Egdon Resources — Focus on UK shale – a low-cost option

Egdon Resources (AIM: EDR)

Last close As at 27/03/2024

GBP0.04

0.00 (0.00%)

Market capitalisation

25m

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Research: Energy & Resources

Egdon Resources — Focus on UK shale – a low-cost option

The equity market is implying very little value for Egdon’s UK shale positions, which span the Gainsborough Trough, Widmerpool and Humber Basins. We see near-term catalysts that could reduce risks and uncertainty relating to the valuation of UK shale assets with initial flow tests from Cuadrilla-operated Preston New Road expected in Q418. Our probabilistic valuation of UK shale assets describes uncertainty in relation to UK shale. We conclude a potential 67% chance of commercial success and net risked P50 valuation of $2,142/acre (we do not include political risk in this metric). Based on our analysis we believe Egdon’s current EV of $22m offers investors a low cost option on over 205,000 acres of UK shale if proven commercial. Our conventional valuation stands at 12.8p/share including risked exploration. The valuation of shale resource remains uncertain but in our view has the potential to be worth in excess of risked 100p/share based on current expectations of well cost, type curves, and forward gas prices.

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Written by

Energy & Resources

Egdon Resources

Focus on UK shale - a low-cost option

Shale outlook

Oil & gas

30 April 2018

Price

7.70p

Market cap

£20m

$/£1.4

Net cash (£m) 31 January 2018

4.1

Shares in issue

260.0m

Free float

51%

Code

EDR

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

32.8

10.8

(17.9)

Rel (local)

24.5

13.1

(20.8)

52-week high/low

9.8p

5.7p

Business description

Egdon Resources is an AIM-listed onshore oil and gas exploration company. The group has conventional and unconventional assets in the UK and access to over 205,000 net shale acres.

Next events

Preston New Road initial results

Q418

Biscathorpe drilling

H218

Springs Road 1 drilling

H218

Analyst

Sanjeev Bahl

+44 (0)20 3077 5742

Egdon Resources is a research client of Edison Investment Research Limited

The equity market is implying very little value for Egdon’s UK shale positions, which span the Gainsborough Trough, Widmerpool and Humber Basins. We see near-term catalysts that could reduce risks and uncertainty relating to the valuation of UK shale assets with initial flow tests from Cuadrilla-operated Preston New Road expected in Q418. Our probabilistic valuation of UK shale assets describes uncertainty in relation to UK shale. We conclude a potential 67% chance of commercial success and net risked P50 valuation of $2,142/acre (we do not include political risk in this metric). Based on our analysis we believe Egdon’s current EV of $22m offers investors a low cost option on over 205,000 acres of UK shale if proven commercial. Our conventional valuation stands at 12.8p/share including risked exploration. The valuation of shale resource remains uncertain but in our view has the potential to be worth in excess of risked 100p/share based on current expectations of well cost, type curves, and forward gas prices.

Year end

Revenue
(£m)

PBT*
(£m)

Net cash/
(debt) (£m)

EBITDA
(£m)

Capex
(£m)

07/16

1.6

(2.7)

2.7

(0.7)

(2.4)

07/17

1.0

(1.7)

6.1

(1.2)

(1.1)

07/18e

1.1

(2.0)

2.2

(1.1)

(2.2)

07/19e

2.1

(1.3)

(0.6)

(1.1)

(2.8)

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Market implying minimal value for shale acreage

We believe the market is implying minimal value for Egdon’s UK shale position, despite potential near-term catalysts that could significantly de-risk and provide greater certainty on UK shale economics. For more detail, please refer to our AJ Lucas initiation note published on 9 April 2018.

Conventional value affected by delays

In this note we revisit the valuation of Egdon’s conventional oil and gas business, removing assets such as Waddock Cross, Avington, Kirklington and Kirkleatham, which have been shut-in, but including higher production expectations for Ceres and Fiskerton. Delays also negatively affect our conventional valuation after Wressle planning appeals were dismissed in January 2018. We also incorporate a higher discount rate of 12.5% (from 10%) to remain consistent with our small-cap E&P coverage. This reduces our conventional valuation from 21.5p/share to 12.8p/share, the bulk of which remains in risked contingent/prospective resource.

Valuation: Shale dominates valuation

Our asset valuation is dominated by Egdon’s shale acreage position, followed by the appraisal of the BP Biscathorpe discovery and Total’s Resolution gas discovery. There is risk and uncertainty in the valuation of contingent or prospective resources; however, Egdon’s shares offer a low-cost option on what we estimate at over 100p/share of risked value.

Investment summary

Company description: Debt free, sizeable shale exposure

Egdon Resources is an independent E&P focused on oil and gas exploration and exploitation across proven basins in the UK, targeting a mix of conventional and unconventional resource. The company is debt free and benefits from carried interests across a number of its licence blocks. Egdon is looking to grow its unconventional resource exposure in Northern England, add reserves and resources through active drilling and maximise returns from its existing production portfolio through selective investment.

