First Calgary steps on the gas

AIM-LISTED energy group First Calgary is to borrow £300m as it looks to cash in on what industry experts say is one of the biggest gas discoveries in recent times.

The Canadian group, which will move to the main London market in April, has been approached by two banks in recent weeks wanting to help fund the development of Algeria's Menzel Ledjmet field.

Speculation has been mounting that several majors operating in the region, including TotalFinaElf, Statoil and BHP Billiton, are close to taking a stake in the lucrative project.

First Calgary chief executive Rick Anderson has held talks with several firms about sharing development costs but is now keen to press on as an independent to benefit when production begins in 2007.

'We're a small company with a big-company asset and we're going to move forward as if we are the main guys,' he said.

His hand was strengthened last month when signing a deal to export gas from the field through pipelines owned by Algeria's State-owned oil firm Sonatrach.

First Calgary is sitting on six trillion cubic feet of gas - a tenth of Canada's entire reserves - and expects to pump out the equivalent of 150,000 barrels of oil a day in four years, generating annual revenue of £360m.

The group is one of the best-performing energy stocks in the City with a market value of close on £500m.