IGas Jumps as Shale May Quadruple U.K. Reserves: London Mover
IGas Energy Plc (IGAS) surged the most in five months in London trading after saying a study of the 300 square miles of northwest England it’s licensed to drill show a “very significant” shale-gas resource.
The shares surged as much as 15 percent, the most since Jan. 2, after IGas estimated its licenses probably hold about 102 trillion cubic feet of gas. Should 30 percent be extractable, U.K. reserves would jump by about 30 tcf compared with BP Plc (BP/)’s estimate now of 7 tcf.
“Gas in place of about 100 tcf is highly significant, both relative to IGas’s existing resource base and the U.K.’s existing gas reserves,” said Laura Loppacher, an analyst at Jefferies Group LLC in London. “U.S. shale recovery factors are generally estimated to be 10 percent to 30 percent with current technology.”
The IGas estimate of gas in place on its licenses comes on top of rival Cuadrilla Resources Ltd.’s estimate its fields may hold as much as 200 trillion cubic feet in the same region. The announcement may add to pressure to provide tax breaks and other incentives to spur drilling as reserves in the U.K. North Sea dwindle.
IGas, which plans to start drilling this year, rose 7.5 percent to 100 pence by 9:58 a.m.
The government lifted an 18-month moratorium on hydraulic fracturing, or fracking, used to exploit shale deposits in December after the completion of an investigation into two small earthquakes near Blackpool caused by Cuadrilla’s drilling. The company has delayed exploratory testing until next year to carry out environmental assessments.
IGas’s study of its resources “supports our view that these licenses have a very significant shale gas resource with the potential to transform the company and materially benefit the communities in which we operate,” IGas Chief Executive Officer Andrew Austin said in a statement.
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