Valuation: Market implying minimal value for shale

Our Egdon valuation is constructed of a risked net asset value for the company’s conventional asset portfolio and an indicative valuation for the company’s unconventional acreage based on a dollar per acre multiple derived from our probabilistic UK shale valuation model. Our conventional asset core value stands at 2.3p/share (including cash and net of G&A) and we include 10.5p/share for risked exploration and appraisal. Our indicative shale valuation stands at 105p/share based on a P50 risked $2,142/acre (see Exhibit 1).

Financials: Debt free, limiting risk exposure through farm out

Egdon had £4.1m of cash and no debt as of 31 January 2018. Management continues to invest in the company’s unconventional asset base while keeping risk capital to a minimum through existing cost-carry arrangements and farm-outs. The company’s 14.5% interest in Springs Road-1 is cost-carried by INEOS and Egdon is looking to farm-down equity to part fund exploration at North Kelsey and appraisal of the Endeavour/Resolution gas discovery.

Sensitivities: Shale activity to provide greater valuation certainty

Numerous studies have been conducted to quantify UK shale gas resources; these form the basis of our probabilistic UK shale valuation. Historic core wells and a vertical exploratory well at Preese Hall provide supportive data to suggest potential for commercial well pad economics. The Bowland shale is thermally mature for gas and benefits from very thick shale sections. Total organic content ranges from 1-7% in cored intervals, and Cuadrilla has demonstrated gas flow to surface at Preese Hall. Significant uncertainty remains over the level of overpressure, the impact of structural complexity on gas recovery and well type curves. Upcoming activity is aimed at reducing this uncertainty through further exploration and appraisal. Cuadrilla is drilling an exploratory well at Preston New Road and initial results from a 90-day flow test are expected in Q418. This will be followed by an extended well test, which should provide valuable data on the type curve for a fracture-stimulated horizontal well – a key determinant of well economics and valuation. Assuming strong gas flows, Cuadrilla may decide to connect the wells and sell gas to the local grid. A key input to our valuation is the 2.5km horizontal well probabilistic-type curve produced by consultancy Anderson Thompson – if actual type curves vary significantly from those predicted, this would have a material impact on valuation. We expect greater valuation certainty after the flow test results from Preston New Road.


Company description

Egdon Resources is an AIM-listed independent E&P focused on conventional and unconventional oil and gas exploration, development and production in the UK. Egdon produces c 100bbld in the UK, with a focus on appraisal of existing discoveries and low-risk conventional exploration. Unconventional exposure is through over 205,000 net acres of prospective shale acreage in the East Midlands, Bowland Basin and Cleveland Basin. In this note we focus primarily on the potential value driver presented by Egdon’s shale assets. An overview of the UK shale industry is shown in Appendix 1 on page 10.

Group strategy

Egdon has three stated strategic objectives:

Grow the company’s exposure to unconventional resource and exploration opportunities in Northern England.

Add reserves/revenues through active drilling while managing the company’s financial exposure.

Continued focus on maximising profitable production through targeted investment.

UK shale dominates valuation

Our valuation is split between producing assets (including cash and net of G&A) at 2.3p/share and 10.5p/share for risked exploration and appraisal, which makes up our conventional RENAV of 12.8p/share. Below we show the valuation that would be ascribed to Egdon’s 205,000 net UK shale acres at multiples ranging from $500/acre (historic farm-outs including those of INEOS/Total in the Gainsborough Trough range from $614/acre to $2,200/acre). Our P50 probabilistic valuation stands at $2,142/acre.

Exhibit 1: Group valuation waterfall including indicated shale valuation (p/share)

Source: Edison Investment Research

Potential catalysts – upcoming UK shale newsflow

Key activity that could drive the market to re-evaluate Egdon’s UK shale assets includes Cuadrilla’s initial flow test at Preston New Road (Bowland Basin) in Q418, and drilling of the IGas-operated Springs Road-1 (Gainsborough Trough) vertical well in H218. Conventional activity relevant to Egdon includes drilling at Biscathrope (5mmbo net), Holmwood (1.1mmbo net) and North Kelsey (5.2mmbo net) (subject to further farm out). Farm out of the Resolution/Endeavour gas discoveries could also provide greater certainty of appraisal timing.

Shale valuation and sensitivities

We see Egdon’s most valuable asset as its exposure to the UK shale sector, despite current uncertainty around commerciality. Egdon’s shale position comprises of over 205,000 net acres across the East Midlands (including Gainsborough Trough), the Bowland Basin and Cleveland Basin. With an enterprise value of $15m, the market is clearly implying very little in terms of option value for Egdon’s shale acreage should shale be proven commercial in the UK. This is despite historical UK onshore transaction values ranging from $300-$3,000/acre and Edison’s P50 probabilistic shale valuation of $2,142/acre as extracted from our recent report on AJ Lucas and shown below.

