igasplc.com
The company explores and develops gas and oil reserves at onshore locations in the northwest of England, in north Wales, in the East Midlands and in southern England.
With almost a decade of experience in onshore drilling, IGas is able to exploit prolific and lower-cost hydrocarbon reserves which contribute to Britain’s energy security while at the same time delivering value to IGas investors.
IGas pulls off transformational deal as it acquires Nexen's UK assets
Domestic gas producer IGas (LON:IGAS) revealed this morning it is buying the UK assets of Nexen Petroleum (TSX:NXY) in an all paper deal.
It is issuing 39.7 million shares to Nexen worth £26.6 million at Friday’s close, or the equivalent of 29.9 per cent of the company’s enlarged equity base.
The transaction increases the contingent recoverable resource of IGas by 115 per cent to 1.74 trillion cubic feet of gas, or 260 million barrels of oil equivalent.
The agreement will also give IGas access to Nexen's unconventional gas technology, including the secondment of key personnel. The Canadian giant will also receive a seat on the IGas board.
Chief executive Andrew Austin said: "This accretive acquisition marks a major turning point in our history.
“IGas is more than doubling its contingent recoverable resources, with a consequential effect on future production.
“As a result of this deal we will have enough recoverable gas to supply electricity to 15 per cent of UK homes for 15 years.
“Additionally, as operator of all our acreage, we will be able to accelerate our production plans and increase our ability to deliver gas.
“This landmark deal brings significant value not only to IGas' existing shareholders but also to Nexen, as its onshore UK gas interests will now be held in a company dedicated to delivering secure gas onshore.
“Nexen has been a great partner in the appraisal and pilot production phases of the development of our assets and we now look forward to having them as shareholders as we move to full field development.
“We remain funded for our existing plans including the delivery of our first commercial production site in 2011."
IGas Energy is the leading player here at home in coal bed methane business and it has a large portfolio of prospects, which could help the UK meet the increasing demand for domestic fuel supplies.
It has interests in licences that cover 1,756 square kilometres in North West England, and North Wales.
It has planning permission for fifteen locations, allowing a range of activities from full production sites in brown-field areas to assay wells in green-field locations.
IGas has a number of full production sites already permitted and it should shortly announce the scale and scope of its first full production site.
The company’s potential has not gone unnoticed. In recent weeks the Royal Bank of Scotland and Goldman Sachs each published in-depth research on IGas as they assessed the prospects for the burgeoning coal bed methane industry here in Britain.
The team at Goldman believes the market is applying an excessive risk premium to IGas’s methane assets and the stock is an attractive unconventional gas play.
In November Goldman initiated its coverage on IGas with a ‘buy’ rating, setting a 119p a share price target (current price 63.89p).
