IGas Energy is to acquire the UK onshore oil and gas producing assets of Star Energy from Petronas. IGas's shares were temporarily suspended after the announcement of the £110m deal, which constitutes a reverse takeover under London Stock Exchange rules and excludes Star's gas storage assets.
The deal covers Star's 11m barrels of oil equivalent of proved and probable reserves and estimated production this year of 2,800 barrels of oil equivalent per day (backdated to 31 March 2011). IGas's chief executive, Andrew Austin, describes the deal as "transformational" and anticipates that Star's output, added to IGas's production profile, could generate enough cash to finance development of the coal-bed methane (CBM) portfolio without needing to raise further equity. The Star acquisition also provides IGas with production expertise and operational synergies.
IGas has also signed a sales agreement with Petronas for 150bn cubic feet of gas at market rates. This will be delivered initially from the Star assets and subsequently IGas's CBM assets as they come on stream. The accelerated CBM development programme aims to prove commercial gas flow rates at the Doe Green production plant by completion of the next two wells, potentially by the year-end.
| IGAS ENERGY (IGAS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 50.5p** | MARKET VALUE: | £81m | |
| TOUCH: | ** | 12-MONTH HIGH: | 85p | LOW: 43p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 40p* | NET CASH: | £28.4m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 0.25 | -0.47 | -0.51 | nil |
| 2011 | 0.02 | -1.00 | -0.75 | nil |
| % change | -92 | - | - | - |
*Includes intangible assets of £37.7m, or 23p a share **Shares temporarily suspended | ||||