Exhibit 2: UK shale implied $/acre values (commercial success case)

The mean implied unrisked US$/acre value from our analysis is US$7,675/acre with P50 of US$6,418/acre.

This only assumes positive values for $/acre, ie a commercial success case.

Including a commercial success risking of 67%, this drops to P50 US$4,284/acre. Reducing again by 50% to reflect potential farm-out dilution, this falls to US$2,142/acre.

Edison’s calculated unit value range and P50 value is comparable to historical UK shale transaction values.

Source: Edison Investment Research

Why does the market choose not to value Egdon’s shale exposure?

One can attempt to rationalise why the market does not ascribe value to the company’s net shale position. However, it is also possible to see how this view could change dramatically and relatively quickly.

Common reasons or sensitivities cited for not ascribing value for shale include:

Political risks

Planning uncertainty

Timing uncertainty

Surface access restrictions and population density

Uncertainty with regard to key economic inputs including type curve, the euro and well costs.

Significant capital requirements to scale up UK shale operations.

What might change this view and drive a re-rating?

We believe the market is overestimating risk and should be ascribing some form of risked value to UK shale assets for the following reasons.

Political risks

We flag that our shale valuation at $2,142/acre does not take into consideration the political risks. Leading political parties maintain opposing views on the net benefits of UK shale extraction. The current incumbent believes shale will provide a significant benefit in terms of employment, security of energy supply and will support a renewable energy transition. However, the current leader of the Labour party has been vocal about banning the practice of fracking. Investors need to be aware of political risks and the importance of central government in the role of supporting the UK shale sector.

Planning uncertainty

We assume a two-year planning cycle for well pads, but we do not see extended planning processes as a major influence on value. We assume that companies have visibility on the duration of planning processes and submit applications according to this expected timeline. A more cohesive planning process is likely to be required to ensure timetables and processes are consistent across UK local councils and planning authorities.

Timing of cash flows

Timing is a key determinant of cash flow, especially when we discount shale gas assets using a relatively punitive 15% cost of capital. If we were to discount our $2,142/acre unit valuation by a further two years to reflect the fact that the company is only at an advanced stage of planning application and appraisal at IGas-operated Springs Road and Tinker Lane, we would arrive at a net valuation at c $1,500/acre, which would be significantly above that implied by the current share price (implied value is zero assuming Egdon conventional value is in line with Edison estimates).

Surface access limitations

Surface access will limit resource recovery; however, technological advances have enabled companies to maximise recovery from a relatively small surface footprint. It is widely expected that a well pad (around the size of two football pitches) will be sufficient for the drilling of 30 to 40 long lateral wells into different stratigraphic intervals (up to 2.5km with 100 frack stages) depending on localised shale thickness. We do not assume resource limitations due to land access restrictions in our analysis over and above those applied by British Geological Society (BGS) in the society’s calculation of gas initially in place (GIIP) in our shale gas valuation. More complex analysis would involve looking at licence-specific surface access limitations, planning complexities and shale thickness to take a view on accessible GIIP.

Whilst we assume shales and acreage valuations are consistent across the BGS study are, it is possible that differences in net shale thickness, surface access and structural complexity will lead to ‘sweet-spots’ that offer better returns than more peripheral acreage. The Gainsborough Trough, Egdon’s core area, located to the east of the Pennines, benefits from less structural complexity than the Bowland Basin to the west (albeit thinner shale sections).

Exhibit 3: Springs road-1 cross-section

Source: Egdon

Commerciality risks and uncertainty

We estimate a 67.2% chance of commercial success based on the modelled inputs in our shale model. A key determinant of value is our probabilistic type curve, which is based on comprehensive analysis carried out by the consultancy Anderson Thompson. Flow tests from Preston New Road in late 2018 will provide further certainty on achievable type curves and per-well economics.

Capital constraints

Egdon is fully carried for the appraisal phase of its share of operations at Springs Road by INEOS. Large-scale development of UK shale assets will require a material capital influx, we would expect a company the size of Egdon to either sell its acreage position to a larger, better capitalised entity or farm-down – we assume 50% value dilution in our base case to reflect a potential farm-down. However, we recognise that dilution will largely be driven by the success or otherwise of the current UK shale appraisal activity. We note that historic farm outs including INEOS/Total in the Gainsborough Trough range from $614/acre to $2,200/acre.

Group valuation

We include Egdon’s conventional asset base in our valuation but note that producing assets remain a relatively small part at 2.3p/share (including cash and net of G&A). This includes the Wressle development, which has incurred numerous delays due to rejected planning applications.

We see greater conventional value in the company’s exploration and appraisal portfolio, in particular its interest in the appraisal of the Endeavour/Resolution gas discovery and appraisal of the BP Biscathorpe oil discovery which make up the bulk of our RENAV. The focus of this note is on Egdon’s shale gas assets. However a full valuation breakdown is provided below including producing assets and risked E&A.

