StockMarketWire.com - IGas Energy has signed a farm out and purchase agreement with INEOS.

On completion of the transaction, INEOS will acquire an interest in certain licences in the North West and East Midlands and the group's participating interest in the acreage held under PEDL 133 in Scotland.

The consideration for IGas's participating interests comprises £30m cash payable to IGas on completion and a funded forward work programme of up to £138m gross, of which IGas's share to be funded fully by INEOS, is expected to amount to approximately £65m.

Highlights:

· In the North West, INEOS will acquire a 50% interest in IGas' licences: PEDL, 147, 184, 189, and 190, and a 60% interest in IGas' licences: PEDL 145, 193 and EXL 273 (collectively, the "Bowland Licences");

· In the East Midlands, INEOS has the option to acquire 20% in PEDL 012 and 200

· In Scotland, INEOS will acquire IGas' entire working interest in the acreage held under PEDL 133 in the Midland Basin and assume operatorship;

· At completion INEOS will pay IGas a cash sum of £30 million;

· INEOS to fund a two phase carried work programme of up to £138 million of which IGas' share of the gross carry is expected to be approximately £65 million. Upon commencement of commercial production from the Bowland Licences, IGas would be obligated to pay back to INEOS its net share of the carry out of 50% of its net, free cashflow;

· At completion, INEOS will become the operator of PEDLs 145, 193 and EXL 273 subject to normal partner approvals;

· IGas will have up to $285 million of total spend from third parties across its key shale gas acreage from major partners, including Total E&P UK Limited ("Total"), GDF SUEZ E&P UK Limited ("GDF") and INEOS; this will give IGas a significant, funded work programme including 15 wells, flow tests and gas handling stations;

· On completion, the cash component of the consideration will further strengthen the Group's balance sheet giving IGas additional financial flexibility and ability to further develop its onshore licence interests.

IGas chief executive Andrew Austin said: "We are delighted to announce this farm out with INEOS which underpins the quality, scale and significant potential of our licences, whilst retaining material upside in these key assets.

"Alongside the commitment from our existing partners, INEOS's commitment of upfront cash and considerable capital investment will help fund us through the next steps of our shale appraisal and production programme.

"This transaction, together with our existing partnerships with Total and GDF, reinforces the potential and materiality of our portfolio to world class counterparties and strongly positions us as we seek to work together to unlock the potential of our untapped natural gas resources in Britain."


At 9:16am: [LON:IGAS] Igas Energy PLC share price was +4.38p at 28.38p



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