The deal is valued at $58 million (about £30 million) in cash payable to IGas on completion and involves the chemical firm funding up to $266 million (gross) of which IGas’ share would be $125 million.
The licences are in ion the North West, East Midlands and Scotland.
In the North West, Ineos will acquire a 50% interest in PEDL 147, 184, 189, and 190, and a 60% interest in IGas’ PEDL 145, 193 and EXL 273 licences in the Bowland Basin where there is already considerable opposition to shale gas exploration.
On the start of any commercial production from the Bowland licences, IGas would be obligated to pay back to Ineos its net share of the carry out of 50% of its net free cashflow.
In the East Midlands, Ineos has the option to acquire 20% in PEDLs 012 and 200, and in Scotland the chemical concern will secure 100% of IGas’ interest PEDL 133 in the Midland Basin and assume operatorship.
PEDL 133 was host to Dart’s flagship Airth project where it intended to spend hundreds of millions of dollars to develop the CSG field to meet a gas sales agreement with BG Group, but concerns over CSG drilling with the Scottish government and local councils stalled much of the planned work back in 2013.
PEDL 133 hosted Europe's first commercial CSG production, with wells flowing at 800,000 cubic feet per day, generating a small amount of electricity, and should be capable of ramping up to 1MMcfpd.
The new deal, and earlier Dart deals struck with Total and GDF Suez, mean IGas will have up to $US285 million of total spend from third parties across its key shale gas acreage, enough for at last 15 wells drilled and tested, and the construction of gas handling stations.
"We are delighted to announce this farm-out with Ineos which underpins the quality, scale and significant potential of our licences, whilst retaining material upside in these key assets,” IGas CEO Andrew Austin said.
“This transaction, together with our existing partnerships with Total and GDF, reinforces the potential and materiality of our portfolio to world class counterparties and strongly positions us as we seek to work together to unlock the potential of our untapped natural gas resources in Britain."
Ineos Upstream CEO Gary Haywood said the deal was a great opportunity to acquire first class assets that have the potential to yield significant quantities of gas in the future.
“Ineos believes that an indigenous Shale gas industry will transform UK manufacturing, and that we can extract the gas safely and responsibly. Ineos’ scale, asset position across the UK, US shale gas expertise, and our expertise in managing oil and gas facilities will be a great match with IGas's existing onshore asset base, and significant exploration and production capability."
The Swiss-based Ineos is a major player in the global petrochemical industry with over $US50 billion in annual sales.
It believes the shale gas feedstock can be used to meet the demands of its s petrochemical plants in Britain, which are enormous consumers of energy.
IGas estimates that Ineos will gain about 220,000 acres with 67 trillion cubic feet of gas in place, although it is not known how much of that might be commercially extractable ¬¬– or politically palatable, although Conservative UK Prime Minister David Cameron has recently pushed through legislation that enables shale wells to be drilled, assuming the plans are not vetoed by local authorities.
One of Ineos’ biggest plants is in Scotland, and in 2013 the threatened to shut down much of Grangemouth in a successful battle to force the unions to make concessions on costs, suggesting the company may play hardball with anti-fraccing activists.
Currently, Ineos is looking at sourcing LNG from the USA when local sources run out.