Exhibit 4: Egdon valuation summary

Assets

Country/

WI

CCoS

Net

NPV/boe

NPV12.5

Risked

$1.4/£, shares 259m

licence

%

%

mboe

$/boe

$m

/share (p)

Net (debt) cash Jan 18

5.7

1.58

G&A (3yrs)

(4.1)

(1.12)

Production

Keddington

UK

45%

100%

0.09

2.6

0.2

0.1

Ceres

UK

10%

100%

0.38

7.5

2.8

0.8

Fiskerton

UK

80%

100%

0.10

9.3

0.9

0.3

Wressle (Ashover Grit)

UK

25%

90%

0.15

21.1

2.8

0.8

Core NAV

8.4

2.3

Exploration/appraisal

North Kelsey

UK

80%

12%

5.17

11.8

7.3

2.0

Louth

UK

65%

20%

0.85

9.3

1.6

0.4

Wressle (upside)

UK

25%

25%

0.38

17.2

1.6

0.5

Broughton

UK

25%

23%

0.11

17.2

0.4

0.1

Biscathorpe

UK

40.8%

20%

5.60

11.9

13.3

3.7

Holmwood

UK

18%

17%

1.03

7.4

1.3

0.3

Resolution

UK

50%*

18%

12.65

5.3

12.7

3.5

Appraisal & Exploration NAV

 

 

 

 

 

38.0

10.5

RENAV

 

 

 

 

 

46.4

12.8

Indicative shale valuation P50

UK

50%

67%

381.3

105.2

Source: Edison Investment Research. Note: *Assumed 50% post farm-down (Egdon holds 100% equity).

Key sensitivities for Egdon’s conventional asset portfolio include underlying commodity price, the timing of Wressle development, and E&A activity at Biscathrope and Resolution/Endeavour. Our unconventional valuation is driven by a probablistic model where key drivers include type curve (IP rate and EUR), well costs and underlying gas prices.

Exhibit 5: Egdon net acreage

Source

Licence

Location

Region

Gross licence area

Interest

Gross
acreage

Net
acreage

$/acre

Value ($m)

Value (p/share)

Alkane

PL161-2

Gainsborough Trough

East Midlands

18.0

100%

4,448

4,448

2142

9.5

2.63

Alkane

PEDL043

Gainsborough Trough

East Midlands

57.0

100%

14,085

14,085

2142

30.2

8.33

Alkane

PEDL169

Gainsborough Trough

East Midlands

62.0

20%

15,321

3,064

2142

6.6

1.81

Alkane

PEDL037

Gainsborough Trough

East Midlands

10.0

100%

2,471

2,471

2142

5.3

1.46

Alkane

PEDL011

Gainsborough Trough

East Midlands

6.0

100%

1,483

1,483

2142

3.2

0.88

Alkane

PEDL202

Edale Shelf

East Midlands

84.2

100%

20,806

20,806

2142

44.6

12.30

Alkane

PEDL001

Edale Shelf

East Midlands

11.0

100%

2,718

2,718

2142

5.8

1.61

Alkane

PEDL191

Croxteth

Bowland Basin

66.0

100%

16,309

16,309

2142

34.9

9.64

Alkane

PEDL039

Manchester

Bowland Basin

3.0

100%

741

741

2142

1.6

0.44

Alkane

EXL253

Manchester

Bowland Basin

3.0

100%

741

741

2142

1.6

0.44

Legacy

PEDL139/PEDL140

Gainsborough Trough

East Midlands

240.6

14.5%

59,453

8,621

2142

18.5

5.10

Legacy

PEDL209

Gainsborough Trough

East Midlands

64.0

36%

15,815

5,693

2142

12.2

3.37

Legacy

PEDL201

Widmerpool Gulf

East Midlands

80.0

32.5%

19,768

6,425

2142

13.8

3.80

Legacy

PEDL068

Cleveland Basin

Cleveland Basin

35.8

68%

8,846

6,016

2142

12.9

3.56

Legacy

PL161/162 Option

Gainsborough Trough

East Midlands

122.3

50%

30,221

15,110

2142

32.4

8.93

Legacy

PEDL130

Edale Shelf

East Midlands

22.0

100%

5,436

5,436

2142

11.6

3.21

Legacy

PEDL181

Humber

East Midlands

160.0

25%

39,537

9,884

400

4.0

1.09

R14

PEDL273

Gainsborough North West JV

East Midlands

196.0

15%

48,433

7,265

2142

15.6

4.29

R14

PEDL305

Gainsborough South JV

East Midlands

143.0

15%

35,336

5,300

2142

11.4

3.13

R14

PEDL316

Gainsborough East JV 1

East Midlands

111.0

15%

27,429

4,114

2142

8.8

2.43

R14

PEDL339

Widmerpool 1

East Midlands

191.0

30%

47,197

14,159

2142

30.3

8.37

R14

PEDL343

Cloughton Area

Cleveland Basin

110.0

17.5%

27,182

4,757

2142

10.2

2.81

R14

PEDL259

Stainmore Trough

Cleveland Basin

139.0

49.99%

34,348

17,170

2142

36.8

10.15

R14

PEDL334

Humber Basin 1

East Midlands

164.0

60.00%

40,525

24,315

400

9.7

2.68

R14

PEDl278

Kirk Smeaton

East Midlands

38.0

50.00%

9,390

4,695

2142

10.1

2.78

Total

2,098.9

 

