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ICIS the respected energy analysts say nin a press release.... Fears are also mounting that the French power system will struggle to meet consumption next week, as sub-average temperatures are forecast to push peak demand to 83GW on 9 November. That is 5.6GW less than the highest demand on record so far in 2016, on 18 January.

The last time Igas got into financial trouble they sold licences for £35 million to INEOS. Wonder if Jim Radcliffe is out there looking for a Brucie bargain.

I'm just an amateur here but doing five minutes internet research suggests that "Equity cure" means asking the shareholders to buy more shares to increase the amount of cash in the company. For Igas the need for "equity cure" will come well into next year when, hopefully, things might look more positive for Igas. Given the valuable nature of their assets it is possible that new equity might be easily obtained. BTW do we know whether KKK is simply bottom fishing in it's attempt to gain control of igas, or do they have a strategic interest in developing onshore production in the UK. Their major share holding in the intermediary company might suggest the latter. So could their failure to gain control Igas by the back door so to speak lead to a more expensive but more likely to succeed takeover bid. I guess the current exchange rate might make this an attractive proposition. Just a few late night thoughts, probably tosh.

May I suggest you don't short the equity, at least not at the moment. As everyone knows AIM stocks are incredibly news driven. The next month or so is fraught with the risk of good news both for shale and each piece of good news puts fractions on the SP. You say the assets are good, indeed they sre, don't you think other investors might think the same.

GG you obviously know your onions financially. Suppose news is good for Igas over the next 6 months, higher poo, approval of the Springs Road project, prospect of first gas from Third, approval of the Cuadrilla second well etc, and as a result of that the SP rises say to 20p or more. How does that effect your perception of Igas as a short. Does that make it easier for Igas to raise money via a placement or attract a farm-in. I suppose I was thinking that a placement does not always result in a proportional drop in the SP as with Hurricane recently.

Let's have a merger ...how about EGGY GAS !!

Yes, the speed of Egdon's fundraising does make one wonder if they are looking to make acquisitions or maybe enter into some joint agreement with Igas. The Egdon open offer information gives five reasons for wanting the money and the last two of these are... 4) Make targeted investments in the Company's existing producing assets and conventional exploration portfolio with a view to increasing production and cash flow 5) Review and target potential new value adding opportunities What better value adding opportunity could there be than this. Be interesting to see if Malcy sees it that way and indeed if the market cottons on to the idea.

BTW it'll be interesting to see how the system copes on Wednesday and Thursday this week with a high pressure system covering the whole of Europe probably means low German and UK wind output. The temperatures are not cold enough to really stress the system but it'll be interesting to see the price movements.

Hear the words used by Phillip Hammond (Chancellor of the the Exchequer) last week in Parliament... “We have a serious challenge on this country’s energy capacity over the next 20 years, and we are going to have to invest eye-wateringly large sums of money—perhaps £100 billion—just to ensure that the lights stay on.” With Drax being the largest producer of low carbon electricity in the Uk and providing back-up to the whole system via it's coal output maybe Drax will be a beneficiary of this new investment. Why not invest in the best example of a Northern Powerhouse! Wonder if energy will get a mention in the Autumn Statement?

Thanks for that. Yes I agree things can't continue as they are regarding the cash flow. What I was trying to say is that if they can get a grace period then if good news comes through they will be in a better position to attract a partner, or perhaps a less worse position would be a better way to put it. It's an ironic twist that Igas might need this restructuring just as the decision which floored it, that is the Saudi decision to let the oil price float seems to be on the point of being reversed.

I was just looking at Proactive Investors coverage of Igas' current problems. What they say is that Igas need £21million pounds in cash to keep within the conditions of the bond covenants. They had £23 million at the beggining of October which is why with ongoing expenditure thay will come adrift at the end of October potentially. I suppose what that means to me is that in the 10 day grace period the company only have to raise a few million (one or two licences?) in order to keep afloat. Clearly the situation of being on the edge of default cannnot be allowed to continue and there needs to be restructuring but it seems the company may potentially have the time to negotiate this while the expected good shale news over early winter comes out. Let's hope so.

