INEOS Styrolution India Ltd (NS:INEO) has completed the acquisition of Total E&P’s interests in a number of Gainsborough Trough area UK licences operated by IGas Energy PLC (LON:IGAS) in which Egdon has equity interests. Total’s partial exit from the UK shale sector and INEOS’s increasing dominance as the largest holder of UK shale acreage will raise questions over integrated oil sector appetite. Nevertheless, INEOS’s commitment to the sector should ensure that planning applications, seismic surveys and exploratory wells are expedited. With INEOS taking on Total’s cost-carry and 14th round obligations we estimate that the implied transaction values range from $600/acre to $2,000/acre.
Deal values: PEDL 139/140: Total’s cost carry balance implies a value of $2,000/acre. PEDL209: assuming INEOS exercises Total’s option the implied discounted value is estimated at $1,800/acre. 14th round: we estimate an implied value of $600/acre on the basis of work programme obligations: 3D seismic and an exploratory vertical well. Implied deal values are supportive of our indicative valuation of Egdon’s net shale acreage at $400/acre or 26p/share.
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