in financial reports. The Audit Committee
reviews the scope and results of the external audit and
monitors the integrity of the financial statements of the
Company. If required, meetings are attended by appropriate
members of the senior management. The external auditors
have unrestricted access to the Chairman of the Committee.
The Audit Committee is also responsible for reviewing the
requirement for an internal audit function.
The Audit Committee plans to meet at least twice a year.
The committee met twice in the year to 31 July 2011 with all
members present or available at both meetings.
17
i
w
e
v
e
R
s
s
e
n
i
s
u
B
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
a
i
c
n
a
n
F
i
n
o
i
t
a
m
r
o
f
n
I
M
G
A
20870.04 09/11/11 Proof 11Stock code: •••07Egdon Resources plc Annual Report and Accounts 2011Stock code: EDREgdon Resources plc Annual Report and Accounts 2011
18
Corporate Governance Statement (continued)
Remuneration Committee
A Remuneration Committee has been established and its
current members comprise Walter Roberts (Chairman),
Philip Stephens and Ken Ratcliff. The principal objective of
the Remuneration Committee is to ensure that members of
the executive management of the Company are provided
with appropriate incentives to encourage enhanced
performance and are, in a fair and responsible manner,
rewarded for their individual contributions to the success of
the Group.
The Company’s policy is to remunerate senior executives
fairly in such a manner as to facilitate the recruitment,
retention and motivation of staff. The Remuneration
Committee agrees with the Board a framework for the
remuneration of the Chairman, the Executive Director and
the senior management of the Company. Non-Executive
fees are considered and agreed by the Board as a whole.
The Remuneration Committee plans to meet at least twice
in each year. It met once in the year to 31 July 2011 with all
members present.
Nomination Committee
The Company has not established a Nomination Committee
as the Directors are of the opinion that such a committee is
inappropriate given the current size of the Group.
Relations with Shareholders
Communication with shareholders is given a high
priority and the Managing Director has regular dialogue
with institutional investors, as well as making general
presentations to analysts at the time of the annual and
interim results.
The Group maintains a website (www.egdon-resources.com)
for the purpose of providing information to shareholders
and potential investors. The website contains all news,
releases, reports and accounts and public presentations.
In addition further detailed information about the Group’s
activities is available on the website.
Enquiries from individual shareholders in relation to their
shareholding and the business as a whole are welcomed
and the website has an enquiry facility and contact details
to assist in facilitating this. Shareholders are encouraged to
attend the Annual General Meeting at which they are able to
put questions to the Chairman and other board members.
Internal Controls
The Board is responsible for establishing and maintaining
the effectiveness of the Group’s internal controls and risk
management systems. They are designed to safeguard the
assets of the Group and to ensure the reliability of financial
information for both internal use and external publication.
The controls which cover financial and operational matters
are reviewed on an ongoing basis. It is recognised that a
system of internal controls cannot provide absolute
assurance that material financial irregularities will be
detected or that a risk of failure to achieve business
objectives is eliminated. The Board keeps under review the
necessity for establishing an internal audit function but
considers that, given the size of the Group and the close
involvement of senior management in day-to-day
operations, there is currently no requirement for such
a function.
Bribery Act
The Group has put in place appropriate measures to ensure
compliance with the Bribery Act 2010.
Risk
The Directors are responsible for the effectiveness of the
Group’s risk management activities and internal control
processes. The Group’s approach to risk is described in
more detail in the Financial Review on page 13.
20870.04 09/11/11 Proof 11Egdon Resources plc Annual Report and Accounts 2011www.egdonresources.com Directors’ Report
The Directors submit their report together with the audited
consolidated financial statements of Egdon Resources plc
for the year ended 31 July 2011.
Business review
The principal activity of the Group during the year
continued to be exploration and production of
hydrocarbons in the UK and France.
The Company is required by the Companies Act to set
out in this report a fair review of the business of the
Group during the financial year ended 31 July 2011 and
of the position of the Group at the end of the year and a
description of the principal risks and uncertainties facing
the Group including consideration of future developments
(“business review”). The information that fulfils the
requirements of the business review can be found within
the Chairman’s Statement, Managing Director’s Operational
Review, the Financial Review and Corporate Governance
Statement on pages 4 to 15 and 17.
Health, Safety and Environmental
As an oil and gas exploration and production business,
the Company is conscious of its health, safety and
environmental responsibilities. The Company is committed
to high standards of health, safety and environmental
protection and performance and these aspects command
equal prominence with other business considerations in the
decision making process.
There were no reportable Health and Safety incidents
during the period.
Results and dividends
The Group recorded a consolidated profit from continuing
operations during the year of £4,076,610 (2010: £235,417).
The profit for the year is after charging exploration write-
downs, impairments and pre-licence costs of £890,699
(2010: £64,786).
The Directors do not recommend the payment of a dividend
(2010: £nil).
Share capital
At the date of this report 130,969,094 ordinary shares
are issued and fully paid. Details of movements in share
capital during the year are given in note 28 to the financial
statements. Movements subsequent to the year end are
given in Note 36.
Substantial Shareholders
As of the date of this report the Company had been notified
of the following interests of three per cent. or more in the
Company’s ordinary share capital:
Encore (NNS) Limited
Encore Petroleum Limited
Hargreave Hale & Co
Williams de Broë
Heyco Energy Holdings SL
Andrew Hindle
Maven Capital Partners UK LLP
% Shares
13.74
15.58
11.04
6.43
5.25
4.99
3.30
The Company has not been notified of any other person
who has an interest in three per cent. or more in the
Company’s share capital.
Directors
The Directors of the Company at the date of this report,
and their biographical summaries are given on page 16.
six Directors served throughout the year. Andrew Hindle
resigned from the board with effect from 1 February 2011.
The Directors’ remuneration is detailed in note 9 to the
financial statements. All Directors benefit from the provision
of Directors’ and Officers’ indemnity insurance policies.
Premiums payable to third parties are described in note 9.
The Directors of the Company at the date of this report held
the following interests in the Company.
Mark A W Abbott
Ken Ratcliff
John Rix
Walter Roberts
Philip Stephens
Alan Booth
%
Shares
5.53
7,238,648
0.04
53,000
0.99
1,293,949
0.99
1,291,750
0.08
100,000
0.00
0
19
i
w
e
v
e
R
s
s
e
n
i
s
u
B
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
a
i
c
n
a
n
F
i
n
o
i
t
a
m
r
o
f
n
I
M
G
A
20870.04 09/11/11 Proof 11Stock code: •••07Egdon Resources plc Annual Report and Accounts 2011Stock code: EDREgdon Resources plc Annual Report and Accounts 2011
20
Directors’ Report (continued)
Charitable and political donations
During the year the Group made various charitable
contributions in the UK totalling £76 (2010: £900). No
donations were made for political purposes (2010: £nil).
Auditor
A resolution to reappoint the auditor, Nexia Smith &
Williamson, will be proposed at the forthcoming Annual
General Meeting.
Creditor payment policy
The Group’s policy for all suppliers is to fix terms of
payment when entering into a business transaction, ensure
that the supplier is aware of those terms and to abide by
the agreed terms of payment. The number of day’s trade
creditors was 41 (2010: 80) for the Group.
Financial instruments
The financial risk management objectives and policies of
the Company in relation to the use of financial instruments
and the exposure of the Company and its subsidiary
undertakings to its main risks, credit risk and liquidity risk,
are set out in note 26 to the financial statements.
Employees
The Group had 13 employees as at 31 July 2011 (2010: 11).
Employees are encouraged to directly participate in the
business through a share option scheme. Details of the
share option scheme are given in note 10 to the financial
statements.
Post balance sheet events
Details of post balance sheet events are shown in note 36 to
the financial statements.
Going concern
After making enquiries the Directors have a reasonable
expectation that the Group and the Company have
adequate resources to continue in operation for the
foreseeable future. For this reason they continue to
adopt the going concern basis in preparing the financial
statements.
Disclosure of information to the auditor
In the case of each person who was a Director at the time
this report was approved: so far as the Director was aware
there was no relevant available audit information of which
the Company’s auditor was unaware and that Director had
taken all steps that the Director ought to have taken as a
Director to make himself aware of any relevant information
and to establish that the Company’s auditor was aware of
that information.
By order of the Board
Mark A W Abbott
Managing Director
4 November 2011
20870.04 09/11/11 Proof 11Egdon Resources plc Annual Report and Accounts 2011www.egdonresources.com Statement of Directors’ Responsibilities
21
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Company’s transactions and disclose with reasonable
accuracy at any time the financial position of the Company
and the Group and enable them to ensure that the financial
statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the
Company and the Group and hence for taking reasonable
steps for the prevention and detection of fraud and other
irregularities.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information included
on the Company’s website. Legislation in the United
Kingdom governing the preparation and dissemination of
the financial statements and other information included
in annual reports may differ from legislation in other
jurisdictions.
The Directors are responsible for preparing the Directors’
report and the financial statements in accordance with
applicable law and regulations,
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the
Directors have prepared the Group, and elected to prepare
the Company financial statements in accordance with
International Financial Reporting Standards (IFRSs) as
adopted by the European Union. Under Company law the
Directors must not approve the financial statements unless
they are satisfied that they give a true and fair view of the
state of affairs of the Company and the Group and of the
profit or loss of the Group for that year. The Directors are
also required to prepare financial statements in accordance
with the rules of the London Stock Exchange for companies
trading securities on the Alternative Investment Market.
•
In preparing these financial statements the Directors are
required to:
• select suitable accounting policies and then apply them
consistently;
• make judgements and estimates that are reasonable and
prudent;
• state whether they have been prepared in accordance
with IFRS as adopted by the European Union;
• prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
Company and the Group will continue in business.
i
w
e
v
e
R
s
s
e
n
i
s
u
B
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
a
i
c
n
a
n
F
i
n
o
i
t
a
m
r
o
f
n
I
M
G
A
20870.04 09/11/11 Proof 11Stock code: •••07Egdon Resources plc Annual Report and Accounts 2011Stock code: EDREgdon Resources plc Annual Report and Accounts 2011
22
Independent Auditor’s Report
To the members of Egdon Resources plc
We have audited the financial statements of Egdon
Resources plc for the year ended 31 July 2011 which
comprise the Consolidated statement of comprehensive
income, the Consolidated and Parent Company statement
of financial position, the Consolidated and Parent Company
statements of cash flows, the Consolidated and Parent
Company statements of changes in equity and the related
notes 1 to 36. The financial reporting framework that has
been applied in their preparation is applicable law and
International Financial Reporting Standards (IFRSs) as
adopted by the European Union and as regards the parent
company financial statements, as applied in accordance
with the provisions of the Companies Act 2006.
This report is made solely to the Company’s members, as
a body, in accordance with Chapter three of Part 16 of the
Companies Act 2006. Our audit work has been undertaken
so that we might state to the Company’s members those
matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility
to anyone other than the Company and the Company’s
members as a body, for our audit work, for this report, or for
the opinions we have formed.
Respective responsibilities of Directors
and auditor
As explained more fully in the Directors’ Responsibilities
statement as set out on page 21, the Directors are
responsible for the preparation of the financial statements
and for being satisfied that they give a true and fair view.
Our responsibility is to audit and express an opinion on the
financial statements in accordance with applicable law and
International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Auditing Practices
Board’s (APB’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial
statements is provided on the APB’s website at
www.frc.org.uk/apb/scope/private.cfm.
Opinion on financial statements
In our opinion:
• the financial statements give a true and fair view of the
state of the Group’s and the Parent Company’s affairs as
at 31 July 2011 and of the Group’s profit for the year then
ended;
• the Group financial statements have been properly
prepared in accordance with IFRSs as adopted by the
European Union;
• the Parent Company financial statements have been
properly prepared in accordance with IFRSs as adopted
by the European Union and as applied in accordance
with the provisions of the Companies Act 2006; and
• the financial statements have been prepared in
accordance with the requirements of the Companies Act
2006.
Opinion on other matter prescribed by the
Companies Act 2006
In our opinion the information given in the Directors’ Report
for the financial year for which the financial statements are
prepared is consistent with the financial statements.
Matters on which we are required to report by
exception
We have nothing to report in respect of the following
matters where the Companies Act 2006 requires us to
report to you if, in our opinion:
• adequate accounting records have not been kept by the
Parent Company, or returns adequate for our audit have
not been received from branches not visited by us; or
• the Parent Company financial statements are not in
agreement with the accounting records and returns; or
• certain disclosures of Directors’ remuneration specified
by law are not made; or
• we have not received all the information and explanations
we require for our audit.
Sancho Simmonds
Senior Statutory Auditor,
for and on behalf of
Nexia Smith & Williamson
Statutory Auditor
Chartered Accountants
1 Bishops Wharf
Walnut Tree Close
Guildford GU1 4RA
4 November 2011
20870.04 09/11/11 Proof 11Egdon Resources plc Annual Report and Accounts 2011www.egdonresources.com Consolidated Statement of Comprehensive Income
For the year ended 31 July 2011
Continuing operations
Revenue
Cost of sales - exploration costs written off, impairments and pre-licence costs
Cost of sales - other
Total cost of sales
Gross profit
Administrative expenses
Other operating income
Exceptional item – profit on disposal of subsidiary
Exceptional item – (loss)/profit on disposal of property, plant and equipment
Finance income
Finance costs
Profit before taxation
Taxation
Profit for the period
Other comprehensive income for the period
Notes
2011
£
2010
£
3 2,379,150
1,251,676
4
(890,699)
(1,207,502)
(64,786)
(819,133)
(2,098,201)
(883,919)
280,949
367,757
4
(687,181)
(668,347)
225,553
5 4,338,290
(648)
6
4,156,963
41,505
(121,858)
12
13
4,076,610
—
14
4,076,610
—
174,797
—
388,881
263,088
1,156
(28,714)
235,530
(113)
235,417
—
Total comprehensive income for the period attributable to equity holders of the parent
4,076,610
235,417
Earnings for the period per share
Basic earnings per share
Diluted earnings per share
15
3.12p
3.10p
0.29p
0.29p
23
i
w
e
v
e
R
s
s
e
n
i
s
u
B
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
a
i
c
n
a
n
F
i
n
o
i
t
a
m
r
o
f
n
I
M
G
A
20870.04 09/11/11 Proof 11Stock code: •••07Egdon Resources plc Annual Report and Accounts 2011Stock code: EDREgdon Resources plc Annual Report and Accounts 2011
24
Consolidated Statement of Financial Position
As at 31 July 2011
Non-current assets
Intangible assets
Property, plant and equipment
Total non-current assets
Current assets
Inventory
Trade and other receivables
Available for sale financial assets
Cash and cash equivalents
Assets held for sale
Total current assets
Current liabilities
Trade and other payables
Liabilities directly associated with assets classified as held for sale
Net current assets
Total assets less current liabilities
Non-current liabilities
Provisions
Net assets
Equity
Share capital
Share premium
Share based payment reserve
Retained earnings
Notes
2011
£
2010
£
17 7,104,670
10,721,342
18
7,032,533
8,422,363
17,826,012
15,454,896
9,796
20
21 2,258,276
50,000
22
3,691,175
24
6,009,247
—
23
—
1,038,896
50,000
2,029,835
3,118,731
21,600
6,009,247
3,140,331
25 (2,725,717) (1,639,667)
(8,645)
—
23
(2,725,717)
(1,648,312)
3,283,530
1,492,019
21,109,542
16,946,915
27
(940,316)
(915,910)
20,169,226
16,031,005
28 13,086,909
1,374,428
29
107,332
5,600,557
13,067,577
1,362,500
84,907
1,516,021
20,169,226
16,031,005
These financial statements were approved by the Board of Directors and authorised for issue on 4 November 2011.
