IGas Energy reveals plans for a new raising ahead of Nexen Exploration UK acquisition

IGas Energy Friday revealed its plans for a new fundraising, ahead of the planned acquisition of Nexen Exploration UK. The raising will see IGas issue upwards of 27.5 million new shares. The shares will correspond to approximately 29.5 per cent of IGas existing share capital. Even though the details of the placing or number of shares and price were not disclosed, analysts reiterated that at the current price of 81 pence, these shares would be worth over £22 million.

IGas will crucially gain full control of all the license acreage, and as such it will be able to accelerate the delivery of its production plans. The fresh funding will accelerate the firm’s strategy.

The new capital is being earmarked for an accelerated drilling program across its acreage from 2011 onwards. IGas already has around £12 million which will help the company bring its first commercial production site online, as well as supporting its progress with gaining land access the Point of Ayr project.

IGas signed an agreement with Nexen Petroleum U.K. Limited, a wholly owned subsidiary of Nexen Inc, to acquire Nexen Exploration U.K. Limited on January 31. IGas Group will become the operator and sole owner of each of its licenses. The agreement will also give IGas on-going access to Nexen’s unconventional gas technology, including the secondment of key personnel. Nexen will have a representative on the board of IGas though one director.

Andrew Austin, CEO of IGas, said the accretive acquisition marks a major turning point in the firm’s history. IGas is more than doubling its Contingent Recoverable Resources, with a consequential effect on future production, he noted. As a result of this deal, IGas will have enough recoverable gas to supply electricity to 15% of UK homes for 15 years, said Austin.

Additionally, as operator of all its acreage, IGas will be able to accelerate its production plans and increase its ability to deliver gas. This landmark deal brings significant value not only to IGas’ existing shareholders but also to Nexen, as its onshore UK gas interests will now be held in a company dedicated to delivering secure gas onshore, Austin said.

IGas was set up to produce and market domestic sourced gas, primarily from unconventional reservoirs, particularly coal bed methane. IGas is now producing gas from its pilot production site at Doe Green in Warrington and selling electricity through its on-site generation.

11 Feb 2011.