528,039

205,828

381.3

105.2

Source: Egdon, Edison Investment Research

Management

Mark Abbott – managing director: Mark is an experienced geophysicist and founding director of Egdon Resources. He graduated Nottingham 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 and was employed by Anadarko Algeria Corporation from 1996 to 1997. He is a council member of UKOOG and a trustee of the UK Onshore Geophysical Library. He is also a director of MA Exploration Services and Bishopswood Pavilion.

Jerry Field – technical director: Jerry has over 30 years’ oil industry experience in small-to-medium sized E&P companies (including Weeks Petroleum, Triton, Ranger, Canadian Natural Resources, Toreador and Northern Petroleum). Jerry has a breadth of experience of exploration in Europe, Africa, the Middle East and the Indian subcontinent and has spent a much of his career working in Egdon’s core areas of the UK onshore and France.

James Elston – commercial and business development director: James has 25 years’ experience in industry, banking and consulting. As CEO of TSX-V listed Realm Energy International in 2009/10, he drove the company’s acquisition of a significant acreage position for shale gas and tight oil in Europe following in-depth basin-by-basin technical review and ranking. He spent an initial five years working onshore E&P as an engineer at NAM in the Netherlands.

Martin Durham – exploration director: Martin graduated from the University of Wales in 1978 with a BSc degree in geology and also holds a MSc degree in petroleum geology from Imperial College, London (1982). Martin has significant industry experience gained through companies including the Louisiana Land and Exploration Inc, LASMO, Eni and Northern Petroleum. During this time, he has held senior technical and management roles for exploration and field development projects. Martin was founding director of Union Jack Oil, a position he held until his appointment to Egdon in September 2014. Martin is a Fellow of the Geological Society and in 2012 he was awarded Honorary Life Membership of the Petroleum Exploration Society of Great Britain.

Martin Brooks – HSE and Production Manager: Martin worked in various industries in the implementation and management of specific production, health, safety and environmental mechanisms and ensuring compliance with ISO14001, prior to joining Egdon in 2007. He now has over seven years’ experience of managing onshore oil and gas production activities including commissioning the Kirkleatham gas field development. He oversees Egdon’s planning and environmental permitting for the company’s UK onshore drilling activities and is also responsible for developing and implementing the company’s HSE management systems at both corporate and site-specific levels.

Financials: Balance sheet has net cash

Egdon’s short-term financials are largely driven by the timing of conventional projects and output from key producing fields such as Ceres. Volatility in earnings can be expected as a result, especially as fields are shut-in permanently or temporarily. Production guidance for FY18 is set at 100bopd – 110bopd; we see production reaching 160bopd for FY19, including a stronger contribution from Ceres, and currently assume Wressle first oil in FY20 (late CY19). Production volumes remain small, and as discussed earlier in this note, we believe the key value proposition for shareholders lies in the company’s net UK shale exposure and conventional E&A. Appraisal activity at Springs Road, where Egdon has a 14.5% equity interest, is carried by INEOS. Meanwhile, management expects to farm down equity at key appraisal projects such as Endeavour/Resolution ahead of drilling in 2019.

At end January 2018 Egdon had cash of £4.1m, which we expect to cover anticipated costs (post farm-down) alongside cash flow from operations through to end 2019. Investors should be aware of potential for further dilution if Egdon chooses to raise equity capital to fund ongoing G&A costs beyond 2019. Alternative financing options may become available contingent on success of current UK shale exploration/appraisal activity and the appraisal of key assets such as Biscathorpe, North Kelsey and Resolution/Endeavour.

Our long-term oil price assumption stands at 70$/bbl Brent (CY22) and we use short-term EIA assumptions of 62$/bbl Brent in CY18 and CY19.

Exhibit 6: Financial summary

£000's

2016

2017

2018e

2019e

July

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

1,586

1,039

1,113

2,065

Cost of Sales

(1,287)

(1,112)

(1,129)

(877)

Gross Profit

299

(73)

(16)

1,188

EBITDA

 

(733)

(1,193)

(1,109)

(1,109)

Operating Profit (before amort. and except.)

