Industry

Notts site construction expected soon and new NW shale application within three months – IGas

tinker-lane-2

IGas site at Tinker Lane, Nottinghamshire. Photo: DrillOrDrop

IGas expects to submit a new planning application in north west England by the end of the year and to begin construction soon at its East Midlands shale gas sites.

The company said in interim half year accounts published this morning it was waiting for formal approval of planning conditions from Nottinghamshire County Council for sites at Springs Road and Tinker Lane. It said:

“We will shortly commence site construction at our two sites in North Nottinghamshire ahead of drilling”.

Site construction work was expected to take two to three months and the first well likely to be spudded in early 2018.

The company added:

“We are currently in the process of securing new sites and progressing further planning applications to follow for appraisal and flow testing in the East Midlands area.”

In north west England, the company said:

“We have been working on securing appropriate sites for development in the area and will now be bringing forward further applications for appraisal/flow testing including hydraulic fracturing, with at least one being submitted before the end of the year.”

An  application to test the IGas well at Ellesmere Port in Cheshire is currently going through the planning system.

IGAS shares were down over 5% on the day at 49p, and have fallen by 83% from 290p in September 2016.

Other plans

IGas said the Welton water injection project, near Lincoln, was to be extended.

At Stockbridge, near Winchester, the company said it had plans for a workover and sidetrack of a well.

In Surrey, the first gas was expected to flow from the Albury production site in the third quarter of 2018. IGas said commercial discussions over both Albury and Bletchingley, also in Surrey, were progressing.

Profit up and debt  down

The accounts for the first half of 2017 saw a rise in revenue compared with the same period a year ago. This follows a higher oil price and weakening of the pound against the dollar. Profit after tax was also up, at £8m, following a loss of £25.2m in the same period a year ago.

Net debt was down sharply following the restructuring of the business. Kerogen Capital invested £29m in the business and is now a 28% shareholder. IGas also raised another £18m in a placing and open offer. The rise in net assets was also the result of the capital restructuring, the company said

Adjusted earnings before deductions were down because of increased operating costs. This was because of higher maintenance activity and the higher costs of buying and transporting oil from other companies. Production was slightly below budget because of well maintenance, IGas said.

Details

(Figures are for the first six months of 2017. Figures in brackets are for the same period of 2016)

Revenue: £16.8m; (Six months to 30 June 2016: £12.1m)

Adjusted earnings before interest, tax, depreciation and amortization: £2.5m; (Six months to 30 June 2016: £5.1m)

Profit after tax: £2.5m; (Six months to 30 June 2016: £25.2m)

Net cash from operating activities: £0.4m; (Six months to 30 June 2016: £9.1m)

Net debt: £7.2m; (Six months to 30 June 2016: £83.5m)

Cash and cash equivalents: £16.3m; (Six months to 30 June 2016: £27.1m)

Administrative expenses: £3.9m; (Six months to 30 June 2016: £4.3m)

Net assets: £173.3m; (Six months to 30 June 2016: £70.5m)

Average production: 2,326 barrels of oil equivalent per day; (Six months to 30 June 2016: 2,299 boepd)

Estimated average production for 2017: about 2,500 boepd

Sales: £16.8m from 444,023 barrels of oil; (Six months to 30 June 2016: £12.1m from 438,665 barrels)

Generated electricity: 4,100mwh; (Six months to 30 June 2016: 4,200mwh)

10 replies »

    • Yes, of course – share price today 49p divided by 200, the revaluation, equals 0.245p; no dividends paid: investor quote ‘Have to agree…. too many people got their fingers burned with this company myself included. won’t be buying back in’.

  1. Share price reflects low oil prices. The positive result of US fracking. It will have a braking effect upon many players in the market, but those who have the right assets and low costs will do okay. Some investors will be focused on the past, others on the future. That’s normal.

    • you are sooo funny Martin. Share price actually reflect the value of the company and investor confidence….IGAS investors are currently focused on why their shares are almost worthless. That’s not normal or is it the shape of things to come, I wonder?

