An independent oil and gas exploration and production company has acquired a geothermal energy generation business in Stoke-on-Trent.
IGas, which is listed on the London Stock Exchange, has snapped up GT Energy UK whose main project is a 14MW deep geothermal project in the Etruria Valley.
The scheme is anticipated to supply zero carbon heat to the city on a long-term ‘take or pay’ contract with Stoke-on-Trent City Council.
It is anticipated that the heat will be supplied through the council owned and operated district heating network, which is undergoing installation.
Under the terms of the deal, IGas will make an initial payment of £500,000 while the maximum consideration is £12m.
IGas chief executive Stephen Bowler said: “I am delighted to be announcing the acquisition of GT Energy today, a leading geothermal energy business in the UK, a major strategic milestone for the company and a logical step given the operational synergies of our onshore business.
“Whilst there is a clear need for oil and gas in a 2050 net zero environment, it is our intention to also play an important role in the UK’s energy transition.
“The acquisition of GT Energy provides us with an exciting entry point into this highly attractive, growth market, one that has seen material progress in Europe over the past five years.”
In the year ended 31 December 2019, the company did not generate any turnover and incurred a loss of £110,000 related to expenditure on progressing its geothermal project.
GT Energy founder and managing director Padraig Hanly added: “IGas, as a long established and trusted onshore operator, is the perfect partner to realise the GT Energy vision to deliver affordable, renewable heat from deep geothermal energy.
“The SoTCC District Heat Network will use our deep geothermal heat energy to produce up to 45 GWh a year, save 10,000 tonnes of CO2 a year and lower energy costs by up to 10 per cent.
“It’s the UK’s first ever low-carbon heat network system on this scale, and will help heat thousands of homes and businesses in the city.”
Hanly will continue to run the business, remaining on the board of GT Energy and joining IGas’s Executive Committee.
GT Energy was advised by Turquoise International.