By Nina Chestney
(Reuters) - Britain's largest shale gas developer IGas (L:IGAS) said on Tuesday it is in talks with a number of potential investors to strengthen its balance sheet.
IGas has been cutting its debt over the last 14 months amid oil price volatility through bond buybacks and the amortisation of secured bonds, it said in a company update.
It has been also been in discussions with bondholders about extending debt maturity, deferring certain interest payments and waivering some financial obligations on the expectation that further finance is generated for the business.
"In relation to these financing requirements, the company is in discussions with a number of potential investors and continues to evaluate options for cash and earnings accretive transactions including farm-outs and other asset portfolio management opportunities," IGas said in a statement.
IGas shares fell by almost 10.5 percent to 15.40 pence by 0853 GMT.
More capital could enable the firm to potentially increase production by around 700 barrel of oil equivalent per day (beopd), net of decline, by Jan. 2018, the firm said.
It maintained its production guidance for the full year at between 2,500 and 2,700 boepd. As the oil price has improved to around $50 a barrel since a low of around $27 a barrel in January this year, IGas expects its operating costs for this year to be around $30 per barrel of oil equivalent.
IGas added that it is making good progress on its five-year shale development plan, aiming to start drilling at two wells in the first half of 2017, subject to planning and permitting.