I can't see how OPEC can do much. Initially they will try to restrict production to jack the price up, but that is only a tempoary measure. Their big hope has always been China which has been suckin in oil imports. Well, it is said that China have some of the largest Shale beds in the world and right now they are exploring some of them. To some extent the closure of oil fields as uneconomic because of the low price will maintain oil for a while, but home grown energy is what interests the world, and as more and more Shale gas comes on stream, so it will be harder for OPEC to manipuate the price . Its effectively changing from a seller's to a buyer's market. Well done Shale, its effect is being felt already, even though we haven't produced a single barrel over here
It is reported today that Ineos are to use some of the $1billion dollars they intend to spend on onshore gas development on buying shale licences. Given that Igas have licences for some of the best researched acreage in the UK which just happens to be adjacent to Ineos's plant at Runcorn, I wonder if we might see some sort of deal. Perhaps that wouldn't be surprising if the estimates provided by E. Lynn below are correct. Ineos have developed an Upstream Division to develop oil and gas, both onshore and offshore to feed their petrochemical facilities. Since the summer they have been creating a team of experts to take this project forward including some important figures in US shale.
TW launches new broadside
good to see his de-ramping isn't over. After a couple of days of new punters being sucked in due to the Ineos news, he has launched a renewed attack at igas. (same reasons as before but clearly he feels there is still more mileage in his chums shorting attacks)
Very eloquently put in your post 2 days ago. I would also like to thank you for the Yes vote. I sold my IGAS shares near peak on the day of the result & broke even. I dip in & out of this BB to keep up to date because the UK is getting close to a grey out (not quite a black out). If your partner is complaining about the time it takes your oven to cook your Sunday roast, it's not the fault of the oven. It's the national grid reducing the voltage. The early signs of not enough power generation. The need for gas is already there. Fortunately, oil sp drop has postponed the gas urgency.
RE: shale gas potential
A fair assessment.
shale gas potential
I have a significant holding of IGas shares and have been following the posts on this website for some time. With the share dropping substantially in the last few weeks, I thought I would join the discussion for the first time. Before my grammar exposes me, I will disclose that I am a Yank. I look at IGas as primarily a resource play. The asset that gives the Company most of its potential value is clearly its shale gas resource. Trying to put a present value on that resource with the limited information available might be an interesting academic exercise but one not likely to yield a result with a high degree of reliability. There are, however, methodologies employed by governments, NGOs and energy companies to get a back-of-the-envelope appraisal of new resources. As study done last year for the US Energy Information Administration gives a fairly concise overview of that methodology and is useful for gaining at least a primary appreciation of shale gas http://www.eia.gov/analysis/studies/worldshalegas/pdf/overview.pdf. Whether an evaluation of IGas’s shale resource is likely or not to be accurate, I’m still faced with having to make a decision to either bail out, hold or buy. Limitations in my resources, the data publicly available and my objective necessarily lead to simple evaluation methodology. I used the following assumptions: Gas Initially in Place (GIIP) of 147 TCF (the mid-case net gas estimate in the 4 November 2014 RNS), a gas price of 45p/therm held flat for the life of production, “all-in” development and production costs of 20p/therm, development over 20 years and gas production for 50 years, a 15% recovery of the GIIP, a 10% discount rate and a 1 in 5 chance that the project will be commercial. The mathematical result is a net present value of £4.9bil for the production revenue. An assumption that the Company’s interest will be diluted by 50% in order to raise development funds drops that figure down to £2.45bil. If all this magically showed up in the Company’s market cap (at 58.75p/share, the market cap is £174.13m), the Company would be worth roughly 14.1 times its present value. Instead of 58.75p/share, the price would be in the neighborhood of £8.27, and, if there is a 1 in 5 chance of success, the risked share price would be £1.65. From my perspective, if this analysis bears any reasonable relationship to ultimate reality I stand a 1 in 5 chance that my 58.75p shares will someday be worth £8.27 each. When you get down to the nub with IGas, it’s future value is still quite speculative. That’s not unusual with small cap energy companies. If one argues that the future value of IGas is all pie in the sky, one also must admit that the pie could be very, very big. Balancing the odds leads me to believe that holding on to my shares seems to be a sound bet and picking up a few extra shares with spare cash would not be a bad buy.
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