Business Overview
IGas Energy Plc (LON: IGAS) is a British Oil & Gas company which is engaged in producing oil and gas onshore. The company produces around c.2,200 barrels of oil equivalent per day from over 100 sites across the country.

Recent News
On 20^th November 2019, the company announced that it had completed the repayment of its secured bonds from the Reserve-based Lending Facility with BMO capital markets.

Financial Highlights – H1 Financial year 2019 (30^th June 2019, GBP, million)

(Source: Interim Report, Company Website)

In the first half of the financial year 2019, the company’s revenue grew marginally to GBP 21.2 million as compared to GBP 21.1 million in the first half of the fiscal year 2018. It was due to the positive impact of stronger dollar vs sterling. Adjusted EBITDA increased to GBP 7.7 million as compared to GBP 6 million recorded in H1 FY2018, driven by an improved hedging position partially offset by higher operating costs. Profit after tax (continuing operations) increased to GBP 0.8 million as compared to a loss of GBP 1.2 million in the first half of the fiscal year 2018. Operating cash flow grew to GBP 8.7 million in the first half of the fiscal year 2019 due to an improved hedging position and lower cash operating costs. The company’s net debt reduced to GBP 5.9 million as compared to GBP 7.4 million in the first half of the financial year 2018.

Share Price Performance

Daily Chart as on 29^thNovember 2019, before the market closed (Source: Thomson Reuters)

On November 29^th, 2019, IGas Energy Plc shares were trading at GBX 37.02 at the time of writing before the market close (at 11:40 AM GMT), up by 2.12 per cent against the last day closing price. Stock's 52 weeks High and Low are GBX 97/GBX 21.50. The stock price is in down-trend and has given negative 57.60 per cent return in the last one year. In the last three months and one month, the company’s share price has dropped by 26.30 per cent and 16.10 per cent respectively.

Valuation Methodology


Conclusion
The company’s overall performance has marginally improved with a slight increase in the revenue and profit after tax. However, there are some uncertainties which could impact the performance of the company. The company is exposed to political risk, which could affect the company’s ability to deliver its strategy. The company faces planning, environmental, licensing risks associated with its drilling and production operations. Production of oil & gas economically is a big challenge for the company and affects its profitability. Successful developments of shale gas resources are also a risk factor for the company, which could increase the competition in the company’s business. Exposure to the market price risk of oil & gas could affect the operating cost of the company. Fluctuations in the exchange rates could impact the financial performance of the company. The company could also face liquidity risk, which could affect the operations of the company.

Based on the above valuation and risks factors as highlighted, we recommend investors to keep a “Watch” on the stock at the current price of GBX 37.50 (as on 29^th November 2019, before the market close at 10:00 AM GMT), with support from few catalysts needs to be evaluated at a later stage.

*All forecasted figures and peer information have been taken from Thomson Reuters.

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