They were signed on its behalf by:
M A W Abbott
Director
Company registration number 06409716
20870.04 14/11/11 CorrectedEgdon Resources plc Annual Report and Accounts 2011www.egdonresources.com
Company Statement of Financial Position
As at 31 July 2011
25
Non-current assets
Property, plant and equipment
Investments
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Current liabilities
Trade and other payables
Net current assets
Total assets less current liabilities
Non-current liabilities
Provisions
Net assets
Equity
Share capital
Share premium
Merger reserve
Share based payment reserve
Retained earnings - deficit
Notes
2011
£
2010
£
7,400
18
19 14,999,606
6,655
14,999,606
15,007,006
15,006,261
117,078
21
24 2,300,530
1,191,295
36,952
2,417,608
1,228,247
25 (1,499,794)
(80,911)
917,814
1,147,336
15,924,820
16,153,597
27
(56,947)
(90,695)
15,867,873
16,062,902
28 13,086,909
1,374,428
29
2,357,816
30
107,332
16 (1,058,612)
13,067,577
1,362,500
2,357,816
84,907
(809,898)
15,867,873
16,062,902
These financial statements were approved by the Board of Directors and authorised for issue on 4 November 2011.
They were signed on its behalf by:
M A W Abbott
Director
Company registration number 06409716
i
w
e
v
e
R
s
s
e
n
i
s
u
B
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
a
i
c
n
a
n
F
i
n
o
i
t
a
m
r
o
f
n
I
M
G
A
20870.04 09/11/11 Proof 11Stock code: •••07Egdon Resources plc Annual Report and Accounts 2011Stock code: EDREgdon Resources plc Annual Report and Accounts 2011
26
Consolidated Statement of Cash Flows
For the year ended 31 July 2011
Cash flows from operating activities
Profit before tax
Adjustments for:
Depreciation and impairment of fixed assets
Exploration costs written off
Loss/(profit) on disposal of property, plant and equipment
Profit on disposal of subsidiary
Increase in trade and other receivables
(Increase)/decrease in inventory
Increase in trade payables and other payables
Movement in provisions
Finance costs
Finance income
Share based remuneration charge
Cash flow generated from operations
Interest paid
Taxation paid
Net cash flow generated from operating activities
Investing activities
Finance income
Payments for exploration and evaluation assets
Purchase of property, plant and equipment
Gross profit on oil well testing
Sale of subsidiary net of costs incurred
Sale of property, plant and equipment
Sale of intangible fixed assets
Net cash generated from/(used in) capital expenditure and investing activities
Financing activities
Issue of shares
Costs associated with issue of shares
Proceeds from short term borrowings
Repayments of short term borrowings
Net cash flow from financing
Net increase in cash and cash equivalents
Cash and cash equivalents as at 31 July 2010
Cash and cash equivalents as at 31 July 2011
2011
£
2010
£
4,076,610
235,530
728,649
593,705
648
(4,338,290)
(960,114)
(9,796)
10,524
(11,006)
121,858
(41,505)
30,351
201,634
(49,592)
—
265,346
—
(388,881)
—
(399,622)
12,127
358,177
(3,612)
27,905
(1,156)
54,831
160,645
—
(113)
152,042
160,532
41,505
(3,236,954)
(861,531)
—
4,484,184
5,044
—
1,156
(1,132,998)
(898,055)
32,767
—
502,950
146,635
432,248
(1,347,545)
31,260 2,000,000
(82,500)
—
—
—
1,053,652
(15,657)
1,069,255
1,917,500
1,653,545
2,037,630
730,487
1,307,143
3,691,175
2,037,630
In 2010 significant non-cash transactions comprised the issue of equity share capital as consideration for the acquisition
of tangible and intangible fixed assets from EnCore Oil Plc (note 28), and for decommissioning and reinstatement
provisions (note 27). There were no significant non-cash transactions in 2011.
20870.04 14/11/11 CorrectedEgdon Resources plc Annual Report and Accounts 2011www.egdonresources.com
Company Statement of Cash Flows
For the year ended 31 July 2011
Cash flows from operating activities
Loss before tax
Adjustments for:
Depreciation and impairment of plant and equipment
Increase in trade and other receivables
Decrease in trade payables
Share based remuneration charge
Movement in provision
Finance costs
Cash flow used in operations
Interest paid
Net cash used in operating activities
Investing activities
Loan from/(to) subsidiaries
Purchase of property, plant and equipment
27
2011
£
2010
£
(256,640)
(272,197)
4,089
(852,143)
(25,896)
30,351
(11,006)
87,123
(1,024,122)
(49,592)
3,322
(135,449)
(441,766)
54,831
(3,612)
—
(794,871)
—
(1,073,714)
(794,871)
2,272,871 (1,080,000)
(7,785)
(4,834)
Net cash generated from/(used in) capital expenditure and financial investment
2,268,037
(1,087,785)
Financing activities
Issue of shares
Costs associated with issue of shares
Proceeds from short term borrowings
Repayment of short term borrowings
Net cash flow from financing
Net increase in cash and cash equivalents
Cash and cash equivalents as at 31 July 2010
Cash and cash equivalents as at 31 July 2011
31,260 2,000,000
(82,500)
—
—
—
1,053,652
(15,657)
1,069,255
1,917,500
2,263,578
36,952
2,300,530
34,844
2,108
36,952
In 2010 significant non-cash transactions comprised the issue of equity share capital as consideration for the
acquisition of tangible and intangible fixed assets from EnCore Oil plc (note 28). There were no significant non-cash
transactions in 2011.
i
w
e
v
e
R
s
s
e
n
i
s
u
B
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
a
i
c
n
a
n
F
i
n
o
i
t
a
m
r
o
f
n
I
M
G
A
20870.04 09/11/11 Proof 11Stock code: •••07Egdon Resources plc Annual Report and Accounts 2011Stock code: EDREgdon Resources plc Annual Report and Accounts 2011
28
Consolidated Statement of Changes in Equity
For the year ended 31 July 2011
Balance at 1 August 2009
Profit for the period
Total comprehensive income for the period
Issue of ordinary shares (April 2010)
Issue of ordinary shares (July 2010)
Share option charge
Balance at 31 July 2010
Profit for the period
Total comprehensive income for the period
Transfer of share option charge on exercise
Issue of ordinary shares (December 2010)
Issue of ordinary shares (January 2011)
Share option charge
Share based
Share
capital
£
Share
premium
£
payment Retained
earnings
£
reserve
£
Total
equity
£
7,547,577
65,000
30,076
1,280,604
8,923,257
—
—
—
235,417
235,417
—
1,600,000
3,920,000
—
—
317,500
980,000
—
—
—
—
54,831
235,417
235,417
1,917,500
—
— 4,900,000
54,831
—
13,067,577
1,362,500
84,907
1,516,021
16,031,005
—
—
—
8,200
11,132
—
—
—
—
5,060
6,868
—
— 4,076,610 4,076,610
— 4,076,610 4,076,610
—
13,260
18,000
30,351
7,926
—
—
—
(7,926)
—
—
30,351
Balance at 31 July 2011
13,086,909
1,374,428
107,332 5,600,557 20,169,226
Company Statement of Changes in Equity
For the year ended 31 July 2011
Share
capital
£
Merger
reserve
£
Share
premium
£
Share based
payment
reserve
£
Retained
earnings
£
Total
equity
£
Balance at 1 August 2009
7,547,577
2,357,816
65,000
30,076
(537,701) 9,462,768
Loss for the period
—
Total comprehensive income for the period
Issue of ordinary shares (April 2010)
Issue of ordinary shares (July 2010)
Share option charge
—
1,600,000
3,920,000
—
—
—
—
—
—
—
—
(272,197)
(272,197)
—
317,500
980,000
—
—
—
—
54,831
(272,197)
(272,197)
—
1,917,500
— 4,900,000
54,831
—
Balance at 31 July 2010
Loss for the period
Total comprehensive income for the period
Transfer of share option charge on exercise
Issue of ordinary shares (December 2010)
Issue of ordinary shares (January 2011)
Share option charge
13,067,577
2,357,816
1,362,500
84,907
(809,898) 16,062,902
—
—
—
8,200
11,132
—
—
—
—
—
—
—
—
—
—
5,060
6,868
—
—
(256,640)
(256,640)
—
(7,926)
—
—
30,351
(256,640)
7,926
—
—
—
(256,640)
—
13,260
18,000
30,351
Balance at 31 July 2011
13,086,909
2,357,816
1,374,428
107,332
(1,058,612) 15,867,873
20870.04 14/11/11 CorrectedEgdon Resources plc Annual Report and Accounts 2011www.egdonresources.com
Notes Forming Part of the Financial Statements
For the year ended 31 July 2011
1. General information
Egdon Resources plc is a company incorporated and domiciled in England & Wales with registered number 06409716.
The address of the registered office is The Wheat House, 98 High Street, Odiham, Hampshire RG29 1LP. The Company’s
administrative office is at the same address.
Egdon Resources plc (the “Company”) and its subsidiaries (together, the “Group”) explore for and develop oil and gas
reserves in England and France.
The Company’s shares are quoted on the Alternative Investment Market (“AIM”) of the London Stock Exchange.
2. Accounting policies
The financial statements are based on the following accounting policies of Group and Company.
Basis of preparation and statement of compliance with IFRS
The Group’s financial statements have been prepared in accordance with International Financial Reporting Standards
(IFRS) and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. IFRS comprises
the Standards issued by the International Accounting Standards Board (IASB) and Interpretations issued by the
International Financial Reporting Interpretations Committee (IFRIC) that have been endorsed by the European Union
(EU). The principal accounting policies adopted by the Group and by the Company where applicable are set out below.
As permitted by Section 408 of the Companies Act 2006, no income statement or associated notes are presented for
the Company as an entity.
Going concern
The Directors have reviewed the budget, projected cash flows, considered committed expenditure and based on this
review are confident that the Group will have adequate financial resources to continue in existence for the foreseeable
future. Consequently the Directors consider it appropriate to prepare the financial statements on the going concern basis.
Based on current forecasts of production and revenues, the Group has sufficient funding to undertake its planned work
programme and repay its existing debt. The Directors recognise that should circumstances change then some planned
exploration and development work will need to be deferred or delayed until such time as additional funding is obtained
either through revenues from production, asset disposals (sales or farm outs), the negotiation of a debt facility and/or the
issue of shares.
Adoption of new and revised standards
In the current financial year, the Group has adopted International Financial Reporting Standard 2 “Share-Based
Payments” (revised 2009), International Accounting Standard 32 “Financial Instruments: Presentation” (revised 2009)
and IFRIC 19 “Extinguishing financial liabilities with equity instruments”.
The adoption of these standards and interpretation did not have any impact on the financial position or performance of
the Group.
At the date of authorisation of these financial statements, the following relevant standards and interpretations which
have not been applied in these financial statements were in issue but not yet effective:
IFRS 7 Financial Instruments: Disclosure (revised 2010)
IFRS 9 Financial Instruments: Recognition and measurement (revised 2009)
IAS 1 Presentation of Financial Statements (revised 2010)
IAS 24 Related Party Disclosures (revised 2009)
29
i
w
e
v
e
R
s
s
e
n
i
s
u
B
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
a
i
c
n
a
n
F
i
n
o
i
t
a
m
r
o
f
n
I
M
G
A
20870.04 09/11/11 Proof 11Stock code: •••07Egdon Resources plc Annual Report and Accounts 2011Stock code: EDREgdon Resources plc Annual Report and Accounts 2011
30
Notes Forming Part of the Financial Statements
(continued)
2. Accounting policies (continued)
The Directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material
impact on the financial statements of the Group.
Basis of consolidation
The Group financial statements incorporate the financial statements of Egdon Resources plc (the “Company”) and
entities controlled by the Company prepared to 31 July each year. Control is achieved where the Company has the power
to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement
from the effective date of acquisition or up to the effective date of disposal, as appropriate.
The financial statements of subsidiaries are prepared for the same reporting year as the parent company, using consistent
accounting policies. All inter-company balances and transactions, including unrealised profits arising from them, are
eliminated in preparing the consolidated financial statements.
Business combinations and goodwill
The Group uses the acquisition method of accounting to account for business combinations. The consideration
transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred and the
equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting
from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets and
liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the
acquisition date. On an acquisition by acquisition basis, the Group recognises any non-controlling interest in the acquiree
either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the
acquisition date fair value of any previous equity interest in the acquiree over the fair value of the Group’s share of the
identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary
acquired in the case of a bargain purchase, the difference is recognised directly in the statement of comprehensive
income.
Where the Group incurs obligations to pay net profit interest as part of an acquisition, the estimated fair value of the net
profit interest is recognised at the date of acquisition. Any subsequent variations in the net profit interest arising from
events occurring after acquisition are recognised through the income statement. Where the fair value of a net profit
interest cannot be established (for example, because the relevant licence has yet to be fully appraised) no provision is
recognised.
The value of options and any net profit interests arising on disposal are recognised at their fair value as at the date of
disposal, except in circumstances where the fair value cannot be determined.
An acquisition is not classified as a business combination when an acquired entity does not have processes or outputs
as defined by IFRS 3 (Revised). Such transactions are accounted for as asset acquisitions and the assets acquired are
measured at cost.
Investments in subsidiaries
Investments in subsidiaries are stated at cost less any provision for impairment.
Revenue and other operating income
Revenue represents amounts receivable for oil and gas sales, net of VAT and trade discounts, and is recognised on
delivery to third party facilities.
