IGas Energy plc Acquires Caithness Oil Limited
IGas (LSE: IGAS), one of the leading producers of onshore hydrocarbons in the UK, announces that it has entered into a Heads of Agreement ("HOA") with Caithness Petroleum Limited ("Caithness"), a privately-owned, British independent oil and gas exploration and production company, to potentially acquire Caithness Oil Limited ("Caithness Oil"), its UK subsidiary, for a total consideration of £8.95million to be satisfied through the allotment of 7,789,382 IGas ordinary shares.
Under the terms of the HOA, IGas will acquire 100% interests in the licences, located in the northern coastal area of the Inner Moray Firth, in which Caithness has an interest, including the Lybster field, following settlement of obligations, prior to completion, under an existing agreement between the Caithness group and Trap Oil Group plc group of companies.
The Lybster Field was discovered in 1996 by Premier Oil at well 11/24-1 which tested 36 API oil at over 2,000bopd from the Beatrice Formation. The field was put into production in May 2012 and, prior to being temporarily shut-in for a routine workover, was producing approximately 200bopd gross and in excess of 2mscf/d of associated gas. The oil is currently transported and sold to facilities at Nigg.
In addition to increasing IGas' current production, the acquisition would offer additional upside through utilisation of significant existing tax losses and monetisation of associated gas.
The Proposed Acquisition is conditional, inter alia, upon receipt of the requisite third party and Department of Energy and Climate Change ("DECC") consents, completion of confirmatory due diligence and the execution of a definitive sale and purchase agreement in due course.
Commenting, IGas CEO, Andrew Austin said:
"I am pleased we have managed to secure this opportunity to increase our existing production and one that offers significant upside potential. The transaction is in line with our strategy to grow our production base in order to fund our exploration activities and to take advantage of accretive acquisition opportunities. IGas continues its strategy of delivering secure hydrocarbons for Britain."