Farm-out Agreement with Total E&P UK Limited

RNS Number : 4439X

Igas Energy PLC

13 January 2014

 



13 January 2014

IGas Energy plc

("IGas" or "the Company")

Farm-out Agreement with Total E&P UK Limited in PEDL139 and PEDL140

IGas Energy plc (AIM:IGAS) and its partners (Egdon Resources, Dart Energy and eCorp) are pleased to announce they have signed a Farm-out Agreement ("The Agreement") with Total E&P UK Limited ("Total"), a wholly owned subsidiary of Total SA, under which Total will acquire a 40% interest in the UK Onshore Petroleum Exploration and Development Licences PEDL139 and PEDL140 ("the Licences") located in the Gainsborough Trough in Lincolnshire.  The Licences cover an area of 240Km² and border PL178 and PEDL006 at Beckingham, an existing IGas producing field. IGas will become operator of the Licences upon completion.

Under the terms of the Agreement, Total will pay $1.6 million in back costs to the partners and fund a fully carried work programme of up to $46.5 million, with a minimum commitment of $19.5 million. At the end of the carried work programme Total will become operator of the Licences.

The programme will include the acquisition of 3D seismic; the drilling and testing of a vertical exploration well and associated well pad construction; and, conditional on the success of the testing of the exploration well, the drilling and testing of a second appraisal horizontal well. 

On completion of the transaction the interests in the Licences will be: Total E&P UK Limited (40%), GP Energy Limited (a subsidiary of Dart Energy Europe) (17.5%), Island Gas Ltd (a subsidiary of IGas) (14.5%), Egdon Resources UK Ltd (14.5%), and eCorp Oil & Gas UK Ltd (13.5%).

Completion is expected to take place not later than 30^th June 2014.

As part of its ongoing plans for the development of natural gas in the North West, the Company is also announcing its intention to apply for permits for the acquisition of extensive 3D seismic surveys across a number of licence areas.  This will enable IGas to identify several potential exploration and development sites in the area. The Company will also begin the permitting process for the acquisition of 3D seismic surveys in the East Midlands and the South of England. 

At our exploration site at Barton Moss, we have set the conductor and continue to drill ahead.  As previously announced, the exploration drilling process is expected to be completed in Q1 2014, with analysis of the core and log data beginning thereafter.

Commenting Andrew Austin, CEO of IGas Energy said: "Today's announcement represents a further step in our exploration programme to develop natural gas within Britain and increases our interest in the Licences. The entry of the first major into UK shale gas licences is a further endorsement of the potential that exists following the recent commitments by Centrica and GDF Suez, and demonstrates strong support for our operating capability.

The future development of natural gas has the potential to create thousands of jobs, generate significant tax revenues, reduce our ever increasing reliance on imported coal and gas and make a positive contribution to the country's balance of payments. As operator, we will be embarking on a stakeholder programme in the area which will involve extensive community engagement."

Commenting on the acquisition, Patrice de Viviès, Total's Senior Vice President for Northern Europe, said: "This opportunity is an important milestone for Total E&P UK and opens a new chapter for the subsidiary in a promising onshore play. The Group is already involved in shale gas projects in the US, Argentina, China, Australia and in Europe in Poland and in Denmark, and will leverage its expertise in this new venture in the UK."

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For further information please contact:

IGas Energy plc	Tel: [phone]
Andrew Austin, Chief Executive Officer Stephen Bowler, Chief Financial Officer Ann-marie Wilkinson, Head of Communications
Jefferies International Limited	Tel: [phone]
Sara Hale  Canaccord Genuity Tim Redfern	Tel: [phone]

MHP

Rupert Trefgarne                                                                    Tel: [phone]

 

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