Preliminary Results

Egdon Resources PLC
31 October 2006




For immediate release                                        31 October 2006


                      EGDON RESOURCES PLC ('THE COMPANY')

              Preliminary Results for the year ended 31 July 2006



Egdon Resources Plc (AIM: EDR), the UK focused energy company, is pleased to
announce preliminary results for the year ended 31 July 2006. The Company also
announces its intention to demerge its gas storage business during 2007 to form
a separate AIM traded company focused on gas storage developments and
operations.



In addition, the Company is also announcing today completion of a placing to
raise £12 million (before expenses) at 190 pence per share through Seymour
Pierce Limited.



Operational Highlights



Gas Storage



  • Confirmation of technical feasibility of Isle of Portland gas storage
    project
  • Project parameters confirmed as 1,000 million cubic metres capacity
    facility with injection/ withdrawal rates of 20 million cubic metres per
    day.
  • Portland project could provide up to 5% of UK gas demand on a winter's day
  • N M Rothschild & Sons appointed as financial advisors to Portland Gas to
    assist with project financing
  • Planned demerger of gas storage business during 2007



            Oil & Gas Exploration



  • Successful multi-well drilling programme completed in 2006, oil confirmed
    in Waddock Cross-3 and gas in Kirkleatham-4 and Westerdale-1
  • Farm-outs concluded for wells in licences PEDL071 and PEDL141
  • Planned production from Waddock Cross, Avington and Kirkleatham in 2007
  • Drilling activity planned at Avington, Burton Agnes (Fraisthorpe), Grenade
    and Tees during 2007
  • Award of block 15/7 in 23rd Licensing Round
  • Currently hold 19 licences in UK and France







Financial Highlights



  • Loss for period of £519,250 (2005: £420,617)
  • Loss per share of 0.94p (2005: £0.92p)
  • Completion of an institutional placing announced today to raise £11.52
    million net of expenses
  • Institutional placing completed in December 2005 raised £4.81 million net
    of expenses
  • Debt free with strong position (Net funds as at 31st July 2006 £1.89
    million; 31st July 2005: £2.95 million).



Commenting on the results, Philip Stephens, Chairman of Egdon, said:



'2006 has been a pivotal year for Egdon with drilling successes at Kirkleatham,
Westerdale and Waddock Cross and confirmation of the technical feasibility of
our gas storage project on the Isle of Portland. The environmental impact
assessment leading to an environmental statement in support of the planning
application is nearing completion for Portland whilst 2007 is expected to see
the first production from our UK oil and gas interests'.







                              CHAIRMAN'S STATEMENT



I am pleased to report that the period covered by these results has seen further
substantial creation of shareholder value.



Financially, the Company recorded a consolidated loss of £519,250 for the year
ended 31 July 2006 (2005: £420,617).   This loss includes a National Insurance
provision of £318,020 for Directors' share options which represents a
significant increase from last year's level of £93,500 as a result of the
substantial increase in the share price of the Company in the financial year.
No dividend is being proposed for the period.



The Company had net cash of £1.89 million as at 31 July 2006 (2005: £2.95
million).  During December 2005, your Company raised £4.81million after expenses
through a share placing at 90p in order to fund the continuing costs of our gas
storage project and exploratory drilling.  I am also pleased to announce today
the successful completion of a further placing of 6,315,790 new shares at a
price of 190p raising a total of £11.52 million after expenses.



During the period your Company has continued to develop two distinct businesses:
an oil and gas exploration and production business, focused on the UK onshore,
and a high impact gas storage business, initially focused on developing a salt
cavern gas storage facility in Dorset through our wholly-owned subsidiary
Portland Gas Limited.



Gas Storage



I am pleased to report that excellent progress has been made in the development
of the Isle of Portland gas storage project during the year.  A number of
project milestones have been passed during the period and the project is on
track, subject to a successful outcome to a forthcoming planning application, to
become a significant part of the UK's gas infrastructure in the coming years.



