4th Feb 2014 10:23
LONDON (Alliance News) - Igas Energy PLC and Egdon Resources PLC Tuesday said they have completed their sale of interests in the UK licences PEDL139 and PEDL140 to Total E&P UK Ltd, part of France's Total SA.
The onshore exploration and development oil and gas companies said that all of the necessary approvals have been received, and IGas will assume operatorship of the licences with immediate effect.
The sites cover an area of 240 kilometres squares in Nottinghamshire and South Yorkshire.
Under the terms of the deal, Total will pay USD1.6 million in back costs to the partners and fund a work programme of up to USD46.5 million, with a minimum commitment of USD19.5 million.
The partners said that at the end of the work programme, which includes 3D seismic studies, well-pad construction, and possible drilling of a second horizontal fracturing, or fracking, well at the site, Total will become operator of the licences.
Total now holds a 40% interest in the licences, Dart Energy holds 17.5%, IGas holds 14.5%, Egdon Resources holds 14.5%, and eCorp Oil & Gas holds 13.5%.
The decision by Total makes it the first oil and gas major to back UK fracking, a move which could drastically accelerate the new process in the UK.
Hydraulic fracturing, otherwise known as fracking, involves extracting gas trapped in shale by pumping in pressurised water and chemicals.
In the US, fuel prices have falling sharply as fracking has become commonplace across such states as North Dakota and Mississippi.
However, so far in Europe fracking has had mixed results - often being either controversial or unreliable. In the UK, there have been major protests against the method, which critics fear will pollute water tables in rural areas and may cause small earthquakes.
Additionally, in countries where it has been properly tested across Europe it is still unproven. In Poland, EU regulation changes and lower revisions of shale reserves have led to mixed sentiment regarding fracking operations.
Exxon Mobil Corp. has already decided to abandon its Polish shale operations, although other global players, such as US majors Chevron Corp. and ConocoPhillips, remain determined to extract shale gas in Poland.
IGas shares were down 2.1% to 127.25 pence while Egdon shares were down 6.7% to 25.65 pence Tuesday.
By Tom McIvor; [email protected]; @TomMcIvor1
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