Igas Energy Placing: Bolstering balance sheet ahead of realising value on its shale gas assets?
Igas (115.25p and 1.6% of JIC) is placing 24.3m new shares at 95p to raise c.£23m. The money raised will bolster Igas's balance sheet and enable it to conduct a work programme aimed at demonstrating the "significant potential of its unconventional resource base" i.e. shale gas. The Company says that it has identified prospective shale horizons across all of its UK acreage in both East Midlands and Weald Basin.
The Company is also completing the acquisition of P.R Singleton from Providence Resources which will give it additional onshore production of around 500 barrels of oil per day of conventional oil. Of the $66m due for Singleton $30m will be funded through increased debt and the remainder from the Company's existing cash resources.
The priority for Igas is to realise some value from its Shale gas assets. The cash raised today should enable the company to gain a better understanding of its potential and increase the value achieved through a farm out. In the meantime the acquisition of Singleton strengthens its financial position with the associated increase in cash flow.
It is still early in the Igas story and there is a lot to prove but today's move is a sensible step in ensuring it has a strong enough balance sheet to do so.
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IGas Energy plc is exploring for, appraising, developing and producing oil and gas resources in Great Britain. It is engaged in both unconventional and conventional hydrocarbons on-shore in Britain. In the North West and Staffordshire it has more than 500,000 acres under license, which are for the development of unconventional resources. In the East Midlands, it has two production centers: Welton and Gainsborough/Beckingham. It produces hydrocarbons in the East Midlands. As of March 31, 2012, production from this area accounted for approximately 60% of its total production. The Welton area is made up of six fields and a gathering center where the produced oil, gas and water are separated. On December 14, 2011, the Company acquired Star Energy Group Limited. On March 9, 2011, the Company acquired Nexen Exploration UK Limited. Effective March 1, 2013, the Company acquired PR Singleton Ltd, a oil and gas exploration and production company from Providence Resources PLC. more »