 

(2,652)

(1,657)

(1,967)

(1,317)

Intangible Amortisation

0

0

0

0

Exceptionals

0

0

0

0

Other

0

0

0

0

Operating Profit

(2,652)

(1,657)

(1,967)

(1,317)

Net Interest

(34)

(42)

(20)

0

Profit Before Tax (norm)

 

(2,686)

(1,699)

(1,987)

(1,317)

Profit Before Tax (FRS 3)

 

(2,686)

(1,699)

(1,987)

(1,317)

Tax

0

0

0

0

Profit After Tax (norm)

(2,686)

(1,699)

(1,987)

(1,317)

Profit After Tax (FRS 3)

(2,686)

(1,699)

(1,987)

(1,317)

Average Number of Shares Outstanding (m)

221

249

259

259

EPS - normalised (p)

 

(1.2)

(0.7)

(0.8)

(0.5)

EPS - normalised and fully diluted (p)

 

(1.2)

(0.7)

(0.8)

(0.5)

EPS - (IFRS) (p)

 

(1.2)

(0.7)

(0.8)

(0.5)

Dividend per share (p)

0.0

0.0

0.0

0.0

Gross Margin (%)

18.8

N/A

N/A

N/A

EBITDA Margin (%)

N/A

N/A

N/A

N/A

Operating Margin (before GW and except.) (%)

N/A

N/A

N/A

N/A

BALANCE SHEET

Fixed Assets

 

27,053

28,495

29,720

31,195

Intangible Assets

18,370

19,231

21,246

24,026

Tangible Assets

8,683

9,264

8,474

7,169

Investments

0

0

0

0

Current Assets

 

5,270

7,613

4,077

1,285

Stocks

0

0

0

0

Debtors

2,541

1,507

1,808

1,808

Cash

2,679

6,057

2,219

(573)

Other

50

50

50

50

Current Liabilities

 

(1,085)

(1,216)

(878)

(878)

Creditors

(1,085)

(1,216)

(878)

(878)

Short term borrowings

0

0

0

0

Long Term Liabilities

 

(1,803)

(2,187)

(2,201)

(2,201)

Long term borrowings

0

0

0

0

Other long term liabilities

(1,803)

(2,187)

(2,201)

(2,201)

Net Assets

 

29,435

32,705

30,718

29,401

CASH FLOW

Operating Cash Flow

 

(159)

(422)

(1,809)

(12)

Net Interest

0

0

0

0

Tax

0

0

0

0

Capex

(2,379)

(1,054)

(2,167)

(2,780)

Acquisitions/disposals

0

0

137

0

Equity Financing

0

4,865

0

0

Other cash flow

8

5

4

0

Net Cash Flow

(2,529)

3,394

(3,835)

(2,792)

Opening net debt/(cash)

 

(5,180)

(2,679)

(6,057)

(2,219)

HP finance leases initiated

0

0

0

0

Other

(28)

16

3

0

Closing net debt/(cash)

 

(2,679)

(6,057)

(2,219)

573

Source: Company accounts, Edison Investment Research


Appendix 1: UK shale overview

Thick organic rich Carboniferous shales extend across Europe from Poland in the east and through The Netherlands and the Southern North Sea to the Irish Sea in the west. This Namurian and Visean basin is present onshore in the UK in several sub-basins in Northern England and Southern Scotland. Conventional fields have produced gas across Europe with these Carboniferous shales as source rock. This Carboniferous source is exceptionally rich in the UK sourcing both conventional oil and gas fields. Shale drilling in the UK has been concentrated in the western portion of the Bowland sub-basin in Lancashire, one of a number of rift basins formed by crustal extension in the UK between late Devonian/Dinantian times.

BGS estimates suggest material gas in place

The Bowland Basin is one of the largest basins in the area and continues westwards beneath the East Irish Sea, where conventional gas fields Hamilton, Douglas and Lennox have produced c 4-5 TCF to date. The key stratigraphic interval within the basin is the Bowland-Hodder shale, which extends across a large area of central Britain and is of Visean to early Namurian age. The gas bearing shale section is in excess of 6,000ft and is intensely naturally fractured in the Bowland Basin. BGS/DECC estimated in 2013 that the Bowland –Hodder unit contains P50 gas in place of 1329 TCF.

Exhibit 7: Regional setting of Bowland basin, PEDL 165 (Cuadrilla operated) shaded red

Source: Cuadrilla, modified from Fraser and Gawthorpe (2003)

The Bowland-Hodder is made up of the Upper Bowland, Lower Bowland and Hodder Mudstone. The Upper Bowland consists of laterally continuous, organic rich zones dominated by clastic deposits with occasional thin sandstones and dolomitized limestones. The Lower Bowland is much thicker and is a highly variable formation comprising a wide range of lithologies, with calcareous mudstones, siltstones and sandstones being relatively abundant. Fewer wells have been drilled into the Lower Bowland, so that its regional continuity is unclear. In its 2013 Carboniferous Bowland Shale Gas Study, BGS/DECC assigned 264 TCF to the Upper Bowland and the remaining 1065 TCF to the lower unit.

