Egdon Resources (LON: EDR) has acquired Aberdeen based onshore oil firm Aurora Production.
Despite having no assets in Scotland, Aurora is “is a UK petroleum exploration and development company based in Europe’s energy capital Aberdeen,” according to its website.
Aurora’s parent – Aurora Production Limited – has paid Egdon £288,000 as part of the deal, on the assumption it will take on all of Aurora’s abandonment liabilities.
Egdon struck the deal because Aurora owns 18.75% of the onshore Egdon-operated PL090 licence, which contains the Waddock Cross oil field.
Through the deal, Egdon has increased its stake in Avington, with 614,000 contingent and prospective barrels, to 36.33%.
Work is ongoing to redevelop the field through H1 of this year.
Aurora also owns 8.33% of the IGas licence PEDL070, which contains the Avington oil field.
Egdon has been paid the £288,000 by Aurora, less interim period costs, as that represents the current estimate for abandonment activities.
In the event that profitable production is established, Aurora’s parent will be reimbursed the sum.
Aurora has also accumulated upstream ring-fenced tax losses of around £90m, which Egdon said could be used to offset tax on future profits.
Egdon managing director Mark Abbott said: “We are pleased to have completed this acquisition, which builds on our existing interests in the Waddock Cross and Avington oil fields. Both assets have active plans in place to rejuvenate oil production.
“The acquisition therefore adds potential for near-term incremental production, adds to our resource base and delivers substantial tax losses that may be utilised to offset future taxes.”
Egdon also has licences in the North Sea, which were dealt a blow last April due to the withdrawal of operator Shell.
Shell said the decision was part of routine portfolio management, while Egdon said it was reviewing its options.
At the time it added: “We will update shareholders once our preferred option and the NSTA position is known.”
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