IGas Notes Financial Results for 2009
IGas announced its financial results for the year ended December 31, 2009 and update on progress since the year end.
- More than a year of pilot production - A UK first
- Two more pilots planned for 2010
- Full scale production at one site planned to start 2011
- Two farm-ups raised resources and IGas Energy now has applications pending for operatorship on half its gas
- GIIP* - Mid case up 76% to 3.82Tcf and high case 8.10Tcf
- CBM Contingent Recoverable Resource - High case 1.18Tcf (200mmboe**)
- Conventional/potentially significant shale gas identified; appraisal underway
- Land bank developing with three multi-well production site permits secured
* Gas Initially In Place; ** Millions of Barrels of Oil Equivalent
- Revenue - £828 thousand
- Operating loss - £515 thousand
- Loss for the year - £504 thousand
- Cash - £17.5 million at 31 December 2009
- 2 fundraisers raised £17.21 million gross; each funding accretive farm-ups
- Funding now in place for production sites planned for 2010 and 2011
Gas initially in place (net to IGas Energy)
IGas Energy is a domestic gas producer and a leading independent company dedicated to unconventional gas in the UK.
Independent estimates show that IGas Energy currently has enough gas to supply electricity to over 7 per cent of the UK's household's for 15 years and is the largest independent CBM (coal bed methane) producer in the UK. The Company's licenses are in the country's industrial heartland, close to customers. IGas Energy is currently selling electricity generated from CBM at its pilot site in the North West - a first for the UK - and plans to start full-scale production next year.
The Company has now moved from identifying and appraising the CBM potential of its acreage to the production phase with one pilot site having come on stream in early 2009 and two more planned for 2010. The Company has also been investigating the potential to produce hydrocarbons both conventionally and from the extensive shale resources within its acreage - with the next stage being an independent assessment of the shale.
IGas Energy has applications pending to operate acreage which contains more than half its gas and has the financial capacity to realize its objective of having its first full production site next year.
Now that the UK's supplies of gas from conventional sources are in decline, having domestic resources is becoming increasingly important. Unconventional gas including CBM, which is a well established industry in other parts of the world, such as the US and Australia, offers a significant alternative resource for the UK.
2009 has been a year of transition. The Company has now had a full year of pilot production at rates that exceed our modeled threshold for commerciality. In 2009 IGas Energy raised funds sufficient to enable it to undertake two 2010 pilot projects and to establish a full scale production site the following year. 2009 also saw IGas Energy strengthen its shareholder base and deliver on the objectives set last year. By the end of 2009 the Company had raised its CBM, (Coal Bed Methane), Contingent Recoverable Resources to a level that is now material not just for IGas Energy but for the security of supply of the UK. Additionally the Company has identified conventional and potentially significant shale gas.
The Company's primary goal remains to be the UK's leading independent unconventional gas producer and to see unconventional gas production in the UK become as important as it is in the USA and is becoming in Australia. 2009 has seen IGas Energy take the first critical steps in achieving this goal with a full year of pilot production at rates that exceed our modeled threshold for commerciality and with fundraisers to accelerate production activity in 2010 (two pilot projects planned) and 2011 (planned full scale production site). 2009 has also seen IGas Energy applying for operatorship of more than 50% of its gas and begin building independent operational capability under the leadership of a recently appointed Chief Operating Officer (COO).
The two fundraisers in 2009 in addition to raising the finance needed for production sites planned for 2010 and 2011, have also materially strengthened IGas Energy's shareholder base. Levine Capital Management BVI became a cornerstone investor and a number of well respected institutions have also become holders. As a result of this process the aggregate shareholding of the Company's original founders has decreased from 81% to 57%, thereby improving the IGas Energy's free float.
I am particularly pleased to report that we have now delivered all our stated near-term objectives as set out in my statement to you of last year.
A 60% increase in CBM Contingent Recoverable Resources, taking the high case (3C) to 1.18Tcf and the mid case (2C) to 0.81Tcf, resulted from two accretive (in terms of gas per share) farm-ins completed in 2009. The mid case numbers alone being sufficient to supply electricity to over 7% of UK households for 15 years. Additionally, preliminary work has shown that the Company has conventional gas and potentially significant shale gas. IGas Energy's shale acreage extends over 1,195 km2, has an expected average thickness of 250 m and is understood to have a very high potential to be hydrocarbon bearing. These findings have led IGas Energy to retain independent consultants to evaluate the potential of these shales, utilizing currently available data.
I would like to welcome John Hamilton to the team as non-executive director. John's experience and background will undoubtedly add to the strength of the board. I would also like to offer my sincere thanks to Peter Redmond whose assistance over the years has been invaluable in the restructuring and refinancing of the Company prior to IGas Energy's listing and subsequently.
I remain confident that the Company is well placed to be the most successful independent unconventional gas producer in the UK and that 2010 and 2011 will be critical years for seeing IGas Energy grow to consistently deliver secure gas, onshore.