IGas Energy Plc, 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 also signed a gas sales agreement with Petronas.
While the Star Energy produces conventional oil and gas, 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.
“This gives us access to production and the team to deliver it,” IGas Chief Executive Officer Andrew Austin said in a telephone interview. “We can add certainty to the portfolio without having to dilute our shareholders. The gas sales agreement is an endorsement of the viability of our coal-bed methane production.”
IGas’s London shares were suspended until the company submits and admission document for the deal, which may take several weeks, Austin said.