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Egdon Resources (EDR)

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 France.

Stock data

Market cap.£25.4m
Last close9.75p
High / Low (52 weeks)12.5p / 5.7p
Stock market listingLN
Forecast net debt (m)N/A
Forecast gearing ratio (%)N/A
TeamResources - Oil & Gas
SectorOil & Gas

Price performance

%1m3m12m
Actual(4.9)68.121.9
Relative *(3.3)56.318.5

* % Relative to local index

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Company news

Y/E Jul Revenue (£m) EBITDA (£m) PBT (£m) EPS (p) P/E (x) P/CF (x)
2016A 1.6 (0.7) (2.7) (1.2) N/A N/A
2017A 1.0 (1.2) (1.7) (0.7) N/A N/A
2018E 1.1 (1.1) (2.0) (0.8) N/A N/A
2019E 2.1 (1.1) (1.3) (0.5) N/A N/A

Last updated on 30/04/2018

Investment summary

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.

Last updated on 30/04/2018

Industry outlook

The UK government's stance towards shale varies by party. However, current central government appears to be supportive of unconventional gas development, attracting sector investment from the likes of Centrica and Ineos.

Last updated on 27/04/2018

Key management

Philip Stephens, Chairman
Mark Abbott, MD

Company address

The Wheat House
98 High Street
Odiham
Hampshire
RG29 1LP
United Kingdom
01256 702292
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