Exhibit 8: Schematic cross-section of northern Bowland Basin

Source: Cuadrilla, modified from Waters and Davies, 2006

Regional faulting and aquifers

The Carboniferous rocks are overlain by Permo-Triassic sediments. The Manchester Marl in the Permian is effectively a Zechstein sequence that forms a regional seal between the Carboniferous and the shallow water aquifers in the Sherwood Sandstone Group (SSG). Within Cuadrilla’s PEDL 165 licence, the UK Environment Agency has assessed the water in the SSG to the west of the Woodsfold Fault to be highly saline and therefore undrinkable, based on water samples from the Kirkham geothermal test hole. To the east of the Woodsfold Fault, the water in the SSG is fresh and considered to be the second most important groundwater aquifer in England after the Chalk. Cuadrilla views the risk of aquifer contamination as low - the depth of the interval to be fracked is several thousand feet below existing aquifers.

Faulting in the basin tends to a follow NE –SW trend. Within Cuadrilla’s PEDL 165 licence area the key faults are the Woodsfold fault and the Thistleton Fault. The Woodsfold fault is a major N-S fault with displacements up to 6,000ft in the Permian and Sherwood Sandstone and was the eastern boundary of the Elswick Graben in Permian times. The western boundary of the Elswick Graben is formed by the smaller Thistleton fault, which stops at the Permian anhydrite. The Thistleton fault sits around 3.5km to the east of Cuadrilla’s 2010 well, Preese Hall-1, while the Woodsfold fault is 9.4km from Preese Hall-1. A second type of faulting exists within the Bowland Shale, which is known to be heavily fractured and faulted. However, these faults are relatively small and are contained within the Bowland (Exhibit 7).

Exhibit 9: Reprocessed seismic showing the location of the Thistleton fault in relation to Preese Hall-1

Source: de Pater and Baisch, Geomechanical Study of Bowland Shale Seismicity 2011

Comparison of US and UK shale basins

Shale basins in the UK are significantly smaller in area relative to their North American counterparts, but tend to be much thicker. In addition, North American shale regions are simple continuous structures, while the UK basins are structurally more complex, consisting of small fault bounded basins that can be significantly faulted. The entire prospective area of the Bowland – Hodder shale was assessed by BGS/DECC to cover c 14,000km2, athlough this area also includes the Blacon, Gainsborough, Widmerpool, Edale and Cleveland basins in addition to the Bowland. Although shale thickness is greater in the UK basins, this can vary over relatively short distances, in contrast to US shale play thickness which is uniform over large distances. The Bowland Basin is considered to be most analogous to the Barnett, Marcellus and Fayetteville shales in the US.

Exhibit 10: UK versus US analogues

Play

Depth (ft)

Thickness (ft)

Area (mi2)

Bowland –Hodder play

5,200 – 10,700

Up to 6,000

5,405

Barnett

4,000 – 8,000

50-1,000

9,000

Marcellus

2,000 – 10,000

Up to 660

75,000

Fayetteville

1,500 – 6,500

50-550

5.853

Source: Edison Investment Research

Techniques for successfully drilling and stimulating shale gas wells have evolved across the US largely on a trial and error basis. While the UK shale plays will benefit from these advances in technology, operators will still need to go through a learning curve of their own to optimise results. Under the terms of its licence to drill in the Bowland, Cuadrilla has had to specify the chemicals and the volumes to be used prior to drilling the wells and this cannot be changed during the current drilling programme. By contrast, in the US, companies can alter these parameters once the well has been drilled and data has been gathered, allowing the flexibility to be reactive to well results in designing optimal fracking programmes.

The US experience also highlights that there can be a substantial difference between high and low producing wells within a play. Exhibit 11 shows observed production curves from the Barnett shale, where the top 20% of field production is driven by 7% of the wells. High producing wells are thought to be those where the fracture stimulation successfully connects to a pre-existing fracture network. In the UK it may take some time and experience to be able to tap into these higher producing sweet spots.

Exhibit 11: Barnett shale observed production curves, 2006-15

Source: The shale gas revolution: Barriers, sustainability and emerging opportunities by Middleton, Gupta, Hyman, Viswanathan

Criteria for shale gas commercial success

The criteria required to define a successful shale gas play have been developed by the USGS in relation to the analogous shale gas plays in the US. These criteria are divided into those that are considered essential, and those that are desirable.

