Operational Update

RNS Number : 5461A

Igas Energy PLC

02 April 2012

 



2 April 2012

IGas Energy Plc

 ("IGas Energy", "IGas", "the Company" or "the Group")

Operational update

Operational Highlights

·     CBM

o  Doe Green commercial scale facilities commissioned, DG-3 and DG-4 now hooked up, de-watering continues and await stabilised flow rates

·     Shale

o  Encouraging results from interpretation of logs from Ince Marshes-1

o  Potentially at least doubling the independent pre-drill estimate of GIIP of 4.6Tcf

o  Process launched for farm-in partner following significant industry interest

·     Production

o  Average production in Q1 of c.2700boe/d, 20% ahead of CPR estimates

o  Revised CPR on conventional assets expected by summer

·     Production enhancement activities - "Chasing the Barrels" initiative

o  Significant potential identified

o  Albury Gas field expected on-stream next year

IGas CEO Andrew Austin said: "We have now hooked up CBM wells DG-3 and DG-4 and commenced de-watering, we await stabilised gas flow rates. We are pleased with the robust levels of oil production we are experiencing, which along with the current realised oil price  enhances the value of our conventional assets. Ince Marshes-1 is a particular highlight, potentially at least  doubling the independent pre-drill estimate of 4.6Tcf of shale resource. Our shale potential offers a significant opportunity for the Company and to potential partners, in addition to our CBM resource base of over 300 million boe. The UK Government's announcement about a new gas generation strategy and the support given in the budget to the industry are all signs that UK sourced hydrocarbons are going to play an increasingly important role in the future energy mix of the country."

CBM

Our latest wells at Doe Green, DG-3 and DG-4 have now commenced dewatering and are showing early gas. The rates of production of both water and gas have not yet stabilised and we will update the market further when they do. We have commissioned the export equipment and all three wells are now connected to the facilities. We have two further sites at Ellesmere Port and Irlam constructed with cellars and conductors set. Well designs will be finalised once the results from DG-3 and DG-4 have been analysed. We believe these sites are underlain by the same shales encountered at Ince Marshes.

Shale

Following the update on 26 January 2012, we have conducted further analysis of the logs and samples from the well at Ince Marshes. The results are very encouraging with TOC (Total Organic Content) of between 1.6% and 3.7% (average 2.8%). We understand the same Bowland Shale in neighbouring licences has been flow tested at rates exceeding many results seen elsewhere in Europe. 

The provisional independent pre-drill estimate of the shale GIIP (Gas initially in place) in the IGas acreage in the North West of England was up to 4.6Tcf (IGas interest 100%). Having now drilled and logged the shale, the GIIP would more than double using these initial log results and applying a consistent methodology.

Following a number of enquiries from interested parties, we are now launching a process to engage a suitable farm-in partner to participate in drilling further wells to corroborate these results and to develop our shale resource.

Production

Production since the beginning of the year has averaged c.2,700 boe/d net to IGas. The oil production is 20% above the Senergy 2P profile included in the admission document of 22 November 2011. Given the greater access to data and understanding of the potential of the assets we now have, a revised CPR will be produced by the summer. We continue to be encouraged by both the levels of production and the potential for additional recovery from the assets acquired.

Approximately 1,500 boe/d is currently hedged at $93.4 per barrel with the balance achieving prices currently c. $120 net per barrel.

Production enhancement activities - "Chasing the Barrels" initiative

We continue to review our producing assets, to assess the potential to bring on new and enhanced production. Preliminary analysis has already identified a series of significant opportunities, which are being evaluated in more detail prior to formal approval. The first of these being the activity at Albury detailed below which is now ready for formal sanction. In parallel, we are planning another production test in the summer on a separate prospect to help quantify the potential for another new gas development in the Weald Basin.

At the time of the acquisition of Star Energy, the Albury gas field in the Weald Basin was suspended following the drilling of a well for potential gas storage use.

We have now flow tested the well at Albury to confirm gas quality and this well produced at a rate of up to 1.5 MMscf/day (260 boe/d). Accordingly, we are applying for planning permission for the installation of export facilities at this site. Subject to planning, we expect this field to be on-stream in 2013.  IGas holds a 100% interest in this field.

The Company will be publishing its preliminary results for the 15-month period ended 31 March 2012 at the end of June.

John Blaymires, Chief Operating Officer 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. Blaymires has more than 27 years' experience.

For further information please contact:

IGas Energy plc Andrew Austin,CEO	Tel: [phone]
Jefferies Hoare Govett Sara Hale / Jamie Buckland	Tel: [phone]
Canaccord Genuity Limited Rob Collins/ Tim Redfern	Tel: [phone]
Kreab Gavin Anderson Ken Cronin/ Kate Hill/ Anthony Hughes	Tel: [phone]

 

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