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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