RNS Number : 1272C
Igas Energy PLC
06 February 2020


6 February 2020

IGas Energy plc (AIM: IGAS)

("IGas" or "the Company")


Reserves and Trading Update

IGas provides a reserves, trading and operational update for the year to 31 December 2019.  Final results for the year ended 31 December 2019 are expected to be announced on Thursday, 26 March 2020. The information contained in this statement has not been audited and may be subject to change.

Reserves Update

The Company publishes today its reserves and resources of its conventional oil and gas interests, as at 31 December 2019, from a Competent Persons Report ("CPR") carried out by DeGolyer & MacNaughton ("D&M"), a leading international reserves and resources auditor.

Key highlights:

·    IGas net reserves and resources* (MMboe):





As at 31 Dec 2018




As at 31 Dec 2019





·   Significant 2P reserves replacement ~277% (1P ~192%)

·   2P NPV10 of $183 million*

*based on forward oil curve of 2020 $61.78/bbl; 2021 $58.39/bbl; 2022 $56.97/bbl; 2023 $56.54/bbl; 2024 $57.67/bbl

The full report will be uploaded to https://www.igasplc.com/investors/publications-and-reports in the next few days.

Operational highlights

·    Net production averaged 2,325 boepd for the year, within guidance, while operating costs for the year were c. $30/boe (at an average 2019 exchange rate of £1:$1.28).  We anticipate net production of between 2,250 - 2,450 boepd and operating costs of c.$30/boe (assuming an exchange rate of £1:$1.30) in 2020.

•     Our Waterflood Projects remain on track both in terms of delivery and budget, and are expected to be online in H1 2020:

Scampton Waterflood project  - pipeline construction now complete, site construction continuing as planned; and

Welton Waterflood project - well integrity tests successfully completed and as such project will progress as planned.


·    The Planning Inspector has now submitted his recommendation report on the Ellesmere Port Appeal to the Secretary of State. A decision is expected on or before 8 April 2020.

•     We continue our work to analyse the data set at Springs Road.

·    In respect of the ongoing moratorium on issuing Hydraulic Fracturing Consents, we continue to work with our partners and the relevant regulators to demonstrate that we can operate safely and environmentally responsibly, as we have done onshore in the UK for many decades. It is acknowledged that each site and basin can have substantially different geology and we continue to analyse and understand the data available to us.

Financial highlights

·    $40 million Reserve Base Loan agreed in October 2019:

Draw down in November 2019 to repay secured bonds;

Greater available capital to grow our conventional business; and

Reduction of financing costs of c. $1 million on an annualised basis.


·    Approximately £15.5 million of free operating cash flow generated in 2019 from the conventional business before administrative expenses, capital investment and finance costs.


·    Cash balances as at 31 December 2019 of £8.2 million and net debt of £6.2 million.


·    As at 31 December 2019, the Group had hedged a total of 420,000 bbls for 2020, using a combination of puts (292,500 bbls at an average downside protected price of $51.4/bbl) and fixed price swaps (127,500 bbls at an average fixed price of $58.7/bbl).


·    The Company incurred net cash capex of £6.0m in 2019 and expects net cash capex for 2020 to be £10.0 million, of which £3.0 million will be on our producing assets and £7.0 million will be on future development.

Stephen Bowler, CEO, commented:

"The Production business has performed well in 2019 and continues to generate strong free operating cash flow. The good performance by our production assets alongside project results and progression means that we have today reported over 250% 2P reserves replacement, demonstrating the significant upside in our conventional portfolio.

The independent expert's valuation of our conventional assets is c. US$180 million on a 2P NPV10 basis, an increase of US$20 million compared to a year ago, which is significantly in excess of our current market capitalisation.  

During 2019, ahead of the moratorium, we also made significant progress on our shale assets in the East Midlands, confirming our prognosis that we have a world-class gas resource in the Gainsborough Trough.

The UK currently imports in excess of 50% of its energy requirements. As we transition to becoming independent from the EU and focus on our climate change ambitions, there is a growing need to develop domestic energy sources, including oil and gas, which have both economic and environmental advantages."

Ross Pearson, Technical Director 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 Pearson has 19 years oil and gas exploration and production experience.


For further information please contact:

IGas Energy plc                                                                           Tel: +44 (0)20 7993 9899

Stephen Bowler, Chief Executive Officer

Julian Tedder, Chief Financial Officer

Ann-marie Wilkinson, Director of Corporate Affairs


Investec Bank plc (NOMAD and Joint Corporate Broker)  Tel: +44 (0)20 7597 5970

Sara Hale/Jeremy Ellis/Neil Coleman


BMO Capital Markets (Joint Corporate Broker)                  Tel: +44 (0)20 7653 4000

Tom Rider/Neil Elliot/Jeremy Low/Tom Hughes


Canaccord Genuity (Joint Corporate Broker)                       Tel: +44 (0)20 7523 8000

Henry Fitzgerald-O'Connor/James Asensio


Vigo Communications                                                               Tel: +44 (0)20 7390 0230

Patrick d'Ancona/Chris McMahon 





£ The lawful currency of the United Kingdom

$ The lawful currency of the United States of America

1P Low estimate of commercially recoverable reserves

2P Best estimate of commercially recoverable reserves

3P High estimate of commercially recoverable reserves

1C Low estimate or low case of Contingent Recoverable Resource quantity

2C Best estimate or mid case of Contingent Recoverable Resource quantity

3C High estimate or high case of Contingent Recoverable Resource quantity

AIM AIM market of the London Stock Exchange

boepd Barrels of oil equivalent per day

bopd Barrels of oil per day

GIIP Gas initially in place

MMboe Millions of barrels of oil equivalent

MMscfd Millions of standard cubic feet per day

PEDL United Kingdom petroleum exploration and development licence

PL Production licence

Tcf Trillions of standard cubic feet of gas

UK United Kingdom



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