viewIGas Energy Plc

IGas Energy says bondholder talks continue

The UK shale firm is working on a potential restructuring of the group and its finances.

The company's shale operations recently gained momentum

IGas Energy Plc (LON: IGAS) has told investors that it is continuing discussions with its key bondholders, as well as a number of strategic investors.

“The company will present proposals in due course following the conclusion of these discussions, and will provide further updates as and when appropriate,” IGas said in a brief stock market statement.

The UK shale firm is working on a potential restructuring of the group and its finances.

It previously noted that one of its major bondholders had proposed that the company sell its conventional oil assets, which are onshore UK, in order to focus its resources on the shale gas opportunity.

The IGas shale opportunity

IGas’s shale opportunity gained momentum earlier this month as it was granted planning approval to drill two exploration wells to target shale gas resources in Nottinghamshire.

At that time, chief executive Stephen Bowler said: “At this stage we, as well as other onshore operators around the country, are trying to establish if the significant quantities of gas that we have identified exists in the right formations to be commercially prospective and address the issue of security of supply that we face.

“We now have the consent to develop a hydrocarbon wellsite and drill up to two exploratory hydrocarbon wells (one vertically and one horizontally) to help us better understand the shale gas potential in North Nottinghamshire."

IGas wants to drill two exploratory wells at the Springs Road site in North Nottinghamshire, within the PEDL 140 licence area.

The company - which operates PEDL 140, with a 32% stake alongside Total with 40% - believes the two-well programme will be an important step in understand the shale gas potential in North Nottinghamshire and more widely in the East Midlands and Yorkshire.

It has previously stated that successful wells would “in all likelihood’ lead to a subsequent planning application to flow test a well which would involve hydraulic fracturing.

Unlocking IGas Energy’s shale potential

Last month the company unveiled a new assessment of its shale gas assets, detailing some 11 trillion cubic feet (tcf) of potentially recoverable resources. It marks the portfolio as ‘world class’.

To put it into context, that’s enough to exclusively meet the UK’s entire gas needs for almost four years.

The figure comes from a third-party assessment of the assets, conducted by DeGolyer & MacNaughton (D&M), which estimates there is a Total of 102 tcf of shale gas in place across the IGas projects.

The 11 tcf figure is an estimate of the unrisked prospective resource, which accounts for the likely ‘productive area’ and recovery factor, a risked estimate factoring in presumed geological chance of success amounts to 2.5 tcf.

The new estimates came after D&M assessed the entire IGas UK asset base; D&M also upgraded the group’s conventional oil reserves.

Proved (1P) reserves Totalled 9.39mln barrels oil equivalent (boe) at the end of June 2016, up from 8.31mln, whereas proved and probable (2P) reserves amounted to 13.77mln boe.

Estimated contingent resources, meanwhile, increased to 21.83mln boe in 2016, from 12.67mln barrels in the year before.

IGas noted that the contingent resources include additional barrels within producing and undeveloped fields that can be readily developed with infill drilling and gas monetisation projects.

It added that several gas monetisation ventures are ready, requiring only sales agreements and final investment decisions before they can be advanced.

D&M calculated between US$195mln and US$277mln of future cash flows for IGas’s net reserves – and that’s despite IGas having seven fields that presently have zero reserves due to oil prices that render them uneconomic.

Quick facts: IGas Energy Plc

Price: 15 GBX

Market: AIM
Market Cap: £18.38 m

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Onshore UK focused IGas’s (LON:IGAS) production currently is 850,000 barrels per year, but that is dwarfed by its shale acreage in the East Midlands. This compares favourably with major shale plays in the US, says Bowler, who believes the reserves are sufficient to provide all the UK’s gas...

on 17/10/19

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