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IGas targets full-scale production

TIP UPDATE: IGas targets two further test plants as precursor to full-scale production next year
May 14, 2010

IGas Energy continues to make good progress towards achieving the UK's first full-scale production of coal bed methane, possibly as early as next year. Its first pilot plant has been in operation for over a year at Doe Green in Cheshire, and is generating electricity for sale to the national grid. The company is planning two further test plants this year at Keele University in Staffordshire and Point of Ayr, southwest of Liverpool.

IC TIP: Buy at 89p

At this stage of its development, the company is primarily focused on proving that gas can flow at commercial rates from its coal seams. If the second and third test plants also confirm that it can, IGas is financed to have a full production site up and running in 2011. The company has already demonstrated the existence of plentiful gas in its acreage: independent estimates show IGas currently has enough gas to supply electricity to over 7 per cent of UK households for 15 years.

The company has also identified potential for shale gas (currently one of the most keenly pursued unconventional hydrocarbon sources) within its Point of Ayr acreage, that it will have independently assessed.

IGAS ENERGY (IGAS)
ORD PRICE:89pMARKET VALUE:£80.6m
TOUCH:88-89p12-MONTH HIGH:91pLOW: 42p
DIVIDEND YIELD:NILPE RATIO:NA
NET ASSET VALUE:20pNET CASH:£17.5m

Year to 31 DecTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20060.580.080.10nil
20070.81-2.01-3.60nil
20080.99-0.39-0.64nil
20090.83-0.50-0.76nil
% change-17---

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