Jan. 15 (Bloomberg) -- IGas Energy Plc, a U.K. shale-gas developer, sold 23.1 million pounds ($37 million) of stock to help develop resources before finding an investment partner.
IGas issued 24.3 million new shares, representing about 15 percent of the company, at 95 pence each to new and existing investors, it said today in a statement. The proceeds will be put toward a work program to shore up the value of assets before selling a stake in them.
Chancellor of the Exchequer George Osborne promised tax breaks to spur shale development after a boom in the industry in the U.S. saw the nation become the world’s biggest gas producer. Britain in December lifted a ban on hydraulic fracturing, the technique used to tap fuel from shale rock, and imposed safety controls after drilling triggered minor earthquakes in 2011.
“The developing supportive backdrop to the shale-gas industry in the U.K., both politically and geologically, leaves IGas well-placed to exploit its significant potential resources,” Chief Executive Officer Andrew Austin said in the statement. “This fundraising allows us to further appraise our shale assets and augment value ahead of a potential farm-out.”
IGas fell 5.4 percent to 109 pence in London trading today. The shares have doubled in the past year.
The proceeds will also let IGas complete its purchase of the P.R. Singleton assets in southern England that produce about 500 barrels of oil a day. It’s expanding a debt facility with Macquarie Bank Ltd. by $90 million for extra funds. IGas agreed to buy the conventional-oil fields in September for $66 million to gain cash from the assets while completing shale exploration.
Jefferies International Ltd. and Canaccord Genuity Ltd. were joint bookrunners for the share placing. The new stock is set to start trading on Jan. 18.
The U.K.’s main shale reserves are in the Bowland basin near Blackpool, northwestern England. IGas last year appointed investment bank Greenhill & Co. to help find an investor in the Bowland prospect and said it hoped to announce a partner by the end of 2012, a timeframe it missed.
The London-based company said it has identified additional prospects in the East Midlands and in the Weald basin in southeastern England.
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