(Adds background, share prices)
LONDON May 12 Independent oil and gas explorer
Egdon Resources said it was in advanced talks to buy
Alkane Energy's shale assets in Britain as interest in
the country's nascent shale gas industry gathers pace.
The deal would give Egdon Resources access to sizeable
resources as Alkane Energy holds oil and gas licences for more
than 800 sq km of land expected to contain shale gas.
Last week, British shale gas rival IGas announced its
acquisition of Dart Energy, a deal that has created Britain's
biggest shale gas company.
The government is expected to launch a major onshore oil and
gas licensing round in the early summer that will test the
industry's appetite for drilling for the unconventional fuel.
Alkane Energy, which specialises in extracting conventional
gas for power generation, said in March it lacked experience in
shale gas extraction and was in talks with potential investors
who are better placed to tap the resources.
Egdon plans to fund the deal with stock and said that if it
was concluded, Alkane would receive 40 million ordinary shares,
equivalent to 27 percent of Egdon's existing share capital.
Egdon also aims to raise 7 million pounds ($11.8 million) by
selling shares at 20 pence apiecediscount to Friday's closing
price, to use for working capital.
The fundraising is expected to be carried out via a 6.4
million pound placing and an open offer of 600,000 pounds, Egdon
said on Monday.
Shares in Egdon Resources and Alkane Energy, which were
suspended temporarily on Monday ahead of the announcement,
traded 4.9 percent and 8 percent higher at 1243 GMT.
($1 = 0.5938 British Pounds)
(Reporting by Karolin Schaps; Editing by Erica Billingham)