Petrochemicals firm Ineos and IGas Energy have signed a farm out and purchase agreement, under which the former will acquire interest in the latter's seven shale gas licences in the North West of England.
As per the terms of the agreement, Ineos will acquire a 50% interest in IGas' licences: PEDL, 147, 184, 189, and 190 in the North West, and a 60% interest in IGas' licences: PEDL 145, 193 and EXL 273, which are collectively known as the Bowland Licences.
The deal will also provide Ineos with an option to acquire 20% in PEDL 012 and 200 in East Midlands.
Additionally, Ineos will acquire IGas' 100% interest in the acreage held under PEDL 133 in Scotland.
Ineos Upstream CEO Gary Haywood said: "This is a great opportunity to acquire some 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.
"We are pleased to have agreed this deal with IGas. INEOS's 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."
Ineos has agreed to pay IGas £30m in cash and to fund a two phase work programme of up to £138m to develop the sites.
However, IGas will repay its net share of the work programme to Ineos, when operations at the Bowland Licences begin.
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."