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Acquisition of Non-Operated Interests


Acquisition of Non-Operated Interests

ABERDEEN, SCOTLAND -- (Marketwire) -- 10/09/12 -- *T

TSXV:IAE

Not for Distribution to U.S. Newswire Services or for Dissemination in the United States

Ithaca Energy Inc.

Acquisition of Non-Operated Interests in Cook and MacCulloch

UK North Sea Producing Fields

9 October 2012

Ithaca Energy Inc. announces that it has entered into agreements with Noble Energy Capital Limited (a subsidiary of Noble Energy Inc., NYSE: NBL) to acquire two wholly owned UK subsidiary companies that will hold non-operated interests in UK North Sea producing fields; a 12.885% interest in the Cook field and a 14% interest in the MacCulloch field.

Highlights

o The acquisitions are forecast to result in net incremental production, predominantly oil, for the Company of approximately 1,100 barrels of oil equivalent per day ("boepd") in 2012.

o The two fields are anticipated to increase the Company's net proven and probable reserves by 3.4 million barrels of oil equivalent ("mmboe"), based on the effective date of the transactions of 1 January 2012.

o The total consideration is US$38.5 million, implying an acquisition cost of US$11.3 per barrel of proven and probable reserves.

o The acquisition is in line with the Company's strategy of further diversifying and expanding its producing asset portfolio and accelerating the monetisation of its existing pool of UK tax allowances.

The Cook oil field, operated by Shell, lies in Block 21/20a in the Central North Sea. The field has been developed as a single well subsea tie-back to the Shell operated Anasuria floating production, storage and offloading vessel ("FPSO"), which serves as a host processing facility to several nearby fields, with oil exported from the FPSO via shuttle tankers and gas via pipeline to shore.

The acquisition will result in the Company increasing its existing Cook field interest from 28.46% to 41.345%, furthering its position as the field's largest owner. Based on the independent reserves assessment performed by Sproule International Limited ("Sproule"), effective as of 31 December 2011, remaining net proved and probable reserves associated with the additional 12.885% interest (as of that date) are 2.0 mmboe.

The MacCulloch oil field, currently operated by ConocoPhillips, lies in Blocks 15/24b in the Central North Sea (transfer of field operatorship to Endeavour Energy UK Limited is pending completion of a previously announced transaction). The field is producing from four subsea wells tied back to the North Sea Producer FPSO, with processed oil and gas exported via pipelines to shore. Remaining net proved and probable reserves effective as of 31 December 2011 are estimated by Ithaca to be approximately 1.4 mmboe. An assessment of the field reserves will be performed by Sproule as part of the normal year end reserves evaluation exercise.

Net production from the two fields is anticipated to average 1,100 boepd over 2012, with the contribution from each field being broadly equal. This estimate takes into account actual field performance, including the impact of planned maintenance shutdowns on the fields and the anticipated operational performance of the fields over the remainder of the year (including a planned shutdown of approximately 15 days on the MacCulloch field in the final quarter of 2012). The fields are anticipated to contribute approximately the same level of net production in 2013.

Completion of the transactions is anticipated in early 2013 and is subject to normal regulatory and joint venture approvals, including reaching agreement in respect of decommissioning cost security.

The acquisition will be funded from Ithaca's existing cash resources. At completion the consideration paid will be subject to normal industry adjustments to reflect the income and costs incurred since the effective date. The Company anticipates that the resulting net cash consideration payable at completion will be under US$30 million, based on the 1 January 2012 effective date and assuming completion occurs in early 2013. Following completion, the Company's available tax allowances mean that the resulting net cash flow from the assets is forecast to deliver a rapid payback of the total consideration.

