Igas steps up production plans following "transformational" £110m deal

IGAS Energy, the firm completing shale gas exploration works in Warrington and in Staffordshire, has announced a “transformational” £110m takeover of Star Energy and plans to step up its operations in the North West.

Star Energy is currently owned by Petronas, the oil & gas giant owned by the Malaysian Government. The deal involves Igas buying the onshore production assets of Star Energy, but not its overseas assets or gas storage business.

Moreover, Petronas has also entered into a deal to buy gas produced by Igas from its existing sites. The deal has been funded by Australian Bank Macquarie, which has provided a $150m loan, $10m of which is for development.

The company has also announced plans to ramp up its operations at its Doe Green Coal Methane Bed extraction site near Warrington. The company said that drilling was now in progress at its third well at the site, and that planning for a fourth well at the site was now at an advanced stage.

It has also completed site construction works at nearby sites in Ince Marshes and Ellesmere Port, and expects to begin drilling at both in October.

Ground works will also begin at Barton near the M60 where it is planning to drill one well, with a view to developing another at a later date.

Chief executive Andrew Austin said: “The enlarged group is expected to have a growing production profile as IGas Energy’s combined oil and gas resources are developed.

“It is anticipated that this growing production profile could potentially see the combined group being financed without the need for further recourse to additional equity. He added that the Gas sale agreement with Petronas “offers an important partnership and a customer for our gas as it comes on stream”.

“This agreement constitutes a significant step towards the migration of our resource base to reserves.”

In the six months to June 30, Igas Energy’s operating losses climbed to £1.1m (2010: £547,00). Revenues slumped to £29,000 following its acquisition of former customer Nexel.