Income charged to other companies net of VAT in respect of fees for acting as operator and consultancy fees is disclosed
within other operating income and is recognised on an accruals basis when the services are provided.
Jointly controlled operations and assets
The Group’s exploration and development activities are generally conducted as co-licensees in joint operation with other
companies. The financial statements reflect the relevant proportions of capital expenditure and operating revenues and
costs applicable to the Group’s interest.
20870.04 14/11/11 CorrectedEgdon Resources plc Annual Report and Accounts 2011www.egdonresources.com 2. Accounting policies (continued)
Currently all of the Group’s exploration and development activities in respect of the licence interests disclosed in the
asset summary on pages 7 to 11 are accounted for as jointly controlled operations, except for those where 100% of the
licence is held within the Group.
Intangible assets — exploration and evaluation assets
The Group accounts for oil and gas expenditure under the full cost method of accounting.
Costs (other than payments to acquire the legal right to explore) incurred prior to acquiring the rights to explore are
charged directly to the income statement. All costs incurred after the rights to explore an area have been obtained, such
as geological, geophysical, data costs and other direct costs of exploration and appraisal are accumulated and capitalised
as intangible exploration and evaluation (“E&E”) assets.
E&E costs are not amortised prior to the conclusion of appraisal activities. At completion of appraisal activities if
technical feasibility is demonstrated and commercial reserves are discovered, then following development sanction, the
carrying value of the relevant E&E asset will be reclassified as a development and production asset, but only after the
carrying value of the E&E asset has been assessed for impairment and, where appropriate, its carrying value adjusted.
If after completion of appraisal activities in an area, it is not possible to determine technical feasibility or commercial
viability, then the costs of such unsuccessful exploration and evaluation are written off to the income statement as
a component of cost of sales in the period the relevant events occur. The costs associated with any wells which are
abandoned are fully amortised when the abandonment decision is taken.
As permitted by IFRS 6, on adoption of IFRS, the Group continued to apply the accounting requirements of the
Statement of Recommended Practice issued by the UK Oil Industry Accounting Committee as applied under UK GAAP in
respect of revenue generated from the sale of oil during the appraisal process and the treatment on disposal of any part
of an E&E asset.
Revenue is recorded in the statement of comprehensive income and, in order that no profit is recognised on the sale,
a corresponding entry is recorded in cost of sales. The carrying value of E&E assets is reduced by the gross profit
generated from the oil sales from an appraisal well.
On disposal of any part of an E&E asset, proceeds are credited against the cost of the asset. No profit is recognised on
the disposal, unless the proceeds exceed the capitalised cost.
Intangible assets — other
Costs of purchased data used to assist with formulating strategy for licence applications and asset purchases are
accumulated and capitalised as other intangibles.
Such assets are considered to have an indefinite useful life and are not subject to amortisation but are tested annually for
impairment and elements that have no ongoing commercial value are written off to the income statement.
Impairment of intangible assets
E&E assets are reviewed annually for impairment and these are grouped with the development and production assets
belonging to the same exploration area to form the Cash Generating Unit (“CGU”) for impairment testing. The equivalent
combined carrying value of the CGU is compared against the CGU’s recoverable amount and any resulting impairment
is written off to the income statement. The recoverable amount of the CGU is determined as the higher of its fair value
less costs to sell and its value in use. E&E assets which are relinquished are written down immediately in the accounting
period of the relinquishment date.
Property, plant and equipment — development and production assets
Development and production (“D&P”) assets are accumulated into cost centres and represent the cost of developing the
commercial reserves and bringing them into production together with the E&E expenditures previously transferred from
E&E assets as outlined in the policy above.
31
i
w
e
v
e
R
s
s
e
n
i
s
u
B
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
a
i
c
n
a
n
F
i
n
o
i
t
a
m
r
o
f
n
I
M
G
A
20870.04 09/11/11 Proof 11Stock code: •••07Egdon Resources plc Annual Report and Accounts 2011Stock code: EDREgdon Resources plc Annual Report and Accounts 2011
32
Notes Forming Part of the Financial Statements
(continued)
2. Accounting policies (continued)
Costs relating to each cost centre are depleted on a unit of production method based on the commercial proven
and probable reserves for that cost centre. Development assets are not depreciated until production commences.
The depreciation calculation takes account of the residual value of site equipment and the estimated future costs of
development of recognised proven and probable reserves, based on current price levels. Changes in reserve quantities
and cost estimates are recognised prospectively.
On disposal of any part of a D&P asset, proceeds are credited to the income statement, less the percentage cost relating
to the disposal.
Impairment of development and production assets
A review is performed for any indication that the value of the D&P assets may be impaired. For D&P assets when there
are such indications, an impairment test is carried out on the CGU. Additional depletion is included within cost of sales
within the income statement if the capitalised costs of the CGU exceed the associated estimated future discounted cash
flows of the related commercial oil and gas reserves.
Property, plant and equipment — other than D&P assets
Property, plant and equipment other than D&P assets are stated in the statement of financial position at cost less
accumulated depreciation. Depreciation is provided at rates calculated to write off the cost less estimated residual values
of each asset over its expected useful life, as follows:
Fixtures and fittings
Computer equipment
25% straight line
33% straight line
Provisions
Provisions are recognised when the Group has a present obligation as a result of a past event which it is probable will result
in an outflow of economic benefits that can be estimated with reasonable certainty. If the effect of the time value of money
is material, provisions are discounted using a pre tax rate that reflects, where appropriate, the risks specific to the liability.
When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
Decommissioning and reinstatement provisions
Licensees have an obligation to restore fields to a condition acceptable to the relevant authorities at the end of their
commercial lives. Provision for decommissioning and reinstatement is recognised in full as a liability and an asset when
the obligation arises. The asset is included within exploration and evaluation assets or property, plant and equipment as is
appropriate. The liability is included within provisions. The amount recognised is the estimated cost of decommissioning
and reinstatement, discounted where appropriate to its net present value, and is reassessed each year in accordance with
local conditions and requirements. Revisions to the estimated costs of decommissioning and reinstatement which alter
the level of the provisions required are also reflected in adjustments to the decommissioning and reinstatement asset.
The increase in the net present value of the future cost arising from the unwinding of the discount is included within
finance costs.
Foreign currencies
Transactions denominated in foreign currencies are translated into Sterling at the rate of exchange ruling at the date of
the transaction. Monetary assets and liabilities in foreign currencies are translated into Sterling at the rate of exchange
ruling at the end of the financial year. All exchange differences are dealt with in the income statement.
Operating leases
Rentals under operating leases are charged on a straight line basis over the lease term, even if the payments are not
made on such a basis.
Inventory
Inventory is stated at the lower of cost and net realisable value. Cost is calculated annually based on the ratio of closing
stock to total annual production and the cost of production (including depreciation) for the year.
Cash and cash equivalents
Cash and cash equivalents comprise cash held by the Group and short term bank deposits with an original maturity of
three months or less.
The cash and cash equivalent amount in the Statements of Cash Flow includes overdrafts where relevant.
20870.04 14/11/11 CorrectedEgdon Resources plc Annual Report and Accounts 2011www.egdonresources.com
2. Accounting policies (continued)
Assets held for sale
Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally
through a sale transaction rather than continuing use. This condition is regarded as met only when a sale is highly
probable and the asset (or disposal group) is available for immediate sale in its present condition. Management must be
committed to the sale which should be expected to qualify for recognition as a completed sale within one year from the
date of classification. Disposal groups are groups of assets, and liabilities directly associated with those assets, that are to
be disposed of together as a group in a single transaction. Non-current assets (and disposal groups) classified as held for
sale are initially measured at the lower of carrying value and fair value less costs to sell.
Financial instruments
Financial assets and financial liabilities are recognised on the statement of financial position when the Group becomes a
party to the contractual provisions of the instrument.
Trade and other receivables are measured at initial recognition at fair value and are subsequently measured at amortised
cost using the effective interest method. A provision is established when there is objective evidence that the Group will
not be able to collect all amounts due. The provision amount is recognised in the income statement.
Trade and other payables are initially measured at fair value, and are subsequently measured at amortised cost, using the
effective interest rate method.
Financial liabilities and equity instruments issued by the Group are classified in accordance with the substance of the
contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An equity
instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.
Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs. Equity issued
for non-monetary consideration is recorded at the fair value of the equity instruments issued.
Interest bearing bank loans, overdrafts and other loans are recorded at fair value, net of direct issue costs, when the
proceeds are received and subsequently at amortised cost. Finance costs are accounted for on an accruals basis in the
income statement using the effective interest method.
Available for sale financial assets are those non-derivative financial assets that are designated as available for sale or
are not classified as financial assets at fair value through profit and loss, held to maturity investments or loans and
receivables. After initial recognition available for sale financial assets are measured at fair value with gains or losses being
recognised as a separate component of equity until the investment is derecognised or until the investment is determined
to be impaired at which time the cumulative gain or loss previously reported in equity is included in the income
statement.
The fair value of investments that are actively traded in organised financial markets is determined by reference to quoted
market bid prices at the close of business on the reporting date. For investments where there is no active market, fair
value is determined using appropriate valuation techniques.
Taxation
The tax expense represents the sum of the tax currently payable and any deferred tax.
The tax currently payable is based on the taxable profit for the year. Taxable profit differs from net profit as reported in
the income statement because it excludes items of income or expense that are taxable or deductible in other years and it
further excludes items that are never taxable or deductible. The Company’s liability for current tax is calculated using tax
rates that have been enacted or substantially enacted by the reporting date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets
and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and
is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable
temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be
available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised
if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of
other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
33
i
w
e
v
e
R
s
s
e
n
i
s
u
B
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
a
i
c
n
a
n
F
i
n
o
i
t
a
m
r
o
f
n
I
M
G
A
20870.04 09/11/11 Proof 11Stock code: •••07Egdon Resources plc Annual Report and Accounts 2011Stock code: EDREgdon Resources plc Annual Report and Accounts 2011
34
Notes Forming Part of the Financial Statements
(continued)
2. Accounting policies (continued)
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except
where the Group is able to control the reversal of the temporary difference and it is probable that the temporary
difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each statement of financial position date and reduced to the
extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be
recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset
realised. Deferred tax is charged or credited to profit or loss, except when it relates to items charged or credited directly
to equity, in which case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends
to settle its current assets and liabilities on a net basis.
Share based payment transactions
Employees (including senior executives) of the Group receive remuneration in the form of share based payment
transactions, whereby employees render services as consideration for equity instruments (equity settled transactions).
The cost of equity settled transactions is recognised, together with a corresponding increase in equity, over the period
in which the performance and or service conditions are fulfilled, ending on the date on which the relevant employees
become fully entitled to the award (the vesting date).
The cumulative expense recognised for equity settled transactions at each reporting date until the vesting date reflects
the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments
that will ultimately vest. The income statement charge or credit for a period represents the movement in cumulative
expense recognised as at the beginning and end of that period.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a
market condition, which are treated as vesting irrespective of whether or not the market condition is satisfied, provided
that all other performance conditions are satisfied.
Where the terms of an equity settled award are modified, as a minimum an expense is recognised as if the terms had not
been modified. In addition, an expense is recognised for any modification, which increases the total fair value of the share
based payment arrangement, or is otherwise beneficial to the employee as measured at the date of modification.
Where an equity settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense
not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled
award, and designated as a replacement award on the date that is granted, the cancelled and new awards are treated as
if they were a modification of the original award, as described in the previous paragraph.
Retirement benefit costs
The Group has a defined contribution plan which requires contributions to be made into an administered fund. The
amount charged to the income statement in respect of pension costs reflects the contributions payable in respect of
the year. Differences between contributions payable during the year and contributions actually paid are shown as either
accrued liabilities or prepaid assets in the statement of financial position.
Exceptional items
Exceptional items are defined as material items which derive from events or transactions that fall within the Group’s
ordinary activities but which, due to their size or incidence, are disclosed separately in order to present fairly the reported
results.
Use of judgements and estimates when preparing the annual financial statements
Preparation of the consolidated financial statements in accordance with IFRS requires management to make estimates
and assumptions affecting recognition and measurement in the consolidated statement of financial position and
statement of comprehensive income, as well as the disclosure of contingent assets and liabilities. Future events may lead
to these estimates being changed. In particular, judgements and estimates are required when:
20870.04 14/11/11 CorrectedEgdon Resources plc Annual Report and Accounts 2011www.egdonresources.com 2. Accounting policies (continued)
• Assessing the need for and measurement of impairment of oil and gas assets (tangible and intangible)
• Capitalising project costs
• Assessing contingent consideration on acquisition
• Determining the fair value of share based payments
• Estimating decommissioning and reinstatement liabilities (note 27)
• Determining going concern
Oil and gas assets
Management is required to assess the oil and gas assets for indicators of impairment. Note 18 discloses the carrying
value of tangible oil and gas assets. As part of this assessment, management has carried out an impairment test on the
tangible assets. This test compares the carrying value of the assets at the reporting date with the expected discounted
cash flow from the project. For the discounted cash flows to be calculated, management has used a production profile
based on its best estimate of proven and probable reserves of the asset and a range of assumptions, including oil/gas
prices and a discount rate.
Intangible assets
The Group determines whether intangible assets are impaired at least on an annual basis. This requires an estimation of
the value in use of the asset. Estimating the value in use requires the Group to make an estimate of the expected future
cash flows from the asset and also to choose a suitable discount rate in order to calculate the present value of those
cash flows.
Capitalisation of project costs
The assessment of whether costs incurred on project exploration and evaluation should be capitalised or expensed
involves judgement. Management considers the nature of the costs incurred and the stage of project development and
concludes whether it is appropriate to capitalise the costs.
Contingent consideration
Contingent consideration is measured at fair value at the date of the transaction. Changes to the amount of the contingent
consideration arising as a result of a post-acquisition event are reflected in the income statement where the additional
consideration is cash or other assets. The amount is not remeasured where the additional consideration is equity. A
retrospective adjustment is required where new information results in a change to fair value at the acquisition date.
Share based payments
Determining the fair value of share based payments requires assumptions in respect of the inputs used in the option
pricing model. Details can be found in note 10.
Decommissioning and reinstatement
The Group determines decommissioning and reinstatement liabilities by making assumptions, based on the current
economic environment, which management believe are a reasonable basis upon which to estimate the future liability.
These estimates are reviewed regularly to take into account any material changes to assumptions. However, the actual
decommissioning and reinstatement cost will ultimately depend upon future market prices for the necessary works
required which will reflect market conditions at the relevant time. Furthermore, actual costs will also reflect the extent of
decommissioning and reinstatement work required to be performed, whether the works can be performed as part of a
multi well programme or in isolation and progress in the relevant technologies.