The successful drilling of the Portland-1 well during the summer and the
subsequent confirmation of the technical feasibility of the project by our
engineering consultants DEEP. Underground Engineering GmbH during September 2006
has enabled the operational parameters for this project to be finalised.  The
project is designed to store 1,000 million cubic metres (35 billion cubic feet)
of gas in a total of fourteen salt caverns at a depth of 2,400 metres.  The
facility will be able to provide up to 5% of the UK's peak winter demand and
make a significant contribution to the security of UK gas supply.



We now look forward to submission of the environmental statement with the
planning and pipeline construction authorisation applications during the fourth
quarter of 2006.   Assuming planning consent is granted during the summer of
2007, first gas could be delivered from storage to the UK market in the winter
of 2010 with full capacity being achieved during 2013.



The Company is already looking beyond the planning phase to the construction
phase and has recently appointed N M Rothschild & Sons as financial advisors to
Portland Gas Limited with the specific remit to advise on the project financing.



Oil and Gas Exploration



I am also pleased to report continued progress in our oil and gas exploration
business.  The period has been one which has been dominated by drilling activity
with the Company operating three appraisal and exploration wells in its UK
portfolio.  Hydrocarbons were encountered in all of these wells, continuing the
Company's excellent success rate with the drill-bit.



The Waddock Cross-3 well in Dorset confirmed the presence of oil and test rates
of up to 48 barrels of oil per day were achieved.  A series of studies are
currently being completed to optimise the future development of the field which
is anticipated to commence during 2007.



The Kirkleatham-4 exploration well in Cleveland has been confirmed as a Permian
limestone gas discovery, having flowed at commercial rates of up to 5 million
cubic feet of gas per day. The well has been completed as a potential future
producer.  A seismic programme was acquired at Kirkleatham during the summer to
enable the determination of the reserve potential of this discovery.
Development of the gas already proved by the well is being planned for the
winter of 2007.



The exploration well at Westerdale-1 in North Yorkshire confirmed the presence
of gas in Permian age limestones in what appears to be a subsidiary structure to
the 1966 Ralph Cross gas discovery.   Additional work, to include a further
well, will be required to determine if the prospect can be developed
commercially and will be progressed during 2007.



A further non-operated well was also completed at Avington-3.  This well, which
was cored, has provided valuable reservoir data and we look forward to the
drilling of the planned side-track as a potential production well during 2007.



Further development of the portfolio of oil and gas assets continued during the
year.  The Company was awarded a 50% interest in a Promote Licence covering
offshore block 15/7 in the 23rd Seaward Licensing Round.  The block, operated by
Nautical Petroleum plc, contains the Seahorse heavy oil discovery made by Texaco
in the 1970's.  Your Company has also farmed out interests in PEDL071 and
PEDL141 where it will now have its costs carried on wells at Burton Agnes-1 and
Nooks Farm-2 with 25% and 46% interests retained respectively.



Proposed Demerger



Your Board has recognised the distinctive difference of the oil and gas
exploration and production business and the gas storage business and proposes to
demerge these businesses into two separate publicly-traded companies in early
2007.



The demerged companies will provide a focused use of capital and management
resources to maximise shareholder value.  The demerged gas storage business will
exploit opportunities for UK and international growth in addition to the
construction of the Portland gas storage facility.  The demerged oil & gas
business has a programme of field development and new exploration drilling
opportunities within the existing portfolio with the potential to add
significant value going forward.  The demerger is expected to be undertaken via
a scheme of arrangement under section 425 of the Companies Act 1985.  The final
timing will be dependent upon gaining HMRC approval in respect of our 2004 EIS
investors.



Outlook



Operationally, the coming year will again be active with wells anticipated
during 2007 in the UK and France at Avington-3z, Burton Agnes-1, Grenade-3,
Holmwood-1 and on the Tees Prospect in block 42/27.



A key focus during the period will be the development of a revenue stream via
production from our discoveries at Waddock Cross, Avington and Kirkleatham.



The Company will continue to evaluate the exploration and development potential
of its licences and will look to strengthen its licence position through active
management of its existing portfolio and review of new opportunities within
focus areas.  Opportunities for growth through acquisition will also be
evaluated.



