Oil price swaps causes loss at IGas

IGAS Energy has welcomed a report by The Royal Society and The Royal Academy of Engineering on the impact of hydraulic fracturing, or ‘fracking’.

The report  states that hydraulic fracturing (fracking) can be managed effectively in the UK as long as operational best practices are followed and enforced by law.

IGas, which is looking to extract shale gas from underneath a number of sites owned by Peel Grop across the North West, said it is examining the report’s findings to ensure that its own approach embraces the report’s conclusions “to ensure that we continue to further improve operational best practice in the industry”.

The firm also announced results for the 15 months to March 31 at the end of last week – a period which saw it complete a “transformational” £110m deal to take on Petronas’s UK oil & gas company, Star Energy.

As a result of the deal, the company recorded a substantial increase in sales during the 15 month-period to £22.1m, compared with just £700,000 in the 12 months to December 2010. It also made an operating profit of £5.3m compared with an operating loss of £1.7m, and its net assets increased to £55.0m (£16.7m).

However, an £18.5m loss on oil price swaps and the £3m costs of acquisition meant it declared a pre-tax loss of £17.9m.

The company also said it had begun the process of finding a farm-in partner to help develop its shale gas assets and appointed investment bank Greenhill to advise it.

IGas CEO Andrew Austin said: “Hydrocarbons from unconventional sources have transformed the global market. The results of this year’s programme, particularly from our well at Ince marshes, are potentially transformational for the group.

“Our conventional production assets offer the opportunity to maintain and potentially enhance current production levels. To maximise this opportunity we have launched a ‘chase the barrels’ initiative to assess the existing fields. Alongside our significant cash flows allowing for rapid deleveraging, I look forward to further progress in the coming months.”