LONDON (Alliance News) - Egdon Resources PLC Tuesday confirmed a placing and open offer to raise up to GBP7 million and entered a sale and purchase deal with Alkane Energy PLC regarding the previously announced transaction of Alkane's shale assets for Egdon shares.
Egdon, a UK-focused oil and gas exploration and production company, said it has entered into a conditional agreement to purchase interests in 10 UK exploration and development licences from Alkane in return for 40 million Egdon shares.
Egdon said the Alkane licences will then be split between the two companies, with Egdon acquiring the rights and interests over the deeper shale gas regions of the plays.
The deal gives Alkane an 18% holding of the enlarged share capital in Egdon, and Alkane said it will remain focused on growing its core business and will retain the rights to all coal gas within its acreage. Alkane extracts gas from abandoned coal mines and uses it to generate electricity.
Egdon also confirmed a conditional placing of 32 million shares at 20 pence each to raise roughly GBP6.4 million and an open offer to qualifying shareholders to raise up to a further GBP600,000 by the issue of 3.0 million shares at the placing price.
The price of the placing and open offer are at a 7% discount to the closing market price of 21.5 pence on Monday. Egdon is currently trading up 10.5% at 24.00 pence, putting it in the top ten AIM ALL-Share risers on Tuesday.
Meanwhile, Alkane shares were down 5.1% to 41.50 pence Tuesday.
On Monday, Egdon announced plans for the placing and said that it was in advanced discussions with Alkane after press speculation over the major shale deal.
In recent months, Egdon has secured its place as one of the UK's major shale fracking players after completing two deals with French major oil and gas company Total SA on the PEDL139/140 and PEDL209 sites in order to develop the Gainsborough Trough Bowland-Hodder shale-gas play.
The enlarged Egdon group will have a total of 140,176 acres of shale gas prospective acreage.
The news also comes a week after Egdon's UK shale gas competitor, IGas Energy PLC agreed a deal to buy Dart Energy Ltd for GBP117.1 million in shares, a deal which will create a company with the largest area in the UK licenced for shale gas fracking.
The shale industry in the UK is undergoing a major push, with companies like Total SA, Cuadrilla Resources Ltd, IGas Energy and Egdon Resources developing fracking operations around the country.
Hydraulic fracturing, otherwise known as fracking, involves extracting gas trapped in shale by pumping in pressurised water and chemicals.
By Tom McIvor; tommcivor@alliancenews.com; @TomMcIvor1
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