UPDATE 1-Egdon Resources ups its UK shale gas estimates ten-fold

Fri Apr 25, 2014 3:20am EDT

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(Adds details, six-month financial results, background)

LONDON, April 25 (Reuters) - Explorer Egdon Resources said an independent report had estimated that its UK shale gas licences hold around 18 trillion cubic feet of gas, enough to supply Britain for more than 6 years and 10 times more than its previous estimate.

Egdon shares were up 13.7 percent at 0716 GMT.

Britain is counting on the extraction of huge shale gas reserves to help make up for a decline in North Sea gas production, and the government has promised tax and local community incentives to help kick off a shale gas programme.

The company, which sold parts of its shale gas licences to French oil major Total earlier this year, also said it was continuing to look for acquisition and consolidation opportunities in the sector.

"Given the high level of interest and recent transactions, we expect our UK shale-gas assets to be an increasing near-term value driver for the business," Egdon Resources Chairman Philip Stephens said in a statement.

British utility Centrica and French peer GDF Suez have also entered the UK shale gas scene over the past year, paving the way for further interest by major oil and gas companies.

Egdon Resources, listed on Britain's Alternative Investment Market (AIM), warned however that it had not assessed the risks of extracting the gas, which meant there was no certainty extraction would be commercially viable.

Typically only 10-15 percent of resources in place are able to be extracted.

The company also said it planned to participate in Britain's next onshore licensing round, which is expected later this year.

Egdon Resources also on Friday reported a 830,000 pound profit for the six months ended Jan. 31, recovering from a 230,000 pound loss over the same period a year ago.

The explorer slightly undershot its full-year production target of 200 barrels of oil equivalent per day. (Reporting by Karolin Schaps; editing by Sarah Young and Jane Baird)

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