Island Gas Resources (IGas) reports a £13.75 million fully underwritten placing to reinforce its position as the leading company dedicated to UK onshore gas production.

Highlights: • Strengthened financial position and funding in place for accelerated development programme - £13.75 million underwritten Placing at 60p - Peter Levine / Levine Capital Management increasing their stake from 3.7% to 12.5% and to fully underwrite the Placing • Accretive acquisition of licence interests from Nexen boosting resources by 38% and giving operatorship of Point of Ayr - increased stake by 25% to 75% in Point of Ayr - increased stakes by 15% to 35% in Four Oaks, North Dees and Parkside licences • Asset base in place to supply electricity to approximately 7% of all UK households for 15 years - first full production site targeted for 2011 - further 20 to 50 sites targeted for production between 2011 and 2014 • Board strengthened with appointment of John Hamilton as non executive Director

Andrew Austin, Chief Executive Officer, said, “The proposed fund-raising will help us accelerate the development of IGas by increasing our assets and bringing forward our production plans. Significantly this positions IGas to play an important role in ensuring the security of UK energy supply.

I am delighted that Peter Levine has significantly increased his investment and I would like to welcome John Hamilton onto the Board. I look forward to working closely with John as Levine Capital Management’s representative and developing IGas into the leading player in the sector.”

Use of proceeds The Placing will enable the Company to complete the acquisition of interests from Nexen. Approximately £5 million of the proceeds will be used to finance a work programme in the licence areas being acquired. A further £2.5 million will be used to fund operatorship and the related increased costs of greater working interests and existing licences; in this regard the Company will become the operator, subject to Secretary of State approval, of the Point of Ayr Licences. The balance of the Placing proceeds will be used to advance production drilling in accordance with the Company’s strategic plans.

Tags: Island Gas Resources