* Company raises 23 mln stg in placing
* Sees deal signed in Q4 2013, Q1 2014
* Placing to fund shale exploration plans and oil field deal
* Shares down 5 pct
By Sarah Young
LONDON, Jan 15 British exploration firm IGas
Energy has received interest from some of the oil
industry's biggest names to look for shale gas in the UK, its
chief executive said, amid growing demand to develop the
country's unconventional resources.
Exxon Mobil was linked with IGas in December over a
possible partnership. IGas has been running a process since June
to find a partner to help it explore for shale gas at its
licenses in northern England.
"The kind of names that have been talked about in the market
are the kind of names that we've seen interest from," said Chief
Executive Andrew Austin. "It's more majors."
Britain's potential to produce shale gas, a resource which
has helped transform the U.S. energy market, has come into focus
since the government lifted a ban last December on the
fracturing process used in extraction, signalling its support.
Big oil firms are seen as key to developing British shale
gas as their financial firepower and technical support could
help the nascent industry move from the exploration to the
Funding for shale exploration is currently on a small scale.
Igas said earlier on Tuesday it raised 23 million pounds via a
placing at 95 pence per share, around a 17 percent discount to
its closing price on Monday, to help it look for shale gas.
The company said around 15 million pounds ($24 million) of
the proceeds of its placing would be used to drill two wells to
appraise its shale resources.
"The $25m planned spend on the UK shale is high risk but
potentially high reward if the company can demonstrate
substantial commercial potential," Jefferies analysts said.
He said he expects a partnership agreement to be signed in
either the fourth quarter of 2013 or early 2014, adding that
"non-traditional" companies had also expressed an interest.
The future of Britain's shale gas resources, the exploration
of which are at a very early stage, received a boost when the
government established a dedicated office for shale gas in
December, something which Austin said came as a surprise.
"That confidence from the government and that positive
support from the government has led to people's increased
appetite to have a good look at what's going on," he said.
The British Geological Survey (BGS) estimates Britain's
onshore shale reserves at 5.3 trillion cubic feet (150 billion
cubic metres) - enough to meet Britain's gas consumption for one
and a half years. However Cuadrilla Resources, a privately-owned
exploration and production company which is the only one to have
tested shale gas in Britain to date, put that reserves figure as
high as 200 trillion cubic feet.
Further evidence of the growing interest in UK shale gas
came on Monday when Cuadrilla was revealed by its part-owner to
be in early-stage talks with interested energy investors,
believed to include utility Centrica.
IGas's biggest shareholder is Canadian oil and gas producer
Nexen Inc which owns a 24 percent stake. It did not
participate in the recent share placing as it is in the midst of
being acquired by Chinese state-owned giant CNOOC,
which also did not participate.
The balance of the new funding will be used to help IGas
acquire full ownership of the Singleton oil field in West Sussex
as part of a $66 million deal first announced in September,
which will give the company stronger cash flows to finance
further shale gas exploration.
Separately, Egdon Resources, another UK oil and gas
exploration company with market capitalisation of around 13
million pounds, said on Tuesday that external analysts estimated
that its licences in the East of England could also potentially
contain a material shale gas resource.
Shares in IGas were down 5 percent to 109.125 pence in
afternoon trading, giving the company a market value of around
177 million pounds.