Sign up United Kingdom
Proactive Investors - Run By Investors For Investors

IGas & Dart Energy consolidation to create UK’s largest shale gas firm

Together IGas and Dart have over 1mln acres in Britain’s major shale basins, and IGas chief executive Andrew Austin says the deal puts the enlarged company “at the heart of unlocking Britain’s energy potential”.
IGas & Dart Energy consolidation to create UK’s largest shale gas firm

Excitement over Britain’s increasingly high profile, yet early stage, shale gas industry has stepped up another gear.

Within months of blue-chip energy firms making an entry into the nascent shale gas sector, a share based deal between IGas (LON:IGAS) and Dart Energy (ASX:DTE) sees the consolidation of two of the play’s largest acreage positions.

IGas agreed to buy Dart Energy through a premium-priced, recommended share-based deal worth £117.1mln.

Together the firms have over 1mln acres in Britain’s major shale basins, and IGas chief executive Andrew Austin says the deal puts the enlarged company “at the heart of unlocking Britain’s energy potential”.

“This is a British success story establishing IGas as a key contributor to UK energy mix and security,” Austin said in a stock market statement.

“The transaction further strengthens our position financially, operationally and also significantly increases our licenced acreage as we seek to unlock the untapped energy resource that exists in Britain."

Dart chief executive John McGoldrick says the merger heralds a new era for the UK gas industry, as it creates a business of scale.

“Success in the oil and gas business comes from scale, and the combination of Dart and IGas achieves that scale, creating a clear market leader with a vastly greater depth in terms of asset base, access to capital and operating capability, all of which will be critical to achieving long-term success. 

McGoldrick considers the emergence of the UK’s shale gas industry will be one of the defining energy market stories of this century, and he said today’s share-based deal is in the best interests of Dart shareholders as it allows them to participate in this the long-term value creation potential.

Dart shareholders, who were set to access the London market with an AIM float this month, will hold around 30% of the merged company.

Investors will receive 0.08117 IGas shares for each Dart share they own, which equates to 18.98 Australian cents per share and is a premium of around 51% to Friday’s close on the ASX.

Crucially, the acquisition consolidates common interests in shale licenses that are now partnered with large oil and gas companies. The enlarged company has 13 licences that are being funded by GDF Suez, and two licences funded by French major Total.

In February, Total completed a deal acquire a 40% of licences in Nottinghamshire and Yorkshire, in return for commitments to pay for drilling in the future. The consolidation of the respective interests of IGas and Dart will give the enlarged company a 32% stake in those licences.

Meanwhile, via a farm-out agreed with Dart in October, GDF Suez paid almost US$40mln in cash and committed to drill programmes, in order to secure 25% of 13 licences.

The transaction also comes at a significant time, as drilling activity is expected to step up considerably in the coming years and the government will soon auction off new prospective shale gas licences through a onshore bidding round.

Indeed, just yesterday, the fledgling sector received further encouragement from the British establishment as a House of Lords’ economic affairs committee said the advantages of shale gas hugely outweigh the disadvantages, and recommended a number of measures that would see the government provide more support.

The industry should be treated as a ‘national priority’. It comes after prime minister David Cameron called on the UK to go “all out for shale”.

“Exploration and appraisal are urgently needed to establish the economic potential of the UK's shale gas and oil resource,” the House of Lords report said.

“Shale gas is not the answer to all the energy policy challenges facing the UK. Substantial economic benefits would however flow from successful development.”

“It would reduce imports and help maintain security of supply.”

View full IGAS profile View Profile

IGas Energy Plc Timeline

Related Articles

oil and gas operations
April 19 2018
The first two potential new wells will be drilled in around 45 days, and investors will be keen to see the results
Trinidad drilling
July 23 2018
The City broker’s bullish view comes after its analysts upgraded their sum-of-the-parts valuation for the Trinidad-focused oil producer by circa 20% to 35p, up from 29p previously
oil and gas operations
July 09 2018
Greka highlighted improved revenues which boosted gross profit despite the challenges experienced in India and China through 2017.

No investment advice

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter.

You understand that the Site may contain opinions from time to time with regard to securities mentioned in other products, including company related products, and that those opinions may be different from those obtained by using another product related to the Company. You understand and agree that contributors may write about securities in which they or their firms have a position, and that they may trade such securities for their own account. In cases where the position is held at the time of publication and such position is known to the Company, appropriate disclosure is made. However, you understand and agree that at the time of any transaction that you make, one or more contributors may have a position in the securities written about. You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate.

From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

© Proactive Investors 2018

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use