iGas’ Share Price Soars on Jump in Northwest Shale Gas Estimates

By:
on Jun 3, 2013
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The iGas share price rose more than 10 percent to 102.60p in London trading on Monday, June 3 after the British oil and gas-drilling company revealed its estimates on its shale gas deposits in Northwest England for the first time. The company estimated the volume of gas initially in place in its licensed drilling areas at 102 trillion cubic feet and said estimated reserves could be as big as 172 trillion cubic feet. The estimate puts iGas close to British rival Cuadrilla Resources, which has estimated prospective reserves at least 200 trillion cubic feet.

**iGas**
IGas (LON:IGAS) has had a strong start to 2013 with its share price rising to as high as 150p in January on hopes of a shale boom. The stock has since retreated to the region of 70-90 pence but the latest estimate of the company’s shale gas reserves has prompted another rally above the 100p mark. The company is a major player in conventional onshore drilling in the UK, operating around 100 small sites but now it’s poised to become a force to be reckoned with in hydraulic fracturing (also known as fracking) as well.

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The Times on Monday quoted the iGas Chief Executive Officer Andrew Austin as saying that the latest estimates supported the company’s view that its licences “have a very significant shale gas resource with the potential to transform the company and materially benefit the communities in which we operate”. He also said that a drilling programme would start later this year.

**New North Sea?**
Assuming that the estimates are accurate, the iGas shale gas deposits will provide a huge boost to the overall UK shale gas reserves.
Bloomberg quoted Laura Loppacher, an analyst at Jefferies Group LLC in London, as saying that the estimated volume was “highly significant, both relative to IGas’s existing resource base and the U.K.’s existing gas reserves”.

If iGas’ estimate of 102 trillion cubic feet held in its licensed drilling areas is correct and assuming 30 percent of that volume is extractable, UK reserves of shale gas would soar by some 30 trillion cubic feet, as compared with BP’s current estimate of 7 trillion cubic feet.
The success of shale industry in the U.S. has prompted many companies in the UK to turn to the shale

segment, as shale gas is now viewed as a possible answer to Britain’s energy needs amid dwindling reserves in the UK North Sea. According to a study by the Institute of Directors, shale gas could be “a new North Sea for Britain”, meeting a third of UK’s gas needs.
!m[iGas (LON:IGA)](/uploads/story/2702/thumbs/pic1_inline.png)
The hydraulic fracturing process, however presents various technological and community challenges, which need to be taken into account. The government had placed a moratorium on fracking while investigating two small earthquakes near Blackpool allegedly caused by Cuadrilla’s drilling. The authorities lifted the moratorium in December after the completion of the investigation. Cuadrilla has delayed exploratory testing until next year to carry out environmental assessments.
**The iGas share price was 102.75p as of 12.49 GMT, 03.06.2013**

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