Ribolla CBM and Shale Gas update

RNS Number : 7124F

Independent Resources PLC

03 May 2011

 



Independent Resources plc

("IRG" or "the Company")

Ribolla Basin Coal Bed Methane & Shale Gas Plays:

Completion of Independent Reviews and Commencement of Farm-Out Discussions

Highlights

·      Original gas in place (OGIP) and gross prospective gas resources (GPGR) (Mean estimates) for the main coal seam, together with associated low-grade coal and organic matter-rich shale are, respectively, 15.2 and 4.5 billion cubic metres (BCM) (537 and 160 billion cubic feet (BCF));

·      An additional and promising 40-50m thick organic rich section has been identified, which remains under assessment;

·      Farm-out negotiations have commenced with a number of companies which have experience in optimising development of analogous unconventional gas projects and have indicated an interest in Ribolla.

May 3rd, 2011: The Company is pleased to announce that farm-out discussions are underway following the completion by DeGolyer and MacNaughton (D&M) of its three-month review and analysis of the technical data generated from IRG's wholly owned unconventional gas acreage located near Grosseto, Italy.

D&M has presented its reports to the Company setting out its evaluation of IRG's unconventional gas resources occurring in association with coal and with organic matter-rich shales and marls of upper Miocene (Messinian) age (locally-named bagaglia) in the Ribolla Basin. The evaluation area includes two exploration licences, Fiume Bruna and Casoni, both awarded to Independent Energy Solutions (IES), a subsidiary of Independent Resources plc. D&M has conducted a review and analysis of the available technical data and has estimated OGIP and GPGR within these two licence areas. D&M has also made observations regarding the technical work performed thus far by IES and an assessment of technical factors, including various appraisal and development work programmes that may enhance the likelihood of achieving commercial gas production.

D&M's reports feature prospective resources that have been estimated for coal and bagaglia intervals in the Fiume Bruna and Casoni blocks which together cover the accessible area of the Ribolla Basin. The prospective resources are based on the statistical aggregation method. Estimates of the GPGR (Mean estimate), as of December 31, 2010, are 4.5 BCM (160 BCF). By analogy with established coal bed methane (CBM) production fields in the United States and elsewhere, there are a variety of drilling and completion methods that could enable commercial gas production from this area. Recommendations to reduce the commercial uncertainty now form the basis for a work programme underpinning farm-out discussions

In addition, the Company has received from Fugro Robertson (Fugro) its more recent geochemical evaluation of rock samples from the 40-50 m thick section of gas shales, found within the locally termed Argille Lignitifere di Ribolla Formation, that are found directly above the coal-shale complex. This sequence represents a new section of interest and is to be considered in addition to the better-understood sequences described above. Fugro's evaluation reviews total organic content (TOC), hydrocarbon source rock potential and maturity of this new sequence, which is not included in the D&M evaluation. Samples have potential for gas or wet gas/condensate at optimum maturity. These source rocks are expected to be present within the depocentre of the basin, and are expected to generate and expel hydrocarbons. Separately, Schlumberger Data and Consulting Services (Schlumberger) contributed valuable input towards an evaluation procedure to appraise the potential of this very promising section. The work done by Fugro and Schlumberger represents valuable new input that is presently being packaged as part of the farm-in process. The Company expects their work to be followed-up during the Joint Venture stage of the project.

As regards farming-out, it is the Company's intention to continue to focus its discussions with a small number of large and technically competent E&P companies who have expressed interest in the opportunity.

Grayson Nash, Executive Chairman commented, "I am delighted that this thorough and independent technical review has confirmed our view as to the potential of the Ribolla Basin. These numbers, it should be pointed out, take no account of the promising resource directly above the coal-shale complex that we hope to prove up by further exploration work, including drilling. We will now commence the process of seeking to monetise for shareholders our interests in both permits. We look forward to updating the market soon on this and other matters of interest."

This announcement has been reviewed by Roberto Bencini, Technical Director of Independent Resources, for the purposes of the current Guidance Note for Mining, Oil and Gas Companies issued by the London Stock Exchange in June 2009. Mr. Bencini is a Chartered Petroleum Geologist. He is a member of the Society of Petroleum Engineers, the Geological Society of London and the American Association of Petroleum Geologists.

For further information, please visit www.ir-plc.com or contact:
Grayson Nash	Independent Resources plc	[phone]
Allan Piper	Tavistock Communications	020 7920 3150
Simon Hudson		020 7920 3150
Jonathan Wright/ Stewart Dickson (Corporate Finance)	Seymour Pierce Limited	020 7107 8000
Richard Redmayne/David Banks (Corporate Broking)

Notes to Editors:

The Ribolla Basin is covered by two exploration permits, Fiume Bruna and Casoni. The Fiume Bruna Exploration Permit consists of an area totalling 247 km² located in Southern Tuscany, Central Italy, lying entirely onshore. The exploration permit was awarded to Independent Energy Solutions srl (a company fully owned by IRG) on August 2008. The permit area contains the second most important coal mining area in Italy, exploited from 1839 to the late 1950's. The Ribolla coal is a low-sulphur sub-bituminous coal of Miocene age. The Ribolla mine was notorious for the frequent methane inflow and consequent explosions. The mine closed a few years after the large methane explosion of May 1954 that caused 43 casualties, the worse mining disaster ever in Italy. The Casoni Exploration Permit consists of an area totalling 143 km² and is located just to the south of the Fiume Bruna block, entirely onshore. The exploration permit was awarded to Independent Energy Solutions srl in March 2011. The prospective area covered by both licences is characterized by plains and includes cultivated fields.

Independent Resources is the planned developer of the Rivara underground storage site located in the Po Valley, Northern Italy, a deeply-buried, highly-fractured limestone structure with inherent geological characteristics that make it ideal for summer gas storage and rapid winter withdrawal, using the benefit of a natural water drive. It is also located right at the hub of Italy's gas transmission system, along the main trunk line corridor from North Africa into Southern Europe. IRG is aiming to develop the project against a backdrop of Italy's urgent demand for new gas storage facilities, following disruptive winter supply shortages and major supply disruptions. Independent Resources has continued to work carefully within the complex framework laid down by the political, regulatory, and environmental processes in Italy, where Rivara remains a key project. IRG characterises Rivara as a much-needed infrastructural investment in an extremely under-supplied market, and as a project that is relatively insensitive to short-term fluctuations in market conditions.

IRG was admitted to AIM in December 2005 and, alongside its exploration interests in Tunisia, where permit renewal formalities are pending, is pursuing an integrated gas business in Italy which includes the onshore Ribolla coal bed methane and shale gas basin near the Italian north-western coast, and the strategically-positioned Rivara gas storage facility in the Po Valley. The company is focusing on developing both conventional oil and unconventional gas production, and building a profitable portfolio through wholly-owned initiatives and partnerships.

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