IGas progressing with shale work programme

IGas issued a trading statement for the period from 1 January to 13 June on Wednesday, as investors gathered for the company’s annual general meeting, which was beginning during the morning.

The AIM-traded firm highlighted the successful completion of its balance sheet restructuring and fundraising in April, adding that “experienced” industry investor, Kerogen Capital, was now a 28% shareholder following its $35m equity investment.

A further $22m was raised in a placing and open offer.

Net debt was reduced from $122m at 31 December to around $8m as at 31 May, and the company said it was cash flow generative at current oil prices.

Net production averaged 2,320 barrels of oil equivalent per day for the first five months of the year.

Production was said to be “marginally below budget” for the period, due to necessary maintenance on a number of wells for which the company was taking remedial action, including engagement of an additional workover rig to accelerate reinstatement of those wells.

That would have an associated impact on full year operational expenditure per barrel, and net production for the year was anticipated to be around 2,400 boepd

IGas said its shale appraisal and development plan was covered by its up-to-$230m carried work programme, as it had agreed and signed Section 106 legal agreements for the exploratory well sites at both Springs Road and Tinker Lane.

Planning conditions were now to be discharged ahead of the construction phase and commencement of drilling activity, with spudding currently anticipated to commence in the fourth quarter of 2017.

As it had previously announced, chairman and founder Francis Gugen and John Bryant were to retire and Mike McTighe to become chairman following the AGM, subject to shareholder approval.

In addition John Blaymires and Julian Tedder were to resign from the board effective following the AGM, but would remain directors of the operating companies and continue to hold their executive roles.

“We are delighted to have completed the fundraising and refinancing in the period whilst also moving forward our operational plans,” said chief executive Stephen Bowler.

“There continues to be volatility in the commodity and foreign currency markets and we are keeping our costs under constant review.

“Importantly, following the refinancing, we are cash generative at current oil prices and have a low level of debt in the business.”

Bowler said the company was continuing to to move its shale work programme forward, with three wells having received formal planning approval in North Nottinghamshire.

“We see further momentum building across the wider UK shale industry as Cuadrilla and Third Energy move closer to drilling their wells and INEOS has begun to submit planning applications and shoot seismic across its licensed acreage.

“This additional data will help us and the wider industry to further understand the shale prospectivity in these basins.

“We look forward to an exciting second half of the year, with a strong balance sheet enabling us to capitalise on value accretive opportunities and rebuild shareholder value.”