Going concern
The preparation of the financial statements requires an assessment of the validity of the going concern assumption,
this being dependent on the availability of adequate financial resources to allow the Group to continue in operational
existence for the foreseeable future. The incoming financial resources expected to be available depend on estimated
production volumes, forecast oil & gas prices and operating costs. Expenditure is primarily dependent on the planned
programme of exploration and its estimated cost. The Directors have reviewed budgets, projected cash flows and other
financial options, and based on this review are confident that the Group will have adequate resources to continue in
operational existence for the foreseeable future. Consequently the Directors consider it appropriate to prepare the
financial statements on the going concern basis. Should the going concern basis not be appropriate, adjustments would
have to be made to the assets and liabilities in the Group statement of financial position.
35
i
w
e
v
e
R
s
s
e
n
i
s
u
B
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
a
i
c
n
a
n
F
i
n
o
i
t
a
m
r
o
f
n
I
M
G
A
20870.04 09/11/11 Proof 11Stock code: •••07Egdon Resources plc Annual Report and Accounts 2011Stock code: EDREgdon Resources plc Annual Report and Accounts 2011
36
Notes Forming Part of the Financial Statements
(continued)
3. Segmental information
For management purposes, the Group currently operates in two geographical markets: UK and Europe. Unallocated
operating expenses, assets and liabilities relate to the general management, financing and administration of the Group.
The following tables present the profit/(loss) and certain asset and liability information regarding the Group’s operating
segments for the year ended 31 July 2011 and for the year ended 31 July 2010.
Revenue of the Group for the period has been derived from the sale of oil and gas which has been extracted from
wells in the UK during production and production testing operations. Oil is a commodity product and can be sold to a
number of customers on industry-standard terms. For reasons of operational convenience, 78% (2010: 93%) of oil sales
in the year were made to one organisation. Gas is a commodity product and can be sold to a number of customers on
industry-standard terms. For contractual reasons, 87% of gas sales in the year were made to one organisation (2010: no
production).
2011
Revenue
Cost of sales — exploration costs written off and pre-licence costs
Cost of sales — impairments
Cost of sales — depreciation
Cost of sales — other
UK
£
Europe Unallocated
£
£
Total
£
2,379,150
(642,385)
(230,000)
(491,258)
(715,712)
—
(18,314)
—
—
(532)
—
—
—
—
—
2,379,150
(660,699)
(230,000)
(491,258)
(716,244)
Total cost of sales
Gross profit/(loss)
Other administrative expenses
Depreciation
Total administrative expenses
Other operating income
Exceptional item — profit on disposal of subsidiary
Exceptional item — (loss)/profit on disposal of property,
plant and equipment
Total
Finance income
Finance costs
Profit/(loss) before taxation
Taxation
Profit/(loss) for the period
Other segment information
Non-current assets
Current assets
Current liabilities
Non-current liabilities
Net assets/(liabilities)
Capital expenditure
Intangible exploration and evaluation assets
Property, plant and equipment
— oil and gas assets
— other
(2,079,355)
(18,846)
— (2,098,201)
299,795
(18,846)
—
280,949
(477,112)
—
(37,250)
—
(165,428)
(7,391)
(679,790)
(7,391)
(477,112)
(37,250)
(172,819)
(687,181)
223,843
1,710
— 4,338,290
225,553
—
— 4,338,290
(648)
—
—
(648)
45,878 4,283,904
(172,819) 4,156,963
—
(33,153)
—
(1,582)
41,505
(87,123)
41,505
(121,858)
12,725 4,282,322
—
—
(218,437) 4,076,610
—
—
12,725 4,282,322
(218,437) 4,076,610
16,171,293
5,911,170
(1,254,474)
(814,675)
1,647,319
29,335
(340,702)
(68,694)
7,400
17,826,012
68,742 6,009,247
(1,130,541) (2,725,717)
(940,316)
(56,947)
20,013,314
1,267,258
(1,111,346) 20,169,226
2,787,735
488,243
—
3,275,978
842,744
17,170
—
—
—
4,834
842,744
22,004
3,647,649
488,243
4,834 4,140,726
20870.04 14/11/11 CorrectedEgdon Resources plc Annual Report and Accounts 2011www.egdonresources.com
3. Segmental information (continued)
2010
Revenue
Cost of sales — exploration costs written off and pre-licence costs
Cost of sales — depreciation
Cost of sales — other
Total cost of sales
Gross profit/(loss)
Other administrative expenses
Depreciation
Total administrative expenses
Other operating income
Exceptional item — profit on disposal of property,
plant and equipment
Finance income
Finance costs
Profit/(loss) before taxation
Taxation
Profit/(loss) for the period
Other segment information
Non-current assets
Current assets
Current liabilities
Non-current liabilities
Net assets
Capital expenditure
Intangible exploration and evaluation assets
Property, plant and equipment
— oil and gas assets
— other
4. Other expenditure
UK
£
Europe Unallocated
£
£
Total
£
1,251,676
(37,145)
(256,882)
(561,790)
—
(27,641)
—
(461)
(855,817)
(28,102)
395,859
(28,102)
—
—
—
—
—
—
1,251,676
(64,786)
(256,882)
(562,251)
(883,919)
367,757
(377,497)
—
(19,339)
—
(263,047)
(8,464)
(659,883)
(8,464)
(377,497)
(19,339)
(271,511)
(668,347)
168,622
6,706
(531)
174,797
388,881
575,865
1,156
(25,698)
—
—
388,881
(40,735)
—
(3,016)
(272,042)
—
—
263,088
1,156
(28,714)
551,323
(43,751)
(272,042)
235,530
(113)
—
—
(113)
551,210
(43,751)
(272,042)
235,417
14,273,473
3,033,408
(1,551,145)
(760,065)
1,174,768
35,130
(16,257)
(65,150)
6,655
71,793
(80,910)
(90,695)
15,454,896
3,140,331
(1,648,312)
(915,910)
14,995,671
1,128,491
(93,157) 16,031,005
1,097,216
35,782
—
1,132,998
5,933,635
—
—
—
—
7,785
5,933,635
7,785
7,030,851
35,782
7,785
7,074,418
?
Auditor’s remuneration (see note 7 below)
Depreciation and other amounts written off tangible assets
Impairments
Exploration and pre-licence costs written off
Foreign exchange losses/(gains)
Operating lease rentals
— land and buildings (in administrative expenses)
— leases on operational sites included within cost of sales
— leases on exploration and evaluation sites capitalised in intangible assets
2011
£
2010
£
42,063
498,649
230,000
660,699
32,157
25,000
35,444
33,760
48,400
265,346
—
64,786
(31,613)
17,500
47,862
21,342
37
i
w
e
v
e
R
s
s
e
n
i
s
u
B
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
a
i
c
n
a
n
F
i
n
o
i
t
a
m
r
o
f
n
I
M
G
A
20870.04 09/11/11 Proof 11Stock code: •••07Egdon Resources plc Annual Report and Accounts 2011Stock code: EDREgdon Resources plc Annual Report and Accounts 2011
38
Notes Forming Part of the Financial Statements
(continued)
5. Exceptional item — profit on disposal of subsidiary
On 5 October 2010 the sale of Egdon Resources (New Ventures) Ltd (“ERNV”), the holder of certain of Egdon’s permit
interests in France, to eCORP Oil and Gas UK Ltd (“eCORP”) was completed.
The consideration was £4.5 million in cash and the grant of options in relation to the permits sold. The assets of ERNV
at completion were a 60% interest in the Navacelles Permit, a 40% interest in the Gex Permit and a 40% interest in the
Gex Sud Permit Application (the “Permit Interests”). The Options are in relation to a 6% interest in the Gex Permit and
the Gex Sud Permit Application and a 9% interest in the Navacelles Permit. These Options are exercisable up to the later
of two years from the 23 June 2010 (or in the case of the Gex Sud Permit Application two years from any licence award)
or 60 days following plugging and abandonment or the completion of initial testing of the first well on each permit,
subject to an end-stop date of 23 June 2015. On exercise of any Option Egdon will pay to ERNV its pro-rata share of all
costs incurred by ERNV on that permit and pay to eCORP the appropriate proportion of the original acquisition price. At
present the fair value of these options cannot be determined and has therefore not been included in calculating the profit
on disposal.
On a consolidated basis, the value of ERNV’s net assets at the date of completion was £12,477 attributable to the permit
interests detailed above. Incidental costs were incurred on the sale totalled £149,233. This resulted in the gain on sale of
subsidiary of £4.3 million.
6. Exceptional item — (loss)/profit on disposal of property, plant and equipment
During the year the Group sold a 5% interest in PEDL070 containing the Avington oil field to IS E&P Limited for a cash
consideration of £200,000. At the date of sale, 5% of the net book value of this asset amounted to £214,217. As part of
the sale agreement, IS E&P Limited became liable for 5% of the outstanding Net Profit Interest agreement and as such
the net book value at the date of sale was reduced by £11,371, giving rise to a loss on disposal of £2,846. During the year
the Group also sold a further 5% interest in PEDL070 containing the Avington oil field to IS NV Limited. The sale was
based on the same conditions detailed above and also gave rise to a loss on disposal of £2,846. During the course of the
year, the Group also sold sundry plant and equipment giving rise to a profit on disposal of £5,044.
In 2010, the Group sold a 15% interest in PEDL005 (Remainder) containing the Keddington oil field to Terrain Energy
Limited for cash consideration of £236,500 and deferred cash consideration of £50,000 payable on the commencement
of the K-3 sidetrack well. At the date of sale, 15% of the net book value of this asset amounted to £82,838, giving rise
to a profit of £203,663. In the same deal the Group sold 25% interest in PEDL203 containing the Kirklington oil field for
cash consideration of £66,865 and deferred cash consideration of £87,500 payable on commencement of the Kirklington
sidetrack well. At the date of sale, 25% of the net book value of this asset amounted to £21,174, giving rise to a profit
of £133,191.
Also in 2010, the Group also sold a further 10% interest in PEDL203 containing the Kirklington oil field to Angus Energy
Kirklington Development Limited by way of a farm-out for contingent consideration of £59,585. This was based on 10%
of the drilling costs for the sidetrack at Kirklington 2 well. At the date of sale, 10% of the net book value of the asset
amounted to £10,058, giving rise to a profit of £49,527.
7. Auditor’s remuneration
Audit services:
Fees payable to the Group’s auditor for the audit of the Group’s annual financial statements
Other services:
The auditing of financial statements of subsidiaries of the Company pursuant to legislation
All other services
Total audit and other services
2011
£
2010
£
9,200
9,000
27,613
5,250
27,000
12,400
42,063
48,400
20870.04 14/11/11 CorrectedEgdon Resources plc Annual Report and Accounts 2011www.egdonresources.com
8. Employee information
The average number of persons employed by the Group in the year, including
Executive and Non-Executive Directors, was:
Management and administration
Employee costs during the year amounted to:
Wages and salaries
Social security costs
Share based remuneration charges
Pension costs
2011
Number
2010
Number
12
11
2011
£
2010
£
519,386
61,541
30,351
15,008
394,418
44,990
54,831
10,838
626,286
505,077
9. Remuneration of Directors and key management
The board considers that the group and company’s key management comprises the directors of the company
Group and company
Directors’ emoluments
Employers national insurance contributions
Short term employment benefits
Post employment benefits
Share based remuneration charge attributable to Directors
The emoluments and compensation of individual Directors were as follows:
M A W Abbott
A D Hindle (resigned 1.2.2011)
P H P Stephens
K M Ratcliff
J G R Rix
W R Roberts
A Booth (appointed 28.7.2010)
Salary
and fees
£
137,500
7,500
37,500
22,500
15,000
15,000
13,750
Bonus
£
Medical
£
Insurance
benefits
£
Pension
£
12,000
—
—
—
—
—
—
2,898
—
—
—
—
—
—
2,898
8,221
385
1,024
1,024
1,024
1,024
951
13,653
6,875
—
—
—
—
—
—
6,875
248,750
12,000
2011
£
277,301
28,518
305,819
6,875
—
2010
£
235,507
23,283
258,790
6,000
12,434
312,694
277,224
Total
2011
£
167,494
7,885
38,524
23,524
16,024
16,024
14,701
Total
2010
£
130,322
16,237
38,737
23,737
16,237
16,237
—
284,176
241,507
The emoluments of the highest paid Director excluding pension contributions were £160,619 (2010: £124,322).
Life policy and critical illness premiums of £7,198 (2010: £1,842) were paid in respect of the Executive Director and
Directors’ indemnity insurance premiums of £6,455 (2010: £7,422) were paid in respect of all Directors.
MAW Abbott participated in the Company’s pension scheme (see note 11) and the Company made payments of £6,875
(2010: £6,000) during the period in respect of pension contributions. The Company does not currently provide pension
arrangements or benefits other than as described above.
39
i
w
e
v
e
R
s
s
e
n
i
s
u
B
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
a
i
c
n
a
n
F
i
n
o
i
t
a
m
r
o
f
n
I
M
G
A
20870.04 09/11/11 Proof 11Stock code: •••07Egdon Resources plc Annual Report and Accounts 2011Stock code: EDREgdon Resources plc Annual Report and Accounts 2011
40
Notes Forming Part of the Financial Statements
(continued)
9. Remuneration of Directors and key management (continued)
Directors’ share options outstanding at 31 July 2011 and at 31 July 2010
M A W Abbott
Exercise
Number
price of options
Date First date
granted of exercise
16.17p
618,429 12/05/2008 01/08/2010
No Director is entitled to receive any shares under the terms of any long term incentive scheme in respect of qualifying
services other than as noted above. No options were granted to the Directors in the year to 31 July 2011 (see below).
10. Share based payment plans
On 13 May 2008, the Company established an Enterprise Management Incentive Scheme and made the initial grant of
options to all eligible employees.
On 13 May 2008, Options were granted over a total of 1,631,908 ordinary shares at an exercise price of 16.17p (being the
average middle-market closing price on the three trading days preceding the grant). These options became exercisable
on 1 August 2010. The options will vest for all grantees that remain in service to date. The options do not have a cash
settlement alternative. The charge to income in respect of these options is £nil (2010: £29,606). An amount equivalent
to the charge to income is credited to reserves and appears in the Group and Company statement of financial positions
described as “share based payment reserve”.
