igas news - city broker upgrades targets

IGas Energy: City broker upgrades targets as it weighs up shale potential

By Jamie Ashcroft
July 18 2013, 12:11pm

As it awaits a farm-out IGas’s ambitions are supported by its not inconsiderable conventional oil and gas operations which currently yield around 2,500 barrels per day.As it awaits a farm-out IGas’s ambitions are supported by its not inconsiderable conventional oil and gas operations which currently yield around 2,500 barrels per day.

City broker Canaccord Genuity has upgraded British oil and gas firm IGas Energy (LON:IGAS) following a re-assessment of the firm’s conventional production as well as its shale gas potential.

Repeating a ‘buy’ recommendation the brokers target price rises to 174p from 150p (current price 117p), however, the broker says its valuation is cautious and highlights a number of possible catalysts.

One such catalyst will be the upcoming two well shale drill programme, which won’t include fracking operations, but will gather information through coring and logging.

Another catalyst will be an anticipated farm-out which will help fund an accelerated shale drilling programme – which will be necessary to define a commercial case for a large scale development.

“We still believe that a ‘commercial’ understanding of the Bowland Shale will require around twenty wells, so the initial programmes should provide about half that well inventory,” analyst Charlie Sharp said in a note.

“The next couple of years then are very important, as these initial wells will provide considerable new data to feed a variety of studies that will provide the foundation for a potential commercial development of this resource.”

In the meantime, as it awaits a farm-out, IGas’s ambitions are supported by its not inconsiderable conventional oil and gas operations which currently yield around 2,500 barrels per day.


According to Canaccord this production will put around £40mln in the IGas coffers each year, which it says is sufficient for the group’s funds for its unconventional (shale and coal bed methane) portfolio.


http://www.proactiveinvestors.co.uk/companies/news/59153/igas-energy-city-broker-upgrades-targets-as-it-weighs-up-shale-potential-59153.html