Chairman?s Review
Ten months ago, I took over the Chairmanship of EnCore from Mike Lynch who led the company from its inception until it was well established and financially strong. The Company had an experienced management team, a mixed portfolio of onshore and offshore assets mainly concentrated on the UKCS North Sea, a market capitalisation of around £46 million, significant cash resources and no debt. Looking at that Company today, the management team has been further strengthened, the onshore assets have been divested for a sizeable equity stake in a focused, growing onshore player, the offshore assets have
delivered a significant oil discovery and the market capitalisation sits at around £161.8 million (as at 9 August 2010).
The discovery at Catcher and subsequent side-tracks are hugely significant for EnCore, our joint venture partners and the UK North Sea industry as a whole. Not since the Buzzard discovery in 2001, found by members of EnCore?s management team, has such a potentially significant UK North Sea oil discovery been made. Our current estimates put up to 300 mmbbls of Oil in Place at Catcher (including East and North) with significant further upside from the undrilled prospects on the block. With that in mind, the joint venture partnership has confirmed that we are to return to the Catcher area for two to four further
exploration and appraisal wells as soon as a rig is available with a view to better determining the scale of the development required for the licence. Following this, preparations will be made to move the project through to field development plan (FDP) approval, anticipated to happen in 2011. EnCore is the operator of Catcher and we are proud to be taking this important project forward.
Moving on to the other event which has shaped EnCore over the last year, our asset divestment to Egdon Resources, an experienced onshore player, has now completed (post period end) and we look forward to actively assisting Egdon as they develop their portfolio. The Egdon transaction is a good example of the approach which we, as a company, can undertake when presented with such an opportunity. EnCore?s prime focus is the development of our offshore interests. Our onshore portfolio came about as part of our
reverse takeover of Oil Quest Resources plc and while we have spent some time in trying to build recognition of the value in those assets, we determined that it was likely that only an onshore focused player could do so successfully. The Egdon transaction has given us the opportunity to realise some of the value in our portfolio, and hopefully continue to create further value through our shareholding as Egdon moves its assets forward.
Our company remains cash rich and debt free, and more importantly, we are able to comfortably cover our proportion of costs on all foreseeable further exploration and appraisal drilling at Catcher, and the appraisal well currently drilling at Cladhan without the need to seek further funding. This leaves us in the very healthy position of having cash in the bank, owning 15 per cent. and being operator of the very significant Catcher oil discovery in the Central North Sea, and having 16.6 per cent. of the Cladhan oil
discovery in the Northern North Sea, though we have yet to determine its size.
Looking to the future, the near to medium term will be dominated by further work in the Catcher area to determine the scale of the discovery. Cladhan may also prove to be a commercial discovery and we await the results of the appraisal well. The gas storage marketing process is continuing and we will update the market accordingly when further information is available and, of course, further work on the other prospects in our portfolio is ongoing.
I would like to thank you, our shareholders, for your continued support through these exciting times. In particular, I would like to thank the team at EnCore. It is rewarding to know that all the technical work on the Catcher block has been carried out in-house by the EnCore team which is a reflection of the talent within that small team. Finally, I would also like to thank my predecessor, Mike Lynch, for his dedication and commitment to the Company during his years of service and for leaving us a company well placed to take advantage of the opportunities which have since arisen.
Christine M.K. Wheeler O.B.E
Chairman
9 August 2010
http://www.encoreoil.co.uk/pages/news/index.asp?NewsID=240
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