On 1 September 2009, the Company granted additional options to all eligible employees. Options have been granted over
a total of 1,470,724 ordinary shares at an exercise price of 11p (being the average middle-market closing price on the three
trading days preceding the grant). The options are exercisable on or after 1 September 2011. The options will vest if the
grantees are in service at the 1 September 2011. The options do not have a cash settlement alternative. The charge to income in
respect of these options is £27,650 (2010: £25,225). An amount equivalent to the charge to income is credited to reserves and
appears in the Group and Company statement of financial positions described as “share based payment reserve”.
In the year to 31 July 2010, 176,252 options were forfeited in respect of the May 2008 options granted, when an eligible
employee left the company.
During the year to 31 July 2011, two employees have exercised their options granted in May 2008 over 193,320 shares. At
the end of the year there are options granted over a total of 1,262,336 (2010: 1,455,656) ordinary shares in respect of the
May 2008 options.
On 1 February 2011, options have been granted over a total of 298,804 ordinary shares at an exercise price of 20.08p
(being the average middle-market closing price on the three trading days preceding the grant) to a new employee. The
options are exercisable on or after 1 August 2013. The options will vest if the grantee is in service at the 1 August 2013.
The options do not have a cash settlement alternative. The charge to income in respect of these options is £2,701 (2010:
£nil). An amount equivalent to the charge to income is credited to reserves and appears in the Group and Company
statement of financial positions described as “share based payment reserve”.
The fair value of equity settled share options granted is estimated as at the date of grant using a Black-Scholes option
pricing model, taking into account the terms and conditions upon which the options were granted. The following table
lists the inputs to the model.
13 May 2008 & 1 September 2009
Dividend yield
Expected share price volatility (%)
Risk-free interest rate (%)
Expected life of option (years)
—
35
5.5
2
20870.04 14/11/11 CorrectedEgdon Resources plc Annual Report and Accounts 2011www.egdonresources.com
10. Share based payment plans (continued)
Dividend yield
Expected share price volatility (%)
Risk-free interest rate (%)
Expected life of option (years)
1 February 2011
—
35
0.5
2.5
The expected volatility is based on the assumption that the historical volatility of a sample of oil and gas companies is
indicative of future trends for Egdon Resources plc, which may not necessarily be the actual outcome.
The following table illustrates the number and weighted average exercise prices (WAEP) of, and movement in, share
options during the year.
Company and group
Opening balance
Granted during the year
Forfeited during the year
Exercised during the year
Outstanding at 31 July 2011
2011
No
2,926,380
298,804
—
(193,320)
2011
WAEP
13.57
20.08
—
16.17
2010
No
2010
WAEP
1,631,908
1,470,724
(176,252)
—
16.17
11.00
16.17
—
13.57
3,031,864
14.05
2,926,380
The weighted average remaining contractual life of share options outstanding as at 31 July 2011 is 7.5 years (2010: 8.25
years). At 31 July 2011 1,262,336 (2010: nil) of the total number of share options outstanding could be exercised and these
options had a weighted average exercise of 16.17 pence (2010: nil). The weighted average share price at the date the
options were exercised was 16.17 pence.
11. Defined contribution pension plan
The Group operates a defined contribution retirement plan for all qualifying employees who wish to participate. The
assets of the scheme are held separately from those of the Group in funds under the control of trustees.
The total cost in the year of £15,008 (2010: £10,838) represents the sum payable to the scheme by the Group at rates
agreed in respect of participating employees.
12. Finance income
Interest receivable on short term deposits
13. Finance costs
Unwinding of decommissioning discount
Interest payable on loan from EnCore Oil plc
Other interest payable
2011
£
41,505
2010
£
1,156
2011
£
34,735
87,123
—
121,858
2010
£
27,905
—
809
28,714
41
i
w
e
v
e
R
s
s
e
n
i
s
u
B
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
a
i
c
n
a
n
F
i
n
o
i
t
a
m
r
o
f
n
I
M
G
A
20870.04 09/11/11 Proof 11Stock code: •••07Egdon Resources plc Annual Report and Accounts 2011Stock code: EDREgdon Resources plc Annual Report and Accounts 2011
42
Notes Forming Part of the Financial Statements
(continued)
14. Income tax
The major components of income tax expense for the years ended 31 July 2011 and 2010 are:
a) Consolidated income statement
Current income tax charge
2011
£
2010
£
—
113
b) A reconciliation between tax expense and the product of the accounting profit and the
standard rate of tax in the UK for the years ended 31 July 2011 and 2010 is as follows:
Accounting profit before tax from continuing operations
Profit on ordinary activities multiplied by the standard rate of tax of 27.33% (2010: 28%)
Expenses not permitted for tax purposes
Profit on sale of subsidiary not taxable
Impact of change in tax rate
Carry forward/(utilisation) of tax losses and movement in unrecognised deferred tax assets
4,076,610
1,114,138
18,898
(1,185,654)
—
52,618
235,530
65,948
25,052
—
—
(90,887)
Income tax expense reported in the income statement
—
113
c) Factors that may affect the future tax charge:
The Group has trading losses of £21,167,766 (2010: £20,888,574) which may reduce future tax charges. Future tax charges
may also be reduced by capital allowances on cumulative capital expenditure, supplementary allowance on ring-fenced
exploration expenditure and the extent to which any profits are generated by any ring-fenced activities, which attract a
higher rate of tax.
d) Deferred taxation
The Group has an unrecognised deferred taxation asset of £1,576,084 (2010: £1,752,321) at the year end, calculated at
a rate of 27.33%. This is represented by accumulated tax losses of £5,785,150 (2010: £5,848,802) offset by accelerated
capital allowances of £4,209,066 (2010: £4,096,481).
15. Earnings per share
Net profit for the financial year
Basic weighted average ordinary shares in issue during the year
Basic profit per share
Diluted profit per share
Net profit for the financial year
Diluted weighted average ordinary shares in issue during the year
Diluted profit per share
2011
£
2010
£
4,076,610
235,417
130,786,388 80,882,893
Pence
Pence
3.12
0.29
2011
£
2010
£
4,076,610
235,417
131,349,668 80,887,969
Pence
Pence
3.10
0.29
A calculation is done to determine the number of shares that could have been acquired at fair value (determined as
the average annual market share price of the Company’s shares) based on the monetary value of the subscription
rights attached to outstanding share options. The diluted weighted average ordinary shares in issue during the year is
calculated from the basic weighted average ordinary shares in issue during the year, adjusted to reflect the potential
dilution assuming the exercise of the options. However, the 2 February 2011 share options have been excluded as these
would be anti-dilutive.
20870.04 14/11/11 CorrectedEgdon Resources plc Annual Report and Accounts 2011www.egdonresources.com
16. Losses attributable to Egdon Resources plc
The loss for the financial year dealt with in the financial statements of Egdon Resources plc was £256,640 (2010:
£272,197). As permitted by Section 408 of the Companies Act 2006, no income statement is presented in respect of
Egdon Resources plc.
17. Intangible fixed assets
Group
At 1 August 2009
Additions
Reclassifications to D&P assets
Gross margin on oil sales from well testing
Reclassifications to Assets held for sale (note 23)
Disposals
At 1 August 2010
Additions
Reclassifications to D&P assets
Disposals
Exploration written off
Transfers
At 31 July 2011
Amortisation
At 1 August 2009
Disposals
At 1 August 2010
Disposals
At 31 July 2011
Net book value
At 31 July 2011
At 31 July 2010
Exploration
and
evaluation
Other
Goodwill
£
costs intangibles
£
£
Total
£
2,856
—
—
—
—
—
5,686,168
1,835,437
(207,105)
(32,767)
(13,805)
(246,635)
2,856
—
—
(2,856)
—
—
7,021,293
3,275,978
(2,610,136)
—
(593,705)
(102,069)
11,240 5,700,264
1,835,437
(207,105)
(32,767)
(13,805)
(246,635)
—
—
—
—
—
11,240
—
—
—
—
102,069
7,035,389
3,275,978
(2,610,136)
(2,856)
(593,705)
—
—
6,991,361
113,309
7,104,670
2,856
—
2,856
(2,856)
—
—
—
—
—
—
—
—
—
—
—
—
—
2,856
—
2,856
(2,856)
—
6,991,361
113,309
7,104,670
7,021,293
11,240
7,032,533
Goodwill related to the acquisition of shares in Egdon Resources (New Ventures) Ltd. On the disposal of Egdon
Resources (New Ventures) Ltd this goodwill has been removed.
The Group’s unevaluated oil and gas interests at 31 July 2011 are its equity interests in licences in the UK and France held
through its wholly owned subsidiaries Egdon Resources U.K. Limited and Egdon Resources Avington Ltd, and through
sub-subsidiaries Egdon Resources Europe Limited, Egdon Resources France Limited, Aquitaine Exploration Limited and
Egdon (E&P) Limited. Additions to exploration and evaluation costs represent exploration and appraisal costs incurred in
the year in respect of unproven properties.
A formal impairment review has been carried out and the Directors have considered and reviewed the potential
value of all projects and licences. The Directors have also considered the likely opportunities for realising the value of
licences, either by development of discovered hydrocarbons, the farm-out of the asset leading to a development or
by the disposal of the assets, and have concluded that the likely value of the expenditure on each exploration area is
individually in excess of its carrying amount. The amount described as exploration written off, which relates to dry wells
and relinquished licences, has been charged to the consolidated income statement and included within cost of sales and
described as “Cost of sales – exploration costs written off, impairments and pre-licence costs”.
In the year ended 31 July 2010, additions include £534,825 in respect of interests in nine exploration and appraisal
licences acquired from EnCore in return for issue of shares in Egdon (note 28).
Other intangibles represent the costs of purchased data and other geological standards which are used to assist with
formulating strategy for licence applications and asset purchases. The costs are subject to an annual impairment test, and
elements are written off if they have no future commercial value.
43
i
w
e
v
e
R
s
s
e
n
i
s
u
B
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
a
i
c
n
a
n
F
i
n
o
i
t
a
m
r
o
f
n
I
M
G
A
20870.04 09/11/11 Proof 11Stock code: •••07Egdon Resources plc Annual Report and Accounts 2011Stock code: EDREgdon Resources plc Annual Report and Accounts 2011
44
Notes Forming Part of the Financial Statements
(continued)
17. Intangible fixed assets (continued)
The Group’s unevaluated oil and gas interests at 31 July 2011 are its equity interests in licences in the UK and France held
through its wholly owned subsidiaries Egdon Resources U.K. Limited and Egdon Resources Avington Ltd, and through
sub-subsidiaries Egdon Resources Europe Limited, Egdon Resources France Limited, Aquitaine Exploration Limited and
Egdon (E&P) Limited.
A formal impairment review has been carried out and the Directors have considered and reviewed the potential
value of all projects and licences. The Directors have also considered the likely opportunities for realising the value of
licences, either by development of discovered hydrocarbons, the farm-out of the asset leading to a development or
by the disposal of the assets, and have concluded that the likely value of the expenditure on each exploration area is
individually in excess of its carrying amount. The amount described as exploration written off, which relates to dry wells
and relinquished licences has been charged to the consolidated income statement and included within cost of sales and
described as “Cost of sales – exploration costs written off, impairments and pre-licence costs”.
18. Property, plant and equipment
Group
Cost
At 1 August 2009
Additions
Disposals
Reclassifications from intangible assets
At 1 August 2010
Additions
Disposals
Reclassifications from intangible assets
At 31 July 2011
Depreciation
At 1 August 2009
Charge for the year
Disposals
At 1 August 2010
Charge for the year
Disposals
At 31 July 2011
Net book value
At 31 July 2011
At 31 July 2010
Development
and production
assets
£
Fixtures
and Computer
fittings equipment
£
£
Total
£
2,848,751
6,176,363
(218,462)
207,105
9,013,757
842,744
(571,635)
2,610,136
4,686
—
—
—
4,686
—
—
—
50,188
7,785
—
—
57,973
22,004
—
—
2,903,625
6,184,148
(218,462)
207,105
9,076,416
864,748
(571,635)
2,610,136
11,895,002
4,686
79,977
11,979,665
376,037
256,882
(34,430)
598,489
721,258
(124,379)
4,686
—
—
4,686
—
—
42,414
8,464
—
50,878
7,391
—
423,137
265,346
(34,430)
654,053
728,649
(124,379)
1,195,368
4,686
58,269
1,258,323
10,699,634
8,415,268
—
—
21,708
10,721,342
7,095
8,422,363
The prior year comparative figure, includes additions totalling £4.5 million in respect of a 10% interest in the Ceres gas
field acquired from EnCore in return for issue of shares in Egdon (Note 28).
The depreciation charge for the year includes impairment charges in respect of the Avington (£130,000) and Kirklington
(£100,000) fields; these charges are included within Exploration costs written off, impairments and pre-licence costs in
the consolidated statement of comprehensive income. Both fields are within the UK market for segmental reporting.
20870.04 14/11/11 CorrectedEgdon Resources plc Annual Report and Accounts 2011www.egdonresources.com
18. Property, plant and equipment (continued)
These productive oil fields are within geographical CGU’s containing exploration & evaluation assets that have been
subject to impairment review and, in the case of Avington, surrender of the adjoining licence. The recoverable amounts
are based on value in use assessed from forecast production, oil price per barrel of $100 – $109 and a discount rate of 8%.
Company
Cost
At 1 August 2009
Additions
At 1 August 2010
Additions
At 31 July 2011
Depreciation
At 1 August 2009
Charge for the year
At 1 August 2010
Charge for the year
At 31 July 2011
Net book value
At 31 July 2011
At 31 July 2010
19. Investments in subsidiaries
Balance at 31 July 2009
Additions in year
Balance at 31 July 2010
Additions in year
Balance at 31 July 2011
Computer
equipment
£
2,832
7,785
10,617
4,834
15,451
640
3,322
3,962
4,089
8,051
7,400
6,655
Total
£
Shares in
subsidiary
Loans to
subsidiary
undertakings undertakings
£
£
9,964,782
—
9,964,782
—
—
5,034,824
9,964,782
5,034,824
5,034,824
—
14,999,606
—
9,964,782
5,034,824
14,999,606
The balance represents the investment in Egdon Resources U.K. Limited and Egdon Resources Avington Ltd. The
loan advanced in the year ended 31 July 2010 represents the value of licence interests acquired from EnCore Oil plc
transferred to Egdon Resources U.K. Limited and Egdon Resources Europe Limited.