The progress which has been achieved this year has significantly enhanced the
potential value of the Company, but this uplift is dependant to a great extent
on the successful outcome of the planning application for our gas storage
project. We have reached this critical phase in the company's development which
could not have been achieved without the significant effort from our management
team.  I would, therefore, on behalf of the Board, like to pay tribute to our
two Managing Directors and their team for their hard work and endeavour.



We look forward to an exciting future as we proceed to the next stage of
development of your Company as two distinctive businesses and we thank
shareholders for their continued support.



The Annual Report and Accounts will be posted to shareholders in due course and
will contain Notice of the Annual General Meeting to be held on 15th December
2006.  Copies will be available from the Company's office at Suite 2, 90-96 High
Street, Odiham, Hampshire RG29 1LP.







Philip Stephens

30 October 2006



egdon resources plc

consolidated profit and loss account

FOR THE YEAR ENDED 31 JUly 2006


                                                                   2006          2005
                                                Notes                 £             £

Turnover                                                         13,991        11,133

Cost of Sales                                                  (14,000)       (9,674)

Gross (Loss)/Profit                                                 (9)         1,459


Administrative Expenses                                       (931,503)     (533,663)
Other Operating Income - Project Operator
Fees                                                           247,708        80,877

Operating Loss                                                (683,804)     (451,327)

Interest Receivable                                             164,554        73,210
Interest Payable                                                      -      (42,500)

Loss on Ordinary Activities before Taxation                   (519,250)     (420,617)

Taxation on Loss on Ordinary Activities                               -             -

Loss for the Year                                            £(519,250)    £(420,617)

Basic and diluted loss per share                  1             (0.94)p       (0.92)p




The consolidated profit and loss account has been prepared on the basis that all
operations are continuing.  There were no recognised gains or losses other than
the loss for the year.



egdon resources plc

consolidated Balance sheet

as at 31 JUly 2006


                                                              2006            2005
                                          Notes                  £               £
Fixed Assets
Intangible Assets                                        8,284,367       2,598,711
Tangible Assets                                              2,503           2,977

                                                         8,286,870       2,601,688
Current Assets
Debtors                                                  1,037,403         232,859
Investments                                              1,506,190       2,044,580
Cash at Bank and in Hand                                   386,837         903,965

                                                         2,930,430       3,181,404

Creditors: due within one year                           (927,562)       (105,598)

Net Current Assets                                       2,002,868       3,075,806

Total Assets Less Current Liabilities                   10,289,738       5,677,494

Provision for Liabilities                                (411,520)        (93,500)

Net Assets                                              £9,878,218      £5,583,994

Capital and Reserves
Called up Share Capital                                    571,499         515,950
Share Premium Account                       2            8,625,530       3,867,605
Profit and Loss Account                     2              681,189       1,200,439

Shareholders' Funds                                     £9,878,218      £5,583,994


egdon resources plc

consolidated cash flow statement

for the year ended 31 july 2006


                                                                           2006                       2005
                                             Notes              £             £            £             £

Net cash outflow from operating activities     3                      (705,598)                  (477,125)

Returns on investment and servicing of
finance
Bank and investment interest receipts                     164,554                     73,210
Other interest paid                                             -                   (42,500)
                                                                        164,554                     30,710
Capital expenditure and financial
investment
Payments to acquire intangible fixed assets           (5,326,500)                  (823,221)
Payments to acquire tangible fixed assets                 (1,448)                    (1,829)

                                                                    (5,327,948)                  (825,050)
Net cash flow before use of liquid
resources
And financing                                                       (5,868,992)                (1,271,465)

Management of liquid resources
Decrease/(increase) in short term deposits                              538,390                (2,044,580)

Financing
Proceeds from issue of Ordinary Shares                  4,999,500                  4,500,000
Costs associated with Share Issue                       (186,026)                  (482,395)
Repayment of Debentures                                         -                  (350,000)
                                                                      4,813,474                  3,667,605

(Decrease)/increase in cash                    4                     £(517,128)                   £351,560



Reconciliation of net cash flow to movement
in net funds
(Decrease)/increase in cash in the year                 (517,128)                    351,560
Cash to repurchase debenture                                    -                    350,000
Cash to (decrease)/increase liquid                      (538,390)                  2,044,580
resources

