IGas to Buy Petronas’s U.K. Star for $173 Million

(Corrects to say deal excludes non-U.K. assets.)

IGas Energy Plc (IGAS), a U.K. coal-bed methane producer, agreed to buy U.K. oil onshore producer Star Energy Group Ltd. from Malaysia’s Petroliam Nasional Bhd. for 110 million pounds ($173 million).

The deal excludes some non-U.K. assets and the gas storage business run by Star Energy, IGas said today in a statement in London. The purchase, which exceeds IGas’s market capitalization of 81 million pounds, will be funded by a $140 million debt facility provided by Macquarie Bank Ltd. IGas’s London shares were suspended.

IGas’s focus so far has been on exploration for coal-bed methane, natural gas found in seams of underground coal. The company said in July it’s trying to produce gas at commercial rates after successful pilot projects.

“With this acquisition we will be creating a substantial onshore oil and gas company in the U.K.,” IGas Chief Executive Officer Andrew Austin said in a statement. “The enlarged group is expected to have a growing production profile as IGas Energy’s combined oil and gas resources are developed.”

To contact the reporter on this story: Brian Swint in London at bswint@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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