Company Update

RNS Number : 0703B

Igas Energy PLC

14 June 2016

 

14 June 2016

IGAS ENERGY PLC (AIM: IGAS)

("IGas" or "the Company")

Company Update

IGas, one of the leading producers of hydrocarbons onshore in Britain, provides the following update.

As announced at the AGM on 25^th May 2016, production guidance for the full year remains between 2,500 - 2,700 boepd.  The oil price has improved from the lows in the first quarter of the year to c. $50 per barrel and IGas expects its operating costs for 2016 to be c. $30/boe. Cash on the balance sheet as at 31 May 2016 was £23.6 million. 

Over the last 14 months, the Company has been de-leveraging its balance sheet through a combination of farm-outs and bond buy-backs as well as through the amortisation of its secured bonds. As was reported at the time of the Company's results for the nine months to 31 December 2015, IGas is actively seeking to strengthen its balance sheet during this period of prolonged oil price volatility and has been in discussions with its leading bondholders with a view to extending the maturity of the debt, deferring certain interest payments and the waiver of some financial covenants on the basis that further finance comes into the business.    

In relation to these financing requirements, the Company is in discussions with a number of potential investors and continues to evaluate options for cash and earnings accretive transactions including farm-outs and other asset portfolio management opportunities. These discussions are intended to achieve a capital structure that is sustainable in the current oil price environment, as well as enabling the Company to capitalise on value accretive opportunities such as water injection, oil behind pipe, gas monetisation and infill drilling with the potential to increase production by c. 700 boepd, net of decline, by January 2018. 

IGas operates one of the largest net shale acreage positions in the UK, with a very significant total gross carried work programme of up to $255 million.  The Company is making good progress on its five year shale development plan, with two carried wells expected to spud in the first half of 2017, subject to planning and permitting. It should be noted that Third Energy, another onshore operator, recently received planning permission to hydraulically fracture its existing KM8 well at Kirby Misperton, Yorkshire, to evaluate the potential of the shale resource.   

The Company is monitoring its bond covenants, in particular ratios based on cash and leverage, which continue to be impacted by the prevailing oil price and current currency volatility. 

The company will update the market in due course as discussions progress.

For further information please contact:

IGas Energy plc   Stephen Bowler, Chief Executive Officer Julian Tedder, Chief Financial Officer Ann-marie Wilkinson, Director of Corporate Affairs		Tel: [phone]
Investec Bank plc (NOMAD and Joint Corporate Broker) Sara Hale/Jeremy Ellis/George Price		Tel: [phone]
Canaccord Genuity (Joint Corporate Broker)   Henry Fitzgerald-O'Connor		Tel: [phone]
Vigo Communications   Patrick D'Ancona/Chris McMahon		Tel: [phone]

 

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