Half-year figures from UK shale gas explorer IGas Energy (IGAS) revealed roughly flat production during the period, at 2,766 barrels of oil equivalent per day. Add a falling oil price to the mix and operating profit fell more than a fifth to £8.6m.
But these figures aren't as important as the group’s progress in appraising and developing its shale acreage. Earlier this month, IGas began drilling a vertical exploration well at Ellesmere Port, and also announced the results of its exploration well at Barton Moss. At the latter, the drillers encountered 15 gas-bearing coal seams, in accordance with pre-drill expectations, and the shale-rock samples recovered contained up to 5.72 per cent of carbon content - though the average figure was rather lower, at 1.9 per cent.
The group also completed the acquisition of Dart Energy last month, creating a portfolio covering around 1m acres for potential fracking. The group now operates an $80m (£51m) programme funded by big names like GDF Suez and Total, and boasts the largest area in the UK that has been licensed for shale gas exploration.
Broker Westhouse Securities has a target price of 164p, which reflects a 15 per cent probability that IGas will successfully develop its shale gas resources.
IGAS ENERGY (IGAS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 59p | MARKET VALUE: | £175m | |
| TOUCH: | 58-59p | 12-MONTH HIGH: | 165p | LOW: 49p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 25p* | NET DEBT: | 110% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 36.2 | 4.6 | -0.2 | nil |
| 2014 | 34.5 | 1.5 | -1.9 | nil |
| % change | -5 | -67 | - | - |
Ex-div:- Payment:- *Includes intangible assets of £135m or 45p a share | ||||