45
i
w
e
v
e
R
s
s
e
n
i
s
u
B
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
a
i
c
n
a
n
F
i
n
o
i
t
a
m
r
o
f
n
I
M
G
A
20870.04 09/11/11 Proof 11Stock code: •••07Egdon Resources plc Annual Report and Accounts 2011Stock code: EDREgdon Resources plc Annual Report and Accounts 2011
46
Notes Forming Part of the Financial Statements
(continued)
19. Investments in subsidiaries (continued)
Holdings of more than 20%
As at the year end the Company directly and indirectly held more than 20% of the share capital of the following
companies:
Company
Egdon Resources U.K. Limited
Egdon Resources Europe Limited
Egdon Resources Avington Ltd
Egdon Resources France Limited
Aquitaine Exploration Limited
Egdon (E&P) Limited
Country of registration
or incorporation shares held
Class of % of shares
held
England
England
England
England
England
England
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100
100
100
100
100
100
All of these companies are involved in oil and gas exploration and production.
On the 23 November 2010 Egdon Resources U.K. Limited completed the acquisition of EnCore (E&P) Limited (now
renamed Egdon (E&P) Limited). The company which holds two Permits in France (Mairy and Nimes) and was acquired in
the period for a cash consideration of £100,000. This transaction has been accounted for as an asset acquisition rather
than a business combination as the acquired company did not have processes or outputs as defined by IFRS 3 (Revised)
and so is not classified as a business.
20. Inventory
Oil stock
21. Trade and other receivables
Amounts falling due within 1 year
Trade receivables
Amounts owed by subsidiaries
VAT recoverable
Other receivables
Prepayments and accrued income
Group
2011
£
9,796
Group Company Company
2010
£
2010
£
2011
£
—
—
—
Group
2011
£
Group Company Company
2010
2011
£
£
2010
£
1,604,317
—
58,069
503,170
92,720
506,912
—
133,263
213,319
185,402
—
75,995
5,281
—
35,802
—
1,156,454
10,863
—
23,978
2,258,276
1,038,896
117,078
1,191,295
The Directors consider that the carrying amount of trade and other receivables approximates to their fair value.
Trade and other receivables represent amounts due from customers for the company’s oil and gas products, balances
due from joint venture partners regulated by signed operator agreements, or receipts in respect of asset sales.
As at 31 July 2011 no trade receivables were considered to be impaired (2010: £nil).
As at 31 July 2011 trade receivables of £81,896 (2010: £32,037) were past due but not impaired.
The ageing analysis of these trade receivables is as follows:
Up to 3 months past due
3–6 months past due
Over 6 months past due
Other receivables do not contain impaired assets.
2011
2010
41,214
4,939
35,743
81,896
30,065
1,972
—
32,037
20870.04 14/11/11 CorrectedEgdon Resources plc Annual Report and Accounts 2011www.egdonresources.com
22. Available for sale financial assets
At 1 August 2010
Additions
At 31 July 2011
Group
2011
£
50,000
—
50,000
Group
2010
£
50,000
—
50,000
The investment in securities above represents an investment in Infrastrata plc (previously Portland Gas plc) redeemable
preference shares. The securities are held at cost as an approximation of fair value.
23. Assets held for sale
Intangible assets
Cash at bank
Assets held for sale
Trade payables
Other taxes and social security costs
Accruals and deferred income
Liabilities directly associated with assets classified as held for sale
Group
2011
£
—
—
—
—
—
—
—
—
Group
2010
£
13,805
7,795
21,600
1,979
1,916
4,750
8,645
12,955
At 31 July 2010 the Company classified Egdon Resources (New Ventures) Ltd as a disposal group. This included the
Navacelles and Gex Sud permits previously included in exploration and evaluation assets and all other associated current
assets and liabilities.
The sale of 100% of the share capital of Egdon Resources (New Ventures) Ltd was completed on 5 October 2010 for a
consideration of £4.5 million in cash and the grant of options in relation to the permits sold.
The permits were measured at their carrying amount as this is lower than the fair value less costs to sell. There were no
discontinued operations as a result of this sale, due to the non-producing nature of the permits, which had not generated
any direct costs or revenues.
24. Cash and cash equivalents
Short term bank deposits
Restricted cash at bank
Cash at bank
Group
2011
£
Group Company Company
2010
£
2010
£
2011
£
2,997,063
296,027
398,085
370,918
295,527
1,363,390
2,272,871
—
27,659
3,691,175
2,029,835 2,300,530
—
—
36,952
36,952
The Directors consider that the carrying amount of these assets approximates to their fair value. The credit risk on liquid
funds is limited because the counterparties are banks with high credit ratings.
Restricted cash at bank represents funds held in escrow accounts under arrangements relating to decommissioning and
similar obligations at Keddington and Burton Agnes.
47
i
w
e
v
e
R
s
s
e
n
i
s
u
B
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
a
i
c
n
a
n
F
i
n
o
i
t
a
m
r
o
f
n
I
M
G
A
20870.04 09/11/11 Proof 11Stock code: •••07Egdon Resources plc Annual Report and Accounts 2011Stock code: EDREgdon Resources plc Annual Report and Accounts 2011
48
Notes Forming Part of the Financial Statements
(continued)
25. Trade and other payables
Trade payables
Amounts due to subsidiaries
Other taxes and social security costs
Other payables
Accruals and deferred income
Group
2011
£
Group Company Company
2010
2011
£
£
2010
£
1,060,679
—
22,170
1,039,367
603,501
802,053
—
14,487
—
823,127
4,401
369,253
22,169
1,039,253
64,718
2,725,717
1,639,667
1,499,794
41,354
—
14,487
—
25,070
80,911
The Directors consider that the carrying amount of trade and other payables approximates to their fair value.
Other payables includes £1,000,000 (2010: £nil) due to EnCore Oil plc for a loan drawn down in the period under the
facility agreement which was provided as part of the purchase of assets from EnCore during 2010. The loan attracts
interest at the higher of 10% or LIBOR plus 5%. The loan is repayable on 28 July 2012.
Also included in other payables is £37,995 (2010: £nil) due to The Carbon Trust. This loan is repayable via monthly
instalments of £2,235. This loan is provided on an interest free basis.
26. Financial assets and liabilities
The Group’s objective is to minimise financial risk. In prior years, the policies to achieve this were to fund operations from
equity capital and not to make use of derivatives or complex financial instruments. These policies have been amended as
the Group now considers that it may also be appropriate to fund certain projects from debt. The Group’s ordinary shares
are considered to be equity capital, together with share premium, share based payment reserve and retained earnings. The
Group is not subject to any externally imposed capital requirements.
During the year the Group drew down on a loan facility made available under the terms of the acquisition of certain licence
interests from EnCore Oil plc. The loan facility has been used to fund the development of the Kirkleatham gas field.
The Group’s financial instruments comprise cash and cash equivalents, trade payables, the above EnCore loan, accruals,
trade receivables, other receivables and available for sale assets which arise directly from its operations. The Group’s
operations expose it to a variety of financial risks including credit risk, liquidity risk, interest rate risk, foreign currency
exchange risk and market risk. Given the size of the Group, the Directors have not delegated the responsibility of
monitoring financial risk management to a sub-committee of the Board. The policies set by the Board of Directors are
implemented by the Company’s finance department.
Credit risk
The credit risk on liquid funds is limited because the Group policy is to only deal with counterparties with high credit
ratings and more than one institution is utilised to deposit cash holdings. At year end the Group had cash and cash
equivalents of £3,691,175 (2010: £2,029,835) and the Company £2,300,530 (2010: £36,952). The balances at 31 July
2011 are held with two banks. Trade receivables comprise amounts due from trading entities and total £1,604,317 (2010:
£506,912) for the Group and £nil (2010: £nil) for the Company (note 21). Trade receivables are mainly due from joint
venture partners and the purchasers of the Group’s produced oil and gas. For joint venture partners, the Group would
have alternative means of recourse in the event of any credit default. The purchasers of the Group’s oil & gas production
are substantial companies or subsidiaries of major international companies. At the year end, the total exposure to credit
risk was £5,848,662 (2010: £2,800,066); Company £2,300,530 (2010: £36,952).
Liquidity risk
The Group policy is to actively maintain a mixture of long term and short term deposits that are designed to ensure
it has sufficient available funds for operations. The Group also has access to the remaining undrawn loan facility of
£500,000 provided by EnCore Oil plc. The Group monitors its levels of working capital to ensure it can meet financial
liabilities as they fall due. The Group’s financial liabilities comprise trade and other payables as set out in note 25, held at
amortised cost, which total £2,725,717 (2010: £1,639,667). Of this balance £1,690,820 (2010: £1,639,667) are all due within
1-2 months. Additionally the Group has a liability under a Net Profit Interest agreement where £12,101 (2010: £21,269) is
estimated to be due within 12 months.
20870.04 14/11/11 CorrectedEgdon Resources plc Annual Report and Accounts 2011www.egdonresources.com
26. Financial assets and liabilities (continued)
Interest rate risk
The Group has interest bearing assets, comprising cash balances which earn interest at variable rates and interest bearing
liabilities in the form of loans. The financial assets of the Group are cash at bank and fixed term bank deposits (money
market) most of which are Sterling denominated, further detailed below:
Cash at bank at floating interest rates
Restricted cash at bank
Cash at bank
2011
£
2010
£
2,997,063
296,027
398,085
370,918
295,527
1,363,390
Cash at bank at floating rates consisted of money market deposits which earn interest at rates set in advance for periods
up to three months by reference to Sterling LIBOR. Restricted cash at bank represents amounts lodged in support of
guarantee commitments, earning interest at short term rates based on Sterling LIBOR.
An effective interest rate increase or decrease by 1% on the cash and cash equivalents balance at year end would result in
a before tax financial effect of an increase or decrease in finance income of £36,912 (2010: £20,298).
The Group has interest bearing liabilities as disclosed in note 25. No sensitivity analysis is provided as the probability of
LIBOR plus 5% exceeding 10% before the loan is repaid is remote.
Foreign currency exchange risk
The Group is exposed to foreign currency exchange rate risk in relation to short term bank deposits, trade receivables
and payables denominated in US dollars and Euros. The value of the Group’s financial assets denominated in foreign
currencies at 31 July 2011 was £416,195 (2010: £85,206) Company £nil (2010: £nil).
A 10% change in the Sterling exchange rate would result in an increase or decrease of £41,620 (2010: £8,521) in profit
before tax.
Market risk
Payments to the former shareholder of Egdon Resources Avington Ltd under the Net Profit Interest (“NPI”) agreement
vary in line with the oil price. If the oil price is below $100 per barrel, NPI payments are based on 5% of Egdon’s net
revenues realised from the licences after subtracting allowable costs. If the oil price exceeds $130 per barrel the NPI
payment percentage increases to 10%. If the oil price is between $100 and $130, the NPI payment percentage is 7.5%.
The provision at 31 July 2011 assumes that oil price will continue to be less than $100 per barrel. If this level were to be
exceeded, the liability would rise, but any increase would be exceeded by the corresponding increase in revenue from oil
sales. If the oil price were to fall below $100 per barrel the liability would decrease and there would be a corresponding
decrease in revenues from oil sales.
49
i
w
e
v
e
R
s
s
e
n
i
s
u
B
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
a
i
c
n
a
n
F
i
n
o
i
t
a
m
r
o
f
n
I
M
G
A
20870.04 09/11/11 Proof 11Stock code: •••07Egdon Resources plc Annual Report and Accounts 2011Stock code: EDREgdon Resources plc Annual Report and Accounts 2011
50
Notes Forming Part of the Financial Statements
(continued)
27. Provision for liabilities
Group
Other Decommissioning
provision
£
provisions
£
Reinstatement
provision
£
At 1 August 2009
Provision made during the year
Paid during the year
Disposals in the year
Transfer of provision on reclassification to D&P assets
Unwinding of discount
At 1 August 2010
Provision created/released during the year
Paid during the year
Disposals in the year
Transfer of provision on reclassification to D&P assets
Unwinding of discount
At 31 July 2011
94,307
—
(3,612)
—
—
—
90,695
—
(11,006)
(22,742)
—
—
56,947
233,506
208,808
—
(69,962)
116,412
13,762
502,526
(55,847)
—
(18,823)
121,553
21,124
570,533
422,520
37,965
—
(35,527)
(116,412)
14,143
322,689
98,089
—
—
(121,553)
13,611
312,836
Company
At 1 August 2009
Provision made during the year
Paid during the year
Unwinding of discount
At 1 August 2010
Provision made during the year
Paid during the year
Disposals in the year
Unwinding of discount
At 31 July 2011
Other Decommissioning
provision
£
provisions
£
Reinstatement
provision
£
94,307
—
(3,612)
—
90,695
—
(11,006)
(22,742)
—
56,947
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Total
£
750,333
246,773
(3,612)
(105,489)
—
27,905
915,910
42,242
(11,006)
(41,565)
—
34,735
940,316
Total
£
94,307
—
(3,612)
—
90,695
—
(11,006)
(22,742)
—
56,947
At 31 July 2011 provision has been made for decommissioning costs on the productive fields at Keddington, Kirkleatham,
Ceres, Avington and Kirklington. Provision has also been made for reinstatement costs relating to exploration and
evaluation assets where work performed to date gives rise to an obligation, principally for site restoration. Assumptions,
based on the current economic environment, have been made which management believe are a reasonable basis upon
which to estimate the future liability. This estimate will be reviewed regularly to take into account any material change
to assumptions. Actual costs will depend on future market prices, any variation in the extent of decommissioning and
reinstatement to be performed, whether the works can be performed as part of a multi-well programme or in isolation
and progress in the relevant technologies. Decommissioning and reinstatement costs are expected to arise between 2011
and 2021.
Other provisions represent the amount expected to be payable to the former shareholder of Egdon Resources Avington Ltd
under the Net Profit Interest agreement entered into at the time of acquisition. As detailed in note 6 other provisions reduced
due to the sale of 10% interest in PEDL070. Of the total provision, £12,101 is estimated to be payable within one year.
20870.04 14/11/11 CorrectedEgdon Resources plc Annual Report and Accounts 2011www.egdonresources.com
28. Share capital and redeemable preference shares
Ordinary share capital
At 31 July 2009
— Issue of new £0.10 ordinary shares
At 31 July 2010
— Issue of new £0.10 ordinary shares
At 31 July 2011
Redeemable preference shares of £1 each (classed as liabilities)
At 31 July 2010
At 31 July 2011
Allotted, called up and fully paid
£
Number
75,475,774
7,547,577
55,200,000 5,520,000
130,675,774
193,320
13,067,577
19,332
130,869,094 13,086,909
50,000
12,500
50,000
12,500
On 6 April 2010 a placing of 16,000,000 10p ordinary shares with a market value of 12.5p was made. Following the
placing 91,475,774 ordinary shares were in issue.
On 28 July 2010 a placing of 39,200,000 10p ordinary shares with a market value of 12.5p was made with EnCore Oil plc
in consideration for the acquisition of interests in nine exploration and appraisal licences and a 10% interest in the Ceres
gas field. Following the placing 130,675,774 ordinary shares were in issue.
