London, 30 November 2009 – Lawyers from the London office of Morrison & Foerster are advising Island Gas Resources plc (“IGas”), the UK’s largest producer of coal bed methane, on a £13.75 million placing which was announced to the market on Wednesday, 25 November.
IGas was set up to produce and market gas which is found in seams of coal. It is the leading coal bed methane (CBM) developer in the UK. The coal seam both generates and traps the gas, which can be extracted by drilling horizontally into the seam and collected for use as fuel. Coal Bed Methane is exactly the same as other forms of natural gas, and is used to provide both industrial and domestic power and has the potential to be an important new source of energy for the UK.
The Morrison & Foerster team was led by partner Ed Lukins and included associate Simon Williams.
Ed Lukins commented “We were delighted to assist IGas on this successful transaction. We have worked with the company since 2007, when we advised on its admission to AIM.”
The £13.75 million placing was fully underwritten by Levine Capital Management. It is intended to strengthen the company’s financial position and provide funding for an accelerated development programme. Through the funding the company will put in place an asset base to supply electricity to approximately 7% of all UK households for 15 years with its first full production site targeted for 2011 and a further 20 to 50 sites targeted for production between 2011 and 2014.
ABOUT ISLAND GAS RESOURCES PLC (“IGAS”)
IGas was set up to produce and market the methane gas which is found in seams of coal. IGas is now producing gas from its pilot production site at Doe Green in Warrington and selling electricity through its on-site generation, a UK first. Initial production rates indicate that the Company should exceed its threshold for commerciality.
IGas has ownership interests of between 20 and 100 per cent in eleven PEDLs in the UK, wholly owns two methane drainage licences after the acquisition of licence interests from Nexen now being announced, will have a 75 per cent interest in three offshore blocks under one Seaward Petroleum Production Licence. These licences cover a gross area of approximately 1,756 km2. The mid case GIIP is up 290 per cent. from 893 at year end 2007 to 3,480 bcf (source: Equipoise Solutions Ltd).
Independent analysis by world leading reservoir engineers, DeGolyer and McNaughton, prior to this announcement confirmed Contingent Recoverable Resource of up to 821 bcf of gas (3C), equivalent to around 140 million barrels of oil. The Contingent Recoverable Resource is derived from a statistical aggregation of contingent resource ranges calculated on an individual coal seam basis.
In May 2009, the Group announced it had been granted a further Field Development Programme approval by DECC for its plans for the commercial production of CBM gas from the Swallowcroft area.
The coal seam both generates and traps the gas, which can be extracted by drilling into the seam and collected for use as fuel. CBM is exactly the same as other forms of natural gas, and is used to provide both industrial and domestic power and has the potential to be an important new source of energy for the UK.
The CBM industry in the UK is in its early stages, but with the continuing decline in natural gas reserves from the North Sea, it is likely to become an increasingly attractive alternative potential source of energy. CBM has become a significant source of gas both in North America and Australia over a relatively short period of time during which both have seen an almost exponential growth in CBM production.
For further information please visit: www.igasplc.com.