IGas Energy (IGAS) has started drilling an exploration well in north west England to further evaluate the potential of its UK shale acreage. Anti-fracking protesters attempted to stop the drill rig arriving at the site - near Barton Moss in Greater Manchester - but police intervened, arresting a man on suspicion of unlawful obstruction, according to the BBC.
The fact that IGas has successfully started drilling in the north west is a positive start for the company, although we suspect environmental resistance will greatly intensify once IGas actually applies to frack a shale gas well. The current well is only designed to "evaluate the gas-bearing potential of the formations" by taking core samples and wireline logs - so no fracking yet.
In-depth analysis of the cores will then take up to six months to complete, at which point the company may decide to complete flow testing - which would give a clearer indication of whether gas could be unlocked successfully from this shale. Potential production will be hindered in any case since the well is being drilled vertically, not horizontally, a technique that greatly boosts shale gas production in the US.
Interim financial results are of less importance but daily production of oil from the company's conventional UK assets is rising, helping to offset some of the unconventional exploration costs.
IGAS ENERGY (IGAS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 110p | MARKET VALUE: | £212m | |
| TOUCH: | 108-110p | 12-MONTH HIGH: | 154p | LOW: 66p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 36p* | NET DEBT: | 117% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 33.4 | 10.3 | -0.68 | nil |
| 2013 | 36.2 | 4.62 | -0.17 | nil |
| % change | +8 | -55 | - | - |
*Includes intangible assets of £94.4m, or 49p a share | ||||