Iain McKendrick, Chief Executive Officer, commented:"This is the Company's first acquisition post the announcement of the new enlarged debt facility and is in line with the stated objective of acquiring producing reserves in the UKCS to both diversify the Company's production base and accelerate the utilisation of existing tax allowances. I am particularly pleased to be acquiring the interests in these fields, where we see large potential production and reserve upsides. These acquisitions represent highly accretive and quick pay-back additions to our growing production base. The Company is cautiously optimistic of being able to add further asset acquisitions to its portfolio, given its efforts to continue driving forward the growth of the Company."

Enquiries:

Ithaca Energy: Iain McKendrick,CEO imckendrick@ithacaenergy.com +44 (0) 1224 650 261 Graham Forbes, CFO gforbes@ithacaenergy.com +44 (0) 1224 652 151

FTI Consulting: Billy Clegg billy.clegg@fticonsulting.com +44 (0) 207 269 7157 Edward Westropp edward.westropp@fticonsulting.com +44 (0) 207 269 7230

Georgia Mann georgia.mann@fticonsulting.com +44 (0) 207 269 7212

Cenkos Securities plc: Jon Fitzpatrick jfitzpatrick@cenkos.com +44 (0) 207 397 8900 Ken Fleming kfleming@cenkos.com +44 (0) 131 220 6939

RBC Capital Markets: Tim Chapman tim.chapman@rbccm.com +44 (0) 207 653 4641 Matthew Coakes matthew.coakes@rbccm.com +44 (0) 207 653 4871

Notes to oil and gas disclosure:

In accordance with AIM Guidelines, John Horsburgh, BSc (Hons) Geophysics (Edinburgh), MSc Petroleum Geology (Aberdeen) and Subsurface Manager at Ithaca is the qualified person that has reviewed the technical information contained in this press release. Mr Horsburgh has over 15 years operating experience in the upstream oil and gas industry.

The report prepared by Sproule International Limited, effective as of 31 December 2011, was prepared in accordance with the Canadian Oil and Gas Evaluation Handbook ("COGEH") reserves definitions and evaluation practices and procedures as specified by National Instrument 51-101 ("NI 51-101"). The estimates of reserves for individual properties may not reflect the same confidence level as estimates of reserves for all properties due to the effects of aggregation. The NI 51-101 summary data is available under Company's Profile on SEDAR at www.sedar.com. Estimated reserves for the MacCulloch oil fieldare based on Ithaca's internal evaluation of the asset.

The term "boe" may be misleading, particularly if used in isolation. A boe conversion of 6 Mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

About Ithaca Energy:

Ithaca Energy Inc. (TSX: IAE, LSE AIM: IAE) and its wholly owned subsidiary Ithaca Energy (UK) Limited ("Ithaca" or "the Company"),is an oil and gas operator focused on production, appraisal and development activities on the United Kingdom Continental Shelf. The goal of Ithaca, in the near term, is to maximize production and achieve early production from the development of existing discoveries on properties held by Ithaca, to originate and participate in exploration and appraisal on properties held by Ithaca when capital permits, and to consider other opportunities for growth as they are identified from time to time by Ithaca.

Not for Distribution to U.S. Newswire Services or for Dissemination in the United States

Forward-looking statements Some of the statements in this announcement are forward-looking. Forward-looking statements include statements regarding the intent, belief and current expectations of Ithaca Energy Inc. or its officers with respect to various matters. When used in this announcement, the words "anticipate", "continue", "estimate", "expect", "may", "will","project", "plan", "should", "believe", "could", "target" and similar expressions, and the negatives thereof, whether used in connection with the closing of the acquisitions referred to herein, including the timing thereof and the anticipated net cash consideration payable therewith, the reserves and production of the field interests being acquired, the Company's other fields or otherwise are intended to identify forward-looking statements. Such statements are not promises or guarantees, and are subject to known and unknown risks and uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements or information. These forward-looking statements speak only as of the date of this announcement. Ithaca Energy Inc. expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any change in its expectations with regard thereto or any change in events, conditions or circumstances on which any forward-looking statement is based except as required by applicable securities laws.

-ENDS-

This information is provided by RNS

The company news service from the London Stock Exchange

END


 
 
 
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