On 21 December 2010 82,003 10p Ordinary shares were issued to staff under the Company’s Enterprise Management
Incentive Scheme for a cash consideration of £13,260. Following this 130,757,777 Ordinary shares were in issue.
On 25 January 2011 111,317 10p Ordinary shares were issued to staff under the Company’s Enterprise Management
Incentive Scheme for a cash consideration of £18,000. Following this 130,869,094 Ordinary shares were in issue.
On 6 November 2007 50,000 redeemable preference shares of £1 each were issued and are now held by Infrastrata
plc. One quarter of the nominal value of these shares is paid up and the shares are entitled to an annual dividend out of
distributable profits of 0.00001% per annum on the amount for the time being paid up on each such share and do not
carry any voting rights. The Company may redeem the shares at any time by giving preference shareholders one week’s
notice. Preference shareholders may require the Company to redeem their shares at any time by giving six months’
notice. In each case, any redemption is at par and is subject to the provisions of the Companies Act. The preference
shares are treated as short term liabilities and included within trade payables.
29. Share premium reserve
During the year to 31 July 2011 193,320 ordinary shares of 10p were issued for cash consideration of £31,260 creating
additional share premium of £11,928. This resulted in a closing share premium reserve carried forward of £1,374,428
(2010: £1,362,500).
30. Merger reserve
Company
The merger reserve arose on the demerger of the Egdon Resources Group of companies from Infrastrata plc (formerly
Portland Gas plc) and represented the difference between the market value of the shares issued on the date of the
demerger at the closing rate of trading and nominal value of the shares so issued.
The reserve is not distributable.
Group
The merger reserve was eliminated on demerger effected by a Court Order.
51
i
w
e
v
e
R
s
s
e
n
i
s
u
B
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
a
i
c
n
a
n
F
i
n
o
i
t
a
m
r
o
f
n
I
M
G
A
20870.04 09/11/11 Proof 11Stock code: •••07Egdon Resources plc Annual Report and Accounts 2011Stock code: EDREgdon Resources plc Annual Report and Accounts 2011
52
Notes Forming Part of the Financial Statements
(continued)
31. Movements in cash and cash equivalents
Group
Cash at bank and in hand
Term deposits
Restricted cash at bank
Cash and cash equivalents as per statement of financial position
Cash held in disposal group (note 23)
Cash and cash equivalents as per statement of cash flow
Company
Cash at bank and in hand
Term deposits
Cash and cash equivalents
As at
31 July
2010 Cash flow
£
£
As at
31 July
2011
£
1,363,390
370,918
295,527
(965,305)
398,085
2,626,145 2,997,063
296,027
500
2,029,835
7,795
1,661,340
(7,795)
3,691,175
—
2,037,630
1,653,545
3,691,175
As at
31 July
2010 Cash flow
£
£
As at
31 July
2011
£
36,952
—
(9,293)
2,272,871
27,659
2,272,871
36,952
2,263,578 2,300,530
32. Obligations under leases
At 31 July 2011 the Group had future minimum commitments under non-cancellable operating leases as follows:
Within 1 year
— Land and buildings
— Leases on operational and exploration and evaluation sites
From 1–5 years
After 5 years
2011
£
2010
£
25,000
69,203
18,750
—
25,000
62,113
43,750
—
112,953
130,863
33. Capital commitments — tangible and intangible assets
Capital commitments of £605,458 (2010: £1,451,100) relate to expenditure committed under signed authorisations for
expenditure and relate to exploration, development and production assets. No other capital commitments have been
made as at 31 July 2011.
34. Related party transactions
Mr Walter Roberts is a Non-Executive Director of Egdon Resources plc and is also a Director and shareholder in Pinnacle
Energy Limited, a company that provides legal and consultancy services to the oil and gas industry. During the year
to 31 July 2011 Pinnacle Energy Limited invoiced the Group £113,565 (2010: £130,107) for legal and consultancy services
provided at commercial rates and agreed by the Directors of the Company. At the year end £1,321 was owing to Pinnacle
Energy Limited (2010: £45,606).
Mr John Rix is a Non-Executive Director of Egdon Resources plc and controlling shareholder in Dorset Exploration
Limited and Yorkshire Exploration Limited, companies that hold non-operating partnership interests in certain licences in
which Egdon has an interest as operator. During the year to 31 July 2011 Egdon invoiced Dorset Exploration Limited and
Yorkshire Exploration Limited £29,955 (2010: £9,602) and £323,173 (2010: £76,315) respectively by way of cost-recovery.
At 31 July 2011 £22,517 (2010: £352) was due from Dorset Exploration Limited and £17,508 (2010: £15,295) was due from
Yorkshire Exploration Limited. Also during the year to 31 July 2011 Yorkshire Exploration Limited invoiced Egdon Resources
U.K. Limited £88,998 (2010: £nil) relating to their proportion of gas sales from the Kirkleatham licence on which Egdon
Resources U.K. Limited is the operator. At 31 July 2011 £63,881 (2010: £nil) was due to Yorkshire Exploration Limited.
EnCore Oil plc is a shareholder in the Company and Alan Booth, the Chief Executive Officer of EnCore, is a Non-Executive
Director of Egdon Resources plc. EnCore provided a loan facility at the time of an asset purchase transaction in 2010, details
of which are provided in Note 25.
20870.04 14/11/11 CorrectedEgdon Resources plc Annual Report and Accounts 2011www.egdonresources.com
34. Related party transactions (continued)
Note 6 records the sale of a 5% interest in the Avington oil field to IS E&P Limited and a further 5% interest to IS NV
Limited. The IS companies are private companies involved in oil and gas exploration and production. InfraStrata plc is a
50% shareholder in both companies, although each company has an independent board. Ken Ratcliff and Walter Roberts
are directors of InfraStrata plc and Walter Roberts and John Rix have shareholdings in the IS companies. An independent
committee of Egdon directors comprising Philip Stephens, Alan Booth and Mark Abbott was established to consider the
offers for the Avington interests, and to negotiate and approve the transaction. Independent advice was sought.
During the year the Group provided services to companies with interests in jointly controlled operations as follows:
Time costs
Overhead recharged in accordance with Joint Operating Agreement
2011
£
118,698
177,725
296,423
2010
£
99,022
55,049
154,071
The balances due from companies with interests in jointly controlled operations in respect of these transactions as at
31 July 2011 and 31 July 2010 are set out below:
Due from companies with interests in jointly controlled operations
2011
£
2010
£
90,007
30,424
The Company has a related party relationship with its subsidiaries in the course of normal operations.
During the year the Company provided management services, and billed for time spent on subsidiary Company projects.
The total amounts invoiced were as follows:
Invoiced to subsidiary companies
The balances outstanding at 31 July 2011 and 31 July 2010 are set out in the following table.
As at 31 July 2011
Related party
The ultimate parent
Egdon Resources plc
Subsidiaries
Egdon (E&P) Limited
Egdon Resources Europe Limited
Egdon Resources U.K. Limited
Egdon Resources Avington Ltd
Egdon Resources France Limited
Aquitaine Exploration Limited
2011
£
2010
£
731,832
503,499
Amounts Amounts
owed to
related
parties
£
owed by
related
parties
£
4,741,566
—
12,076
—
—
2,242,711
— 2,422,860
22,304
—
30,083
—
11,532
—
53
i
w
e
v
e
R
s
s
e
n
i
s
u
B
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
a
i
c
n
a
n
F
i
n
o
i
t
a
m
r
o
f
n
I
M
G
A
20870.04 09/11/11 Proof 11Stock code: •••07Egdon Resources plc Annual Report and Accounts 2011Stock code: EDREgdon Resources plc Annual Report and Accounts 2011
54
Notes Forming Part of the Financial Statements
(continued)
34. Related party transactions (continued)
As at 31 July 2010
Related party
The ultimate parent
Egdon Resources plc
Subsidiaries
Egdon Resources (New Ventures) Limited
Egdon Resources Europe Limited
Egdon Resources U.K. Limited
Egdon Resources Avington Ltd
Egdon Resources France Limited
Aquitaine Exploration Limited
Amounts Amounts
owed to
related
parties
£
owed by
related
parties
£
6,191,278
—
—
—
—
—
—
—
7,820
2,276,266
3,888,692
5,000
7,778
5,722
35. Control of the Group
There is no ultimate controlling party of Egdon Resources plc.
36. Post balance sheet events
Transfer of operatorship of PEDL141 to Seven Star Natural Gas Limited
On 19 August 2011, Egdon transferred operatorship of licence PEDL141 (“Nooks Farm”) to Seven Star Natural Gas Limited.
Issue of shares under EMI scheme
On 14 September 2011, 100,000 ordinary shares of 10 pence were issued and allotted under the Company’s Enterprise
Management Incentive Scheme. Following this allotment, the total issued share capital of the Company increased to
130,969,094 ordinary shares.
Resumption of Ceres Production
Gas production resumed from the Ceres gas field on 17 September 2011, following prolonged maintenance shut-down of
the BP Cleeton Platform and associated infrastructure.
20870.04 14/11/11 CorrectedEgdon Resources plc Annual Report and Accounts 2011www.egdonresources.com
Letter from the Chairman with Notice of
Annual General Meeting
EGDON RESOURCES PLC
(THE “COMPANY”)
(Incorporated and registered in England and Wales with registered number 06409716)
Directors:
Philip Stephens (Non-executive Chairman)
Mark Abbott (Managing Director)
Alan Booth (Non-executive Director)
Kenneth Ratcliff (Non-executive Director)
John Rix (Non-executive Director)
Walter Roberts (Non-executive Director)
Dear Shareholder,
Registered Office:
The Wheat House
98 High Street
Odiham
Hampshire
RG29 1LP
4 November 2011
1. Introduction
Notice of the Company’s forthcoming annual general meeting to be held on Thursday 8 December 2011 (“AGM” or
“Annual General Meeting”) appears on the following pages.
As in previous years your Board is not recommending the payment of a dividend.
2. Resolutions to be proposed at the AGM
Ordinary Business
Annual report and accounts (Resolution 1)
A copy of the annual report and accounts (together with the Directors’ and Auditor’s reports on the annual report and
accounts) for the Company for the financial year ended 31 July 2011 (the “Accounts”) has been sent to you with this
document. Shareholders will be asked to receive the Accounts at the Annual General Meeting.
Re-appointment of auditor (Resolution 2)
The Company is required at each general meeting at which accounts are presented to appoint an auditor to hold office
until the next such meeting. Resolution 2 proposes the re-appointment of Nexia Smith & Williamson Audit Limited as
the auditor of the Company to hold office from the conclusion of the Annual General Meeting until the conclusion of the
next annual general meeting of the Company at which accounts are laid, and authorises the Directors to determine their
remuneration.
Retirement by Directors (Resolutions 3 & 4)
Walter Roberts and Philip Stephens are the Directors retiring by rotation this year and each offers himself for re-election.
All members of the Board are required to submit themselves for re-election at least once every three years. Brief
biographical details of each of the Directors appear on page 16 of the Accounts.
Special Business
Authority of Directors to allot shares (Resolution 5)
The authority given to the Directors to allot further shares in the capital of the Company requires the prior authorisation
of the shareholders in general meeting under section 551 Companies Act 2006. Upon the passing of Resolution 5,
pursuant to paragraph (A) of the Resolution, the Directors will have authority to allot shares up to a maximum of
£4,365,636 which is approximately one third of the current issued share capital as at 4 November 2011, being the latest
practicable date before the publication of this Letter. This authority will expire immediately following the annual general
meeting in 2012 or, if earlier, six months following the date to which the Company’s next annual report and accounts are
made up.
In addition, in accordance with the guidance from the Association of British Insurers (“ABI”) on the expectations of
institutional investors in relation to the authority of directors to allot shares, upon the passing of Resolution 5, the
Directors will have authority (pursuant to paragraph (B) of the Resolution) to allot an additional number of ordinary
shares up to a maximum of £4,365,636 which is approximately a further third of the current issued ordinary share capital
as at 4 November 2011, being the latest practical date before the publication of this Letter. However, the Directors will
only be able to allot those shares for the purposes of a rights issue in which the new shares are offered to existing
shareholders in proportion to their existing shareholdings. This authority will also expire immediately following the
next annual general meeting or, if earlier, six months following the date to which the Company’s next annual report and
accounts are made up to.
55
i
w
e
v
e
R
s
s
e
n
i
s
u
B
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
a
i
c
n
a
n
F
i
n
o
i
t
a
m
r
o
f
n
I
M
G
A
20870.04 09/11/11 Proof 11Stock code: •••07Egdon Resources plc Annual Report and Accounts 2011Stock code: EDREgdon Resources plc Annual Report and Accounts 2011
56
Letter from the Chairman with Notice of
Annual General Meeting (continued)
As a result, if Resolution 5 is passed, the Directors could allot shares representing up to two-thirds of the current issued
share capital pursuant to a rights issue.
Disapplication of pre-emption rights (Resolution 6)
If the Directors wish to exercise the authority under Resolution 5 and offer unissued shares (or sell any shares which the
Company may purchase and elect to hold as treasury shares) for cash, the Companies Act 2006 requires that unless
shareholders have given specific authority for the waiver of the statutory pre-emption rights, the new shares be offered
first to existing shareholders in proportion to their existing shareholdings. In certain circumstances, it may be in the
best interests of the Company to allot new shares (or to grant rights over shares) for cash without first offering them to
existing shareholders in proportions to their holdings.
Resolution 6 would authorise the Directors to do this by allowing the Directors to allot shares for cash (i) by way of a
rights issue (subject to certain exclusions), (ii) by way of an open offer or other offer of securities (not being a rights
issue) in favour of existing shareholders in proportions to their shareholdings (subject to certain exclusions) and (iii) to
persons other than existing shareholders up to an aggregate nominal value of £3,929,072 which is equivalent to 30% of
the issued share capital of the Company on 4 November 2011, being the latest practicable date prior to the publication of
this Letter. If given, the authority will expire on the conclusion of the annual general meeting in 2012 or, if earlier,
31 January 2013.
For this purpose the ABI recommendation for companies on the LSE main list is 5%, although it is generally recognised
that for smaller companies and those on AIM this may be too restrictive. Consequently I would ask that you approve a
30% disapplication of pre-emption rights to provide your Board with the flexibility to pursue investment opportunities
without incurring the costs of a rights issue or the need to market part of the investment opportunity to third parties.
