IGas Energy Plc (LON:IGAS) has highlighted that it is in talks with a number of potential investors.
The UK shale gas frontrunner and conventional onshore operator said it continues to evaluate options for cash and earnings accretive transactions, including farm-outs and other portfolio management opportunities.
IGas also noted that it has also been in discussions with its leading bondholders with a view to extending the maturity of the debt, deferring certain interest payments and the waiver of some financial covenants.
The company’s efforts aim to establish a sustainable capital structure for the current oil price environment, as well as enabling it to capitalise on value accretive opportunities
Such opportunities include water injection programmes, accessing oil that’s currently ‘behind pipe’, and gas monetisation.
Infill drilling could be another option, which could help increase production by 700 barrels of oil equivalent net of decline by January 2018.
Currently, IGas expects to produce between 2,500 and 2,700 boepd in 2016. It highlighted that oil prices have now improved to around US$50 and it expects operating costs of around US$30 per barrel for the year.
IGas had £23.6mln of cash at the end of May.
In a stock market statement, IGas said: “The company is monitoring its bond covenants, in particular ratios based on cash and leverage, which continue to be impacted by the prevailing oil price and current currency volatility.
“The company will update the market in due course as discussions progress.”
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IGas also highlighted that it has one of the largest shale acreage positions in the UK, and has “very significant” carried work programmes - with a total value of US$255mln - due to take place across its portfolio.
Good progress is being made on IGas’s five year shale development plan, the company said, with two wells planned for the first half of 2017 - subject to planning and permitting.