Ithaca Energy Inc (IAE) - Acquisition of Non-Operated Interests
RNS Number : 2408O
Ithaca Energy Inc
09 October 2012
Not for Distribution to U.S. Newswire Services or for Dissemination in the
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.
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
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."
Iain McKendrick, CEO firstname.lastname@example.org +44
(0) 1224 650 261
Graham Forbes, CFO email@example.com+44
(0) 1224 652 151
firstname.lastname@example.org+44 (0) 207 269 7157
Edward Westropp email@example.com +44
(0) 207 269 7230
Georgia Mann firstname.lastname@example.org
+44 (0) 207 269 7212
Cenkos Securities plc:
email@example.com+44 (0) 207 397 8900
firstname.lastname@example.org+44 (0) 131 220 6939
RBC Capital Markets:
Tim Chapman email@example.com
+44 (0) 207 653 4641
Matthew Coakes firstname.lastname@example.org
+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
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.
This information is provided by RNS
The company news service from the London Stock Exchange
MSCLIFERIALAIIF -0- Oct/09/2012 07:00 GMT
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