3. Recommendation
Your Directors consider the resolutions to be proposed at the AGM to be in the best interests of the Company and its
shareholders as a whole. Consequently, the Directors recommend shareholders to vote in favour of the resolutions as
they intend to do in respect of their own beneficial holdings totalling 9,977,347 ordinary shares (representing 7.62% of
the Company’s issued share capital as at the date of this Letter).
A form of proxy is included for use at the AGM. Forms of proxy should be completed, signed and returned as soon as
possible and in any event so as to be received by Capita Registrars at The Registry, 34 Beckenham Road, Beckenham,
Kent BR3 4TU not less than 48 hours prior to the time appointed for the holding of the AGM on 8 December 2011.
Completion of a proxy form will not prevent you from attending the AGM in person if you so wish.
Yours sincerely,
Philip Stephens
Non-Executive Chairman
20870.04 14/11/11 CorrectedEgdon Resources plc Annual Report and Accounts 2011www.egdonresources.com Notice of Annual General Meeting
EGDON RESOURCES PLC
(Incorporated and registered in England and Wales with registered number 06409716)
Notice is hereby given that the Annual General Meeting of Egdon Resources plc (the “Company”) will be held at the
offices of Buchanan Communications Limited, 107 Cheapside, London, EC2V 6DN, United Kingdom on Thursday
8 December 2011 at 11.30 a.m. for the purpose of passing the following resolutions, of which Resolutions 1 to 5 will be
proposed as Ordinary Resolutions and Resolution 6 will be proposed as a Special Resolution:
ORDINARY RESOLUTIONS:
1 To receive the report of the Directors and the audited accounts of the Company for the year ended 31 July 2011,
together with the report of the Auditor on those audited accounts.
2 That Nexia Smith & Williamson Audit Limited be and are hereby re-appointed as auditor of the Company to hold
office from the conclusion of this meeting until the conclusion of the next meeting at which accounts are laid before
the meeting, at a remuneration to be determined by the Directors.
3 To re-elect Walter Roberts as Director who retires pursuant to article 92 of the Company’s articles of association and
who, being eligible, offers himself for re-election.
4 To re-elect Philip Stephens as Director who retires pursuant to article 92 of the Company’s articles of association and
who, being eligible, offers himself for re-election.
5 To consider and, if thought fit, to pass the following resolution as an ordinary resolution:
THAT the Directors be and they are hereby generally and unconditionally authorised in accordance with section 551
Companies Act 2006 (CA 2006) to exercise all the powers of the Company to allot shares in the Company and to
grant rights to subscribe for, or to convert any security into, shares in the Company:
(A) up to an aggregate nominal amount of £4,365,636; and
(B) comprising equity securities (within the meaning of section 560 CA 2006) up to a further aggregate nominal
amount of £4,365,636 in connection with an offer by way of a rights issue:
(i) to ordinary shareholders in proportion (as nearly as may be practicable) to their existing holdings; and
(ii) to holders of other equity securities as required by the rights of those securities or as the Directors otherwise
consider necessary,
and so that that Directors may impose any limits or restrictions and make any arrangements which they consider
necessary or appropriate to deal with treasury shares, fractional entitlements, record dates, legal, regulatory or
practical problems in, or under the laws of, any territory or the requirements of any regulatory body or stock
exchange or any other matter (including any such problems arising by virtue of equity securities being represented
by depositary receipts).
The authorities conferred on the Directors under paragraphs (A) and (B) above shall expire at the conclusion of the
next annual general meeting of the Company after the passing of this Resolution or 31 January 2013, whichever is
the earlier save that the Company may before such expiry make an offer or agreement which would or might require
shares to be allotted or rights to subscribe for, or to convert any security into, shares to be granted after such expiry
and the Directors may allot shares or grant rights to subscribe for, or to convert any security into, shares (as the case
may be) in pursuance of such an offer or agreement as if the authority conferred hereby had not expired.
57
i
w
e
v
e
R
s
s
e
n
i
s
u
B
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
a
i
c
n
a
n
F
i
n
o
i
t
a
m
r
o
f
n
I
M
G
A
20870.04 09/11/11 Proof 11Stock code: •••07Egdon Resources plc Annual Report and Accounts 2011Stock code: EDREgdon Resources plc Annual Report and Accounts 2011
58
Notice of Annual General Meeting
(continued)
SPECIAL RESOLUTION:
6 To consider and, if thought fit, to pass the following resolution as a special resolution:
THAT, subject to the passing of Resolution 5 above the Directors be and they are hereby empowered pursuant to
section 570 CA 2006 to allot equity securities (within the meaning of section 560 CA 2006) for cash pursuant to the
authority conferred by Resolution 5, as if section 561 CA 2006 did not apply to any such allotment, provided that this
power shall be limited:
(A) to the allotment of equity securities in connection with an offer of equity securities (but in the case of the
authority granted under paragraph (B) of Resolution 5, by way of a right issue only):
(i) to ordinary shareholders in proportion (as nearly as may be practicable) to their existing holdings; and
(ii) to holders of other equity securities as required by the rights of those securities or as the Directors otherwise
consider necessary,
and so that the Directors may impose any limits or restrictions and make any arrangements which they consider
necessary or appropriate to deal with any treasury shares, fractional entitlements, record dates, legal, regulatory
or practical problems in, or under the laws of, any territory or the requirements of any regulatory body or stock
exchange or any other matter (including any such problems arising by virtue of equity securities being represented
by depositary receipts); and
(B) to the allotment (otherwise than under paragraph (A) of this Resolution 6) of equity securities up to an aggregate
nominal amount of £3,929,072.
and shall expire at the conclusion of the next annual general meeting of the Company after the passing of this
Resolution or 31 January 2013, whichever is the earlier, except that the Company may before such expiry make an
offer or agreement which would or might require equity securities to be allotted after such expiry and the Directors
may allot equity securities in pursuance of such offer or agreement as if the power conferred hereby had not expired.
Dated 4 November 2011
By Order of the Board
Walter Roberts
Secretary
Registered Office:
The Wheat House
98 High Street
Odiham
Hampshire
RG29 1LP
Notes:
1 A member is entitled to appoint one or more proxies to exercise all or any of the member’s rights to attend, speak and vote on his/
her behalf at the meeting. A proxy need not be a member of the Company. If a member appoints more than one proxy to attend the
meeting, each proxy must be appointed to exercise the rights attached to a different share or shares held by the member. If a member
wishes to appoint more than one proxy and so requires additional proxy forms, the member should contact Capital Registrars on +44
(0)871 664 0300 (calls cost 10p per minute plus network extras). A form of proxy for use by members at the Annual General Meeting
accompanies this notice.
2 To be effective, the form of proxy and the power of attorney or other authority (if any) under which it is signed, or a notarially certified
copy of such authority, must be received by post or (during normal business hours only) by hand at the office of the Company’s
Registrars, being Capita Registrars at The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, not less than 48 hours before the
time of the holding of the meeting or any adjournment thereof.
3 Completion and return of the proxy form does not preclude a member from attending and voting at the meeting in person.
4
In the case of joint shareholders, where more than one of the joint holders purports to appoint a proxy, only the appointment
submitted by the most senior holder will be accepted. Seniority is determined by the order in which the names of the joint
shareholders appear in the Company’s register of members in respect of the joint holding (the first-named being the most senior).
5 To change your proxy instructions simply submit a new proxy appointment using the methods set out above. Note that the cut-off
time for receipt of proxy appointments (see above) also apply in relation to amended instructions; any amended proxy appointment
received after the relevant cut-off time will be disregarded. If you submit more than one valid proxy appointment, the appointment
received last before the latest time for the receipt of proxies will take precedence.
20870.04 14/11/11 CorrectedEgdon Resources plc Annual Report and Accounts 2011www.egdonresources.com
6
7
8
9
In order to revoke a proxy instruction you will need to inform the Company by sending notice in writing clearly stating your intention
to revoke your proxy appointment to Company’s Registrars, being Capita Registrars at The Registry, 34 Beckenham Road, Beckenham,
Kent BR3 4TU. In the case of a member which is a company, the revocation notice must be executed under its common seal or signed
on its behalf by an officer of the company or an attorney for the company. Any power of attorney or any other authority under which
the revocation notice is signed (or a duly certified copy of such power or authority) must be included with the revocation notice.
The revocation notice must be received by the Company no later than 48 hours before the time of the holding of the meeting or any
adjournment thereof. If you attempt to revoke your proxy appointment but the revocation is received after the time specified then
your proxy appointment will remain valid. If you have appointed a proxy and attend the meeting in person, your proxy appointment
will automatically be terminated.
In accordance with the permission in Regulation 41(1) of The Uncertificated Securities Regulations 2001 (SI 2001 No. 3755), only those
holders of ordinary shares who are registered on the Company’s share register at 1800 hours on 6 December 2011 shall be entitled to
attend the above Annual General Meeting (or, in the case of an adjourned meeting, 1800 hours on the day which is two days before
the adjourned meeting) and to vote in respect of the number of shares registered in their names at that time. Changes to entries on
the share register after 1800 hours on 6 December 2011 shall be disregarded in determining the rights of any person to attend and/or
vote at the Annual General Meeting.
In order to facilitate voting by corporate representatives at the meeting, arrangements will be put in place at the meeting so that
(i) if a corporate shareholder has appointed the Chairman of the meeting as its corporate representative with instructions to vote
on a poll in accordance with the directions of all of the other corporate representatives for that shareholder at the meeting, then on
a poll those corporate representatives will give voting directions to the Chairman and the Chairman will vote (or withhold a vote)
as corporate representative in accordance with those directions; and (ii) if more than one corporate representative for the same
corporate shareholder attends the meeting but the corporate shareholder has not appointed the Chairman of the meeting as its
corporate representative, a designated corporate representative will be nominated, from those corporate representatives who attend,
who will vote on a poll and the other corporate representatives will give voting directions to that designated corporate representative.
Corporate shareholders are referred to the guidance issued by the Institute of Chartered Secretaries and Administrators on proxies
and corporate representatives (www.icsa.org.uk) for further details of this procedure. The guidance includes a sample form of
representation letter if the Chairman is being appointed as described in (i) above.
If the Chairman, as a result of any proxy appointments, is given discretion as to how the votes the subject of those proxies are cast
and the voting rights in respect of those discretionary proxies, when added to the interests in the Company’s securities already held
by the Chairman, result in the Chairman holding such number of voting rights that he has a notifiable obligation under the Disclosure
and Transparency Rules, the Chairman will make the necessary notifications to the Company and the Financial Services Authority. As a
result, any member holding 3% or more of the voting rights in the Company who grants the Chairman a discretionary proxy in respect
of some or all of those voting rights and so would otherwise have a notification obligation under the Disclosure and Transparency
Rules, need not make a separate notification to the Company and the Financial Services Authority.
10 Copies of the service agreements and letters of appointment between the Company and its Directors will be available for inspection
at the registered office of the Company during usual business hours on any weekday (Saturdays, Sundays and Bank Holidays
excluded) until the date of the meeting and also on the date and at the place of the meeting from half an hour before the meeting
until the conclusion of the meeting.
59
i
w
e
v
e
R
s
s
e
n
i
s
u
B
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
a
i
c
n
a
n
F
i
n
o
i
t
a
m
r
o
f
n
I
M
G
A
20870.04 09/11/11 Proof 11Stock code: •••07Egdon Resources plc Annual Report and Accounts 2011Stock code: EDREgdon Resources plc Annual Report and Accounts 2011
stock code: EdR
Egdon Resources plc Annual Report and Accounts 2011
Licence Holdings
As at 31 July 2011
Licences
operator
Egdon Interest
Area km2
uK
PL090
PEdL005
(Remainder)
PEdL 068
PEdL070
PEdL118
PEdL125
PEdL126
PEdL130
PEdL139
1
2
3
4
5
6
7
8
9
Egdon Resources u.K. Limited
Egdon Resources u.K. Limited
Egdon Resources u.K. Limited
Star Energy Group Limited
Egdon Resources u.K. Limited
northern Petroleum Plc
northern Petroleum Plc
Egdon Resources u.K. Limited
Greenpark Energy Limited
10
PEdL140
Greenpark Energy Limited
11
12
13
14
15
16
17
18
19
PEdL141
PEdL143
PEdL155
PEdL180
PEdL181
PEdL182
PEdL201
PEdL203
PEdL206
20 PEdL237
21
PEdL240
22 PEdL241
23 PEdL253
24 PEdL256
Seven Star natural Gas Ltd.
Europa Oil and Gas plc
northern Petroleum Plc
Egdon Resources u.K. Limited
Europa Oil and Gas Limited
Egdon Resources u.K. Limited
Egdon Resources u.K. Limited
Egdon Resources u.K. Limited
Egdon Resources u.K. Limited
Egdon Resources plc
northern Petroleum Plc
Egdon Resources u.K. Limited
Egdon Resources u.K. Limited
northern Petroleum Plc
25 P.1241 block 47/9c
centrica Energy
FRAncE
26 St Laurent
Egdon Resources France Limited†
27 Pontenx
Egdon Resources France Limited†
28 nimes
29 Mairy
Egdon Resources (E&P) Limited
Toreador Energy France
Awaiting Award
45.000%
75.000%
40.000%
26.670%
65.000%
10.000%
10.000%
100.000%
13.500%*
13.500%*
46.000%
38.400%
10.000%
33.330%
25.000%
33.330%
50.000%
65.000%
75.000%
45.000%
7.500%
50.000%
60.000%
7.500%
10.000%
33.423%
40.000%
100.000%
50.000%
202.00
23.57
78.30
36.00
10.40
197.10
256.20
94.60
100.00
130.00
100.00
80.00
52.80
100.00
540.00
40.00
100.00
10.54
100.00
108.53
7.20
110.00
189.30
52.80
85.50
615.00
313.00
507.00
444.00
donzacq‡
Egdon Resources France Limited
33.423%
218.00
Back-in option Licences
Back-in interest
Gex
navacelles
Gex Sud‡
ecORP France Limited
ecORP France Limited
ecORP France Limited
6.000
9.000
6.000
932.00
216.00
1991.00
* Egdon holds a 10% interest on the coal bed methane potential of these licences
† Awaiting completion of licence transfer
‡ Awaiting award
20870.04 09/11/11 Proof 11
Egdon Resources plc
The Wheat House
98 High Street
Odiham
Hampshire
RG29 1LP
England
Tel +44 (0)1256 702292
Fax +44 (0)1256 702293
www.egdon-resources.com
E
g
d
o
n
R
e
s
o
u
r
c
e
s
p
l
c
A
n
n
u
a
l
R
e
p
o
r
t
a
n
d
A
c
c
o
u
n
t
s
2
0
1
1
20870.04 09/11/11 Proof 11