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Egdon Resources the focus of more UK shale M&A

Published: 07:09 12 May 2014 EDT

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Trading in Egdon Resources' (LON:EDR) shares was suspended on Monday, as the AIM minnow confirmed it was at the centre of the latest UK shale acquisition story.

Hot on the heels of IGas’s (LON:IGAS) deal to buy Dart Energy (ASX:DTE), which creates the UK’s largest shale gas player, Egdon revealed it is in advanced talks over the acquisition of Alkane Energy’s onshore shale assets.

Alkane, which is primarily focused on gas-to-power projects, has interests in 21 onshore licences in the UK, spanning over 800 square kilometres. The company considers 15 of those licences to have shale potential.

It is anticipated that Egdon will issue Alkane 40mln new shares and also intends to raise £7mln of new capital, by issuing more new shares at 20p each.

With a deal value of about £8.5mln the Egdon transaction doesn’t quite register in the same league as IGas’s £117mln takeover of Dart, but it does provide another signal to the market that UK shale assets are very much in play.

The spate of M&A activity comes after major oil and gas firms moved in, via high profile farm-out deals.

In this, all three shale juniors – IGas, Dart and Egdon – have assets in common. Back in January, the French major Total agreed such a deal with the three companies for production exploration and development licences 139 and 140.

Total is committing to pay for more than £45mln of exploration work to acquire 40% of the two assets, which are located in the Gainsborough Trough in Lincolnshire.

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