Exhibit 12: Successful shale gas play criteria

Minimum requirements

Desirable characteristics

Total organic content (TOC) > 2%

High gamma-ray values in shale

Kerogen Type Type I,II or IIS

Hydrogen index > 250mg/g

Vitrinite reflectance (Ro) > 1.1% (thermal maturity)

Depth > 5000ft

Net thickness > 50ft

Not intensely structured

Gas must be thermogenic

Overpressured

Minimum requirements

Total organic content (TOC) > 2%

Kerogen Type Type I,II or IIS

Vitrinite reflectance (Ro) > 1.1% (thermal maturity)

Net thickness > 50ft

Gas must be thermogenic

Desirable characteristics

High gamma-ray values in shale

Hydrogen index > 250mg/g

Depth > 5000ft

Not intensely structured

Overpressured

Source: USGS

On this basis, initial indications are promising for a successful shale gas play in the Bowland Shale. The Bowland shale is of a thickness and depth to satisfy the criteria, while results from the first shale gas well in the Bowland Basin, Preese Hall-1, have demonstrated that the Bowland Shale is thermally mature for gas. The total organic content (TOC) has been found to vary through the stratigraphy, with the highest values found within the Bowland Shale. The average TOC was 2.65% with a range of 1% to 7% in the cored intervals. The data on kerogen type is less clear. The presence of humic material indicates Type III, however Type I/II is implied at the top of the sampled section. The Bowland is more intensely structured than the shale plays in North America; however, the presence of 3D seismic over 100km2 of PEDL 165 will allow wells to be drilled away from existing faults. This structural complexity reduces to the east of the Pennines in basins such as the Gainsborough Trough. A key desirable characteristic that is not currently known is the level of overpressure, if any, that exists in the Bowland. The minerology of the Lancashire Bowland shale has been analysed using x-ray diffraction of shale core samples from the Preese Hall well, and has confirmed that both the Upper and Lower Bowland shales are well suited to hydraulic fracturing. This is due to the highly siliceous matrix and low overall clay content. Cuadrilla recently retained consultancy Anderson Thompson to produce a probabilistic-type curve for the Bowland shale based on available data and the consultancy’s specialist knowledge of the Permian, Eagle Ford, Bakken, Marcellus and Montney shale in North America. The result of this analysis is shown in Exhibit 13, with the predicted P50-type curve for a 2.5km horizontal well. We use this type curve as well as the P10 and P90 range associated with this curve in our probabilistic UK shale valuation.

Exhibit 13: Anderson Thompson modelled potential gas recovery from 2.5km Bowland horizontal well

Exhibit 14: Minerology of Lancashire Bowland shale

Source: Cuadrilla

Source: Cuadrilla

Exhibit 13: Anderson Thompson modelled potential gas recovery from 2.5km Bowland horizontal well

Source: Cuadrilla

Exhibit 14: Minerology of Lancashire Bowland shale

Source: Cuadrilla

Contact details

Revenue by geography

Egdon Resources plc
The Wheat House
98 High Street
Odiham, Hampshire
RG29 1LP
www.edgon-resources.com

Contact details

Egdon Resources plc
The Wheat House
98 High Street
Odiham, Hampshire
RG29 1LP
www.edgon-resources.com

Revenue by geography

Management team

Managing director: Mark Abbott

Chairman: Philip Stephens

A geologist by training, Mr Abbott has gained experience at the British Geological Survey, BG and Andarko. He co-founded Egdon Resources in 1997.

Mr Stephens is a corporate financier with significant City experience. He was head of UK corporate finance at UBS and joint head of corporate finance at Williams de Broe.

Exploration director: Jerry Field

Mr Field has over 30 years’ experience in the oil and gas industry. He has worked for a range of companies, including Ranger, Weeks and Northern Petroleum.

Management team

Managing director: Mark Abbott

A geologist by training, Mr Abbott has gained experience at the British Geological Survey, BG and Andarko. He co-founded Egdon Resources in 1997.

Chairman: Philip Stephens

Mr Stephens is a corporate financier with significant City experience. He was head of UK corporate finance at UBS and joint head of corporate finance at Williams de Broe.

Exploration director: Jerry Field

Mr Field has over 30 years’ experience in the oil and gas industry. He has worked for a range of companies, including Ranger, Weeks and Northern Petroleum.

Principal shareholders

(%)

Petrichor Holdings Coperatif, U.A.

16.24%

<Insert %>

Alkane Energy UK

15.42%

<Insert %>

Premier Oil plc

15.11%

<Insert %>

Hargreave Hale & Co.

10.16%

<Insert %>

JP Morgan Asset Mgt

7.07%

<Insert %>

Hargreaves Lansdown Asset Mgt

5.30%

<Insert %>

Mr Mark Abbott

2.99%

<Insert %>

Companies named in this report

Cuadrilla, AJ Lucas, IGas, INEOS , Total, BP, Endeavour

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Pty Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2018 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Egdon Resources and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Investment Research Pty Ltd (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2018. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Pty Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2018 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Egdon Resources and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Investment Research Pty Ltd (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2018. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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The relative de-rating of Cohort against its peers since its interim results in December seems somewhat anomalous. The company looks set to maintain solid progress in FY18, which is now coming to a close. Peers in the UK defence sector have continued to face issues that do not directly read across to Cohort. While the UK defence funding environment remains uncertain at present, there appear to be some indications that a more favourable perspective may be developing following recent events. We maintain our forecasts and our fair value currently stands at 508p.

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