IGas to acquire Nexen Explora

RNS Number : 3095A

Igas Energy PLC

31 January 2011

 



31 January 2011

IGas Energy PLC

("IGas", "the Company" or "the Group")

IGas to acquire Nexen Exploration U.K. Limited

The Board of IGas, a domestic gas producer and leading developer of unconventional gas resources in the UK, is delighted to announce the signing of an agreement ("the Agreement") with Nexen Petroleum U.K. Limited, a wholly owned subsidiary of Nexen Inc ('Nexen'), to acquire Nexen Exploration U.K. Limited, and as a result, IGas Group will become the operator and sole owner of each of its licences (subject to approval of change of control by DECC).

IGas' Contingent Recoverable Resource 2C (P50) will increase by 115% to 1,736bcf or 290 million barrels of oil equivalent and its current production will almost triple.

In exchange Nexen will receive 39,714,290 IGas shares equivalent to 29.9% of the enlarged issued share capital. These shares will be subject to a lock up agreement for nine months.

The Agreement will also give IGas on-going access to Nexen's unconventional gas technology, including the secondment of key personnel. Nexen will have the right to be represented on the board of IGas by one director.

Andrew Austin, CEO, of IGas said: "This accretive acquisition marks a major turning point in our history. IGas is more than doubling its Contingent Recoverable Resources, with a consequential effect on future production.  As a result of this deal we will have enough recoverable gas to supply electricity to 15% of UK homes for 15 years.

Additionally, as operator of all our acreage, we will be able to accelerate our production plans and increase our ability to deliver gas. This landmark deal brings significant value not only to IGas' existing shareholders but also to Nexen, as its onshore UK gas interests will now be held in a company dedicated to delivering secure gas onshore.

Nexen has been a great partner in the appraisal and pilot production phases of the development of our assets and we now look forward to having them as shareholders as we move to full field development. We remain funded for our existing plans including the delivery of our first commercial production site in 2011."

The closing of the transaction is subject to DECC approval of a change of control of Nexen Exploration U.K. Limited, and the approval of the shareholders of IGas. A letter describing the transaction and the timing of the required General Meeting will be posted to IGas shareholders shortly.

Ends

For further information please contact:

IGas Energy Plc	Tel: [phone]
Andrew  Austin, Chief Executive Officer
RBS Hoare Govett	Tel: [phone]
Stephen Bowler/ John MacGowan
Kreab Gavin Anderson	Tel: [phone]
Ken Cronin/ Kate Hill/ Anthony Hughes

 

Notes to Editors

IGas Energy plc ("IGas")

IGas was set up to produce and market domestic sourced gas, primarily from unconventional reservoirs, particularly coal bed methane. IGas is now producing gas from its pilot production site at Doe Green in Warrington and selling electricity through its on-site generation, a UK first from CBM. Initial production rates indicate that the Company should exceed its threshold for commerciality.

IGas will now have 100% ownership of eleven PEDLs in the UK, two methane drainage licences and three offshore blocks under one Seaward Petroleum Production Licence. These licences cover a gross area of approximately 1,756 km2. Prior to this transaction IGas's interest ranged from 20% to 100% in licences and the net 2C resource attributable to IGas was 807bcf. IGas' resource numbers will now be:

GIIP - CBM and Shale (Bcf):
(Now all 100% IGas)	CBM Unrisked GIIP	Shale Unrisked GIIP	All unconventional Unrisked GIIP
Low	5,155	89	5,244
Medium	9,107	1,139	10,246
High	19,462	4,644	24,106

                                                                                                                             Source: Equipoise

Contingent Recoverable Resources - CBM only (Bcf)
(Now all 100% IGas)	Statistically aggregated
1C (p90)	1,192
2C (p50)	1,736
3C (p10)	2,530

                                                       Source: DeGolyer and McNaughton report as of 31^st December 2008 

The above Contingent Recoverable Resources evaluation was carried out by the world-renowned international petroleum consulting firm DeGolyer and MacNaughton. These results reflect only the changes in equity that have taken place since the report was initially written assessing  the Contingent Recoverable Resources of the group as at 31st December 2008 . DeGolyer and MacNaughton have prepared these Contingent Recoverable Resource estimates in accordance with the Petroleum Resources Management System (PRMS) approved in March 2007 by the Society of Petroleum Engineers, the World Petroleum Council, the American Association of Petroleum Geologists, and the Society of Petroleum Evaluation Engineers. Contingent Recoverable Resources are defined as discovered potentially recoverable quantities of hydrocarbons where there is no current certainty that it will be commercially viable to produce any portion of the contingent resources evaluated. Contingent Recoverable Resources are further divided into three status groups: marginal, sub-marginal, and undetermined. IGas' Contingent Recoverable Resources all fall into the undetermined group. Undetermined is the status group where it is considered premature to clearly define the ultimate chance of commerciality

Nexen Inc

Nexen Inc. is an independent, Canadian-based global energy company, listed on the Toronto and New York stock exchanges under the symbol NXY.

Equipoise Solutions Ltd

Equipoise Solutions is a privately owned independent consulting company established in 1998 with offices in South London. The company specialises in petroleum geology and geophysics. The work has been supervised by Dr Adam Law, Director of Equipoise, a post graduate in Geology and a Fellow of the Geological Society of London. He has 15 years experience in the evaluation of oil and gas fields and acreage. Mr. Donald Alastair Scott has reviewed and approved these estimates. Mr. Scott is a Director of Equipoise, and has over 40 years experience in the evaluation of oil and gas acreage.

For further information on Equipoise Solutions, please visit: www.equipoisesolutions.ltd.uk 

Qualified Person

John Blaymires, Chief Operating Officer of IGas Energy Plc, and a qualified person as defined in the Guidance Note for Mining, Oil and Gas Companies, March 2006, of the London Stock Exchange, has reviewed and approved the technical information contained in this announcement.  Mr. Blaymires has more than 27 years experience.

Glossary

The following definitions apply throughout this announcement, unless the context requires otherwise 

Bcf	billions of standard cubic feet of gas
boe	barrel of oil equivalent
CBM	coal bed methane
CPR	competent person report
DECC	The Department for Energy and Climate Change
FDP	field development programme
GIIP	gas initially in place
PEDL	Petroleum Exploration and Development Licence
Tcf	trillions of standard cubic feet of gas

 

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