UK IGas Nears Capital Increase

Energy investment fund Kerogen is poised to inject $35mn into UK onshore explorer IGas, two months after IGas said that an approach of that nature had been made by a strategic investor.

In a March 1 statement, IGas said the deal depended on the successful restructuring of the company's secured and unsecured bonds. IGas will also seek to raise additional equity funding and existing shareholders will be given the opportunity to participate in this additional fundraising. The placing price is expected to be about £0.045/each ($0.055), it said.

The new capital structure will be sustainable in the current oil price environment and enable IGas to capitalise on value accretive opportunities whilst also maintaining its valuable carry agreements, for the benefit of all stakeholders, it said, although there would be significant dilution. IGas and Kerogen Capital will work together to finalise the terms which may require the consent of the Takeover Panel.

(Credit: IGas)

IGas CEO Stephen Bowler (pictured, above) said the potential investment "recognises the underlying value in the IGas Group, both through its stable production assets, significant shale acreage and about $230mn carry from its partners. The deal would give the company a capital structure that we believe is sustainable in the current oil price environment and that will enable the company to capitalise on value accretive opportunities."

William Powell