Egdon Resources, Union Jack Oil drop as Leicestershire well plugged

The share prices of oil and gas groups Egdon Resources and Union Jack Oil plummeted on Thursday after an exploration well in the UK has had to be plugged.

Egdon, the operator of the Burton on the Wolds-1 well in licence PEDL201, Leicestershire, said that the well spudded on 18 October and reached a total depth of 1,086 metres on 28 October.

"The well penetrated only thin sands in the primary reservoir objective, the Rempstone Sandstone group, while the deeper secondary objective was encountered as non-reservoir rock," Egdon said.

What's more, wire-line logs to evaluate the well showed that the thin sands identified were water bearing. The well is therefore being plugged and the well-site will be restored to its original condition as agricultural land.

Previously-announced farm-outs meant that Egdon's net share of the Burton on the Wold-1 well cost was just 15%.

Edgon's managing director Mark Abbott said he was "naturally disappointed" with the result, but that the company had recognised the pre-drill risks and was able to mitigate its exposure beforehand by bringing new partners in.

"Furthermore, the drilling of the well has been accomplished ahead of schedule and within budget," he said.

Nevertheless, Egdon was trading 17.1% lower by 15:05, while Union Jack Oil, which owns a 10% stake in the licence, fell 23%.

The remaining interests in PEDL201 are owned by Celtique Energy Petroleum (32.5%), Terrain Energy (12.5%) and Corfe Energy (12.5%).