Change in net funds                                                 (1,055,518)                  2,746,140
Net funds at 1 August 2005                                            2,948,545                    202,405

Net funds at 31 July 2006                                            £1,893,027                 £2,948,545



NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 JULY 2006



1. LOSS PER SHARE


                                                                            2006           2005
                                                                              £              £
Net loss for the financial year                                           (519,250)      (420,617)

Basic weighted average ordinary shares in
Issue during the year                                                   55,110,604     45,718,262

                                                                             Pence          Pence
Basic loss per 1p ordinary share                                            (0.94)         (0.92)





The basic earnings per share has been calculated on the loss on ordinary
activities after taxation of £519,250 divided by the weighted average number of
ordinary shares in issue of 55,110,604 during the period. At the year-end
options were in place over 2,000,000 shares. These share options are not
considered dilutive as their inclusion would decrease the loss per share. For
this reason a diluted earnings per share calculation is not required.





2. RESERVES


                                                                   Share  Profit and
                                                                 Premium        Loss
Group                                                            Account      Account        Total
                                                                       £            £            £
At 1 August 2005                                               3,867,605    1,200,439    5,068,044
On shares issued in the year                                   4,943,951            -    4,943,951
Share issue costs                                              (186,026)            -    (186,026)
Loss for the year                                                      -    (519,250)    (519,250)

At 31 July 2006                                                8,625,530      681,189    9,306,719







3. RECONCILIATION OF NET OUTGOING RESOURCES TO NET CASH OUTFLOW FROM OPERATING
ACTIVITIES


                                                                                 2006        2005
                                                                                    £           £
Operating loss for the year                                                  (683,804)   (451,327)
Depreciation                                                                     1,922       3,012
Loss on disposal of intangible assets                                           40,844           -
(Increase) in debtors                                                        (804,544)   (162,202)
Increase in creditors                                                          421,964      68,692
Increase in provisions                                                         318,020      64,700
                                                                             (705,598)   (477,125)





4. ANALYSIS OF CHANGES IN NET CASH RESOURCES AND DEBT




                                                                   As at    Cash Flow         As at
                                                                1 August                    31 July
                                                                    2005                       2006
                                                                       £            £             £
Cash at bank and in hand                                         903,965     (517,128)      386,837
Current asset investments                                      2,044,580     (538,390)    1,506,190
                                                               2,948,545   (1,055,518)    1,893,027







5. BASIS OF PRESENTATION



The financial information set out in this announcement, which does not
constitute the statutory accounts of the Group, is extracted from the
consolidated audited statutory accounts for the year ended 31 July 2006, which
were approved by the Board on 30 October 2006.   The auditors have reported on
those accounts in accordance with Section 235 of the Companies Act 1985, their
report was unqualified and did not contain a statement under Section 237(2) or
237(3) of the Companies Act 1985.  The results have been prepared on the basis
of the accounting policies adopted in the statutory accounts for the year ended
31 July 2005.  Accounting standards introduced since this date have had no
effect on the accounting treatment adopted.  The statutory accounts for the year
ended 31 July 2005 have been delivered to the Register of Companies.  Those for
2006 will be delivered to the Registrar after the Annual General Meeting which
is scheduled for 15 December 2006.





The preliminary announcement was approved by the Board on 30 October 2006





For further information please contact:


Egdon resources Plc                                 01256 702 292
Andrew Hindle, Joint Managing Director
Mark Abbott, Joint Managing Director

Buchanan Communications
Eric Burns                                          01943 883 990
Ben Willey                                          020 7466 5000

Seymour Pierce                                      020 7107 8000
Jonathan Wright



Company Background



Egdon is an established, UK-based energy company primarily focused on the
onshore UK. Egdon also has exploration interests in the offshore UK and France.
Egdon's shares are traded on the AIM market.



The Company is developing two distinctive businesses:



•                     An oil and gas exploration and production business which
has a portfolio of nineteen exploration licences containing identified oil and
gas prospects ranging from discoveries under appraisal through to higher risk
but higher reward 'wild-cat' exploration prospects.



•                     A gas storage business initially focused on the
development of a major salt cavern gas storage facility beneath the Isle of
Portland, Dorset.






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