Igas snaps up North Sea oil producer in £9m deal

SHALE gas explorer Igas Energy yesterday announced it had agreed to buy North Sea producer Caithness Oil in a deal worth almost £9 million.

A North Sea oil well. Picture: AP

Under the agreement, Igas will acquire Caithness Oil’s interests in licences within the Inner Moray Firth area, including the Lybster field.

Igas, which is listed on the Alternative Investment Market, will also pay Caithness partner Trapoil about £4.8m in shares for its interests in the licences.

Igas chief executive Andrew Austin said the £8.95m acquisition of Caithness – a subsidiary of privately-owned Caithness Petroleum, which has interests in Morocco and the North Sea – offered the company “significant upside potential”.

“The transaction is in line with our strategy to grow our production base in order to fund our exploration activities and to take advantage of acquisition opportunities,” Austin said.

“Igas continues its strategy of delivering secure hydrocarbons for Britain.”

Under the agreement, Igas will acquire 100 per cent interests in the licences owned by London-based Caithness.

Trapoil will receive Igas shares in exchanges for its interests in the licences, which were acquired as part its 2011 takeover of Aberdeenshire-based Reach Oil & Gas.

Mark Groves Gidney, chief executive of Trapoil, welcomed the agreement “in light of Caithness’ anticipated exit from the North Sea region and the fact that they have had limited finances to apply to the development of the licence interests”.

Completion of the proposed disposal will result in a net impairment charge for Trapoil of about £9.2m reflecting the current aggregate carrying value of the licences of some £14m.

The sale agreement is subject to consent from the Department of Energy & Climate Change.

The Lybster field was discovered in 1996 by Premier Oil and was put into production in May 2012. The oil is transported and sold to facilities at Nigg.

Igas is exploring and developing gas and oil reserves at onshore locations in the north west of England, in North Wales, the East Midlands and in southern England.

It recently upgraded its estimate of how much shale gas may be sitting within its licence areas in the north west of England.

In June, it said it may have up to 172.3 trillion cubic feet (TCF) of shale gas in a 300-square mile area in Cheshire, a significant increase on its previous estimate of just nine TCF.

Meanwhile Aberdeen-based Faroe Petroleum yesterday said that the start-up of the Njord and Hyme fields off Norway scheduled for 15 September has been delayed until the latter half of the month.

The delay is to allow operator Statoil to complete inspection work and Faroe said it did not expect the delay to impact to its latest production guidance.

Shares in Igas closed down 4.75p at 106p, in Trapoil down 0.25p at 11.25p and in Faroe up 0.25p at 130p.