  2. You showed with your comments about the Ineos vehicle project that you don’t do much research. I should not compound it on this subject.

    What is the major CURRENT source of income for IGAS? And what is the price per barrel? There is a clue there. I would not take too much notice of one share holder, or ex., or someone who has never held shares wanting to drop the price further for their own interests, posting on a chat site. (You can find that for just about every company.)

    Most share holders, or potential investors, will look at the fundamentals. Yes, others will want returns over a shorter period and decide it’s not for them. Without that, shares would sit in the hands of the same people continuously, and there would be no trading at all. I suspect with IGAS there has been a high proportion of shareholders who have expected quick high returns, and did not see the drop in oil prices coming, and have moved elsewhere, some in time others not. You have again only seen what you want to see. If you looked at the fundamentals, “wondering” may not be required.

  3. The fundamentals are that this company has yet again posted a net loss from its operations, meaning that it still fails to meet one of the OGA’s four Financial Viability Criteria, namely Interest Cover, a measure that OGA is supposed to take into account before giving approval for drilling to commence. IGas also benefited from a favourable £:$ exchange rate.

    The results also reflect the reduced borrowings, and thus lower interest charges; IGas will continue to benefit from this in the future, but at some point will have to start demonstrating that its operational and exploration competences match its financial engineering abilities.

    April’s financial restructuring saved this business from going to the wall, or at leastfrom being raped and pillaged by its bondholders. Reducing the gearing should have the business’ future secured for the medium term, and it says it will finally start drilling in North Notts this year (only 3+ years after starting its survey work!!!). So the expectation would be that the future is brighter for shareholders than it has been for a long time …….. and yet the share price has tanked, falling by over 55% since the re-structuring.

    Discuss

  4. Gledders-a reasonable summary, with a great deal more research than some.

    The discussion would be, that at these share prices it could be a pretty good gamble for some to take. For others, who don’t want to gamble, not so.

    It all depends on what they are able to achieve in increased revenue over the medium term, and whilst Sherwulfe will think that is a straight forward equation of whether he can delay some drilling, it is a lot more than that. Equally, for those who want to gamble, there are a few companies which appear to be a better bet at the moment, and I suspect that is where the money has gone. If they are successful, some of their profit may return to IGAS holdings. But most of these companies are speculative bets, and many investors will switch easily depending upon short term views.

  5. Kerogen Capital invested £29m in the business and is now a 28% shareholder. Kerogen Capital have stated that they have little interest in European (UK) shale. Their opportunities are largely non-shale (i.e. conventional). Kerogen are private equity players and prey on companies with distressed balance sheets. If IGas do well then Keogen Capital wins. If IGas goes down the tubes they still win.

    You have a 28% shareholder who really doesn’t mind if IGas go bust or not. That is the nature of Private Equity; no loyalty, just there to make as much money as they can.

    The other reason that Kerogen invest here is that taxes have decreased. Tushar Kumar (a Director at Kerogen Capital) notes that in the U.K. the tax rates were lower than in the Gulf of Mexico.

    If I held shares in IGas I think that I would be feeling a bit distressed. IGas took over Dart Energy. Ask any of the Australian investors who held shares in Dart Energy what happened to their shares. Not happy bunnies I suspect.

    In the April 2017 re-structuring lots and lots of investors lost value as their shares were traded at a ratio 20:1.

    To he honest, I have no real interest in share dealings or the like. The above is just my basic take on the situation. Please feel free to do your own research. Have a nice day.

  6. Not going to disagree Waffle, except any distressed shareholder will totally depend on when they bought. And, Kerogen invested £29m, they do care if the business goes bust. They would not have invested £29m if that was their view-you make no money if a business goes bust! (Usually.) Much more enjoyable ways to dispose of £29m.

    Perhaps they were aware that with cheaper oil prices, wealthy Western countries are returning to their fixation with oil? And that on shore UK oil often has low production costs which adds to the low taxation benefits?

    I will not give the reference, but it is there if people want to search for it-and with very little going on at the moment for people to investigate, other than bats, it should supply hours of Giggle fun.

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