DECC was renamed to include the words "industrial strategy". At the same time hear the words used by Phillip Hammond (Chancellor of the the Exchequer) this week in Parliament... “We have a serious challenge on this country’s energy capacity over the next 20 years, and we are going to have to invest eye-wateringly large sums of money—perhaps £100 billion—just to ensure that the lights stay on.” Strong stuff. If ever there was a time to show that this country has an industrial strategy and that strategy includes support for shale exploration then this is it. Surely by way of offering guarantees or just applying influence then HMG could stop the potential destruction of the company. This at no or little cost to the tax payer. Surely they would want our gas resources to be in the hands of a largely UK owned concern.

Looks like it's an American investment company through it's ownership of Trans European Oil and gas that is behind the bond buy up of Igas. The stated aim of TEOG is to acquire onshore assets in Europe, presumably in anticipation of rising crude prices. I didn't realise there were such companies around. I wonder if this makes EDR a takeover target especially with the cheap exchange rate.

Yes the Financial times report that " Unless things change dramatically, there will be increases in the price of electricity and gas for all consumers over the next month or two, probably sooner rather than later,”. This is as a result of the fall in sterling combined with reduced European supply because of the French nuclear outages. Energy prices have been stable for a couple of years now but rapid rises will soon make the headlines (especially when wage rises don't keep up). Nothing like the voters being hit in the pocket to make the government take action. Wonder if the Chancellor will take action in the Autumn statement - I doubt it but at least the issue will rise rapidly up the priority list.

Weirdly there are a couple of big buys going through this morning. I can see that things look grim. Odds against but remember this company is run by two very competent accountants so if anyone can pull this round financially then they have the skills to do it. Would expect a big sale of assets and SP down in single figures.

Nice rise this morning, I presume invstors are realising that Egdon represents a great chance to get in on the shale gas revolution without becoming involved in Igas and it's (hopefully temporary) financial difficulties. A good hedge.

The point about the interconnector is that the UK power stack is quite dependent on French imports, or at least has been for the last few month, but because of the French nuclear outages these imports are unlikely to be available at least until Christmas making the UK energy margin look even thinner. The Npower video this morning said there have been further French closures for maintenance losing another 5gw of their output, making it even more unlikely Imports from France will resume anytime soon. The point about Europe is that, as I understand it, European regulations say that power market auctions must be used to regulate inter-country flow, so it looks like (i'm not certain), if our energy margin gets dangerously thin, we're not going to be able to stop exports if the continental firms outbid us. The Mail would have a field day with that, "French pinch our lecky while Granny freezes". Anyway I don't want to scaremonger and the Grid have methods such as regulating voltage and Demand Side Management which would be used before there was any effect on ordinary consumers.

Drax is top of the Biggest Risers column on the BBC business website this morning. Big smug smile to myself.

Regarding assumptions for winter electricity supply the key para from the National Grid winter outlook is “Our analysis is based on a de-rated generation capacity of 55 GW. The capacity margin assumes an average cold spell (ACS) peak demand of 52.7 GW and net interconnector imports of 2.0 GW.” Avearage cold spell peak demand is average peak demand in the worst of winter weather averaged out over a few years, as an average of course it must have been exceeded roughly 50% of the sample. The relevant graph is Fig 5 of the outlook with the orange line showing ACS. I think the most important point is that the French supply situation will be much poorer this year than last and they will be importing from Germany. Looks to me as a complete amateur that we are very unlikely to be getting any electricity from France. If France outbids us for Netherlands exports then even worse. In other words the National Grid assumptions look false. If (a big IF I know) as suggested by my brief reading of Ofgem we are required by European regulations to export electricity (the interconnector is two way) when the Europe wide auctioning system demands it, AND that results in low UK supplies, the cat would really be among the pigeons politically.

I know I'm writing to myself here but just to note the pleasing rise again this morning. Drax is a good defensive stock for those fearful of a Brexit meltdown in the market, also II's may be becoming aware of the narrow electricity supply situation and the potential for Drax to sell into cold spells. See next post.