Ithaca Energy Inc (IAE) - Greater Stella Area Development Update
RNS Number : 8313Q
Ithaca Energy Inc
12 November 2012
Not for Distribution to U.S. Newswire Services or for Dissemination in the
Ithaca Energy Inc.
Greater Stella Area Development Update
12 November 2012
Ithaca Energy (TSX: IAE, LSE AIM: IAE) provides an update on the progress made
with its Greater Stella Area ("GSA") development activities and schedule.
o The modifications contract for the "FPF-1" floating production unit has
been awarded to the Remontowa shipyard in Gdansk, Poland. The FPF-1 is now
located In Gdansk.
o The Ensco 100 drilling rig is now forecast to commence the development
drilling campaign in Q1-2013, due to delays in the completion of drilling
programmes for other operators.
o Four initial Stella wells are to be drilled over a period of approximately
twelve months prior to the arrival of the FPF-1 for hook-up and commissioning,
currently anticipated in H1-2014.
o Detailed design has been completed for the subsea infrastructure that is to
be installed in 2013 by Technip, a world leader in the execution of subsea
projects. Fabrication of the required linepipe is underway.
o A suite of gas transportation and processing agreements has been executed
for export of gas processed on the FPF-1 via the Central Area Transmission
System ("CATS") and Teeside Gas and Liquids Processing ("TGLP") terminal.
o The Company's net share of remaining capital expenditure prior to first
hydrocarbons from the GSA production hub is $395 million, which will be funded
from existing financial resources.
o The successful appraisal of the Hurricane discovery in Q3-2012 and the
offer of Block 29/5e, adjacent to Hurricane, in the 27^th UK Offshore License
Round in October 2012, have further augmented the opportunity set for the GSA
o The Company's partners in the GSA are Dyas UK Limited, a long established
privately owned North Sea oil and gas producer, and Petrofac, a leading
international service provider to the oil and gas industry listed on the FTSE
100 in London.
Iain McKendrick, Chief Executive Officer, commented:
"This is exciting progress towards the creation of a 25kboe/d North Sea oil
and gas operator and unlocks substantial value by monetising over 30Mboe of
the Company's reserves base. We are pleased with the significant milestones
achieved by all the major service providers to this development. The Company
is firmly focused on executing the project safely and efficiently and creating
further long term value by building upon its position in the GSA."
FPF-1 Modification Works
The contract for the modification of the FPF-1 for deployment on the GSA
production hub was awarded to Petrofac in October 2011. Following completion
of detailed design studies and removal of the existing topsides processing
equipment in Teeside, Petrofac, under the terms of its lump sum incentivised
modification contract with the GSA co-venturers, will install new processing
equipment on the FPF-1. The decision to install new equipment, rather than
partially re-use the existing facilities, will lead to a higher quality vessel
capable of achieving high operational uptime performance being deployed on the
The contract for completion of the FPF-1 modification works has been awarded
to the Remontowa shipyard in Gdansk, Poland, where the vessel is now located.
The shipyard is located approximately 10 days towing time from its future
final location at the Stella field.
The immediate work programme in the shipyard is focused on the performance of
a detailed inspection to verify the requirements of the envisaged marine
systems workscope and preparation for dry dock works, which are anticipated to
commence in Q1-2013. Once these activities have been completed and the vessel
is in the dry dock, the schedule for completion of the full modification work
programme will be finalised.
A contract was signed with Ensco Offshore UK Limited ("Ensco") in November
2011 for use of the Ensco 100 heavy duty jack-up drilling rig on the Stella
and Harrier development drilling campaign. The rig is currently anticipated
to be on location at the Stella field around late Q1-2013, later than
originally anticipated when the contract with Ensco was signed, due to delays
in the completion of drilling programmes for previous users of the rig.
As previously announced, to maximise initial oil and condensate production and
fill the gas processing facilities on the FPF-1, four Stella wells are planned
for the start-up of production from the hub. Each well is anticipated to take
approximately 90 days to drill, complete and undergo a clean-up test designed
to give further assurance around flow rates prior to start-up of the field.
Further wells on Stella and Harrier, plus other potential targets, including
Hurricane, will then be drilled post first hydrocarbons from Stella to
maintain the gas processing facilities on plateau.
Subsea Infrastructure Construction & Installation Activities
An Engineering, Procurement, Installation and Construction ("EPIC") contract
was awarded to Technip UK Limited in July 2012, for completion of the major
subsea works that are to be conducted on the GSA hub. The engineering and
construction activities associated with the subsea work programme are
progressing as planned and remain on target for the main installation works to
be performed in 2013.
During October 2012, terms were finalised for use of the BP operated CATS
pipeline for the transportation of gas from the FPF-1 to shore and for
processing of the gas in the TGLP terminal, owned and operated by Teeside Gas
Processing Plant Limited. The gas processing that will be performed at the
TGLP terminal involves the separation of natural gas, which will be sold to
the UK spot market on a daily basis, and the associated propane, butane and
condensate from within the gas exported from the FPF-1, with such natural gas
liquids being sold by TGLP at prevailing market prices.
The Company's focus on the GSA is driven by monetisation of 31.7 million
barrels of oil equivalent of net proven and probable reserves, as
independently assessed by Sproule International Limited, and generation of
additional value via the wider opportunities provided by the range of
undeveloped discoveries surrounding the infrastructure hub.
Initial annualised production from the hub is anticipated to be approximately
16,000 barrels of oil equivalent per day ("boepd") net to Ithaca, thereby
pushing the Company's annualised production over 20,000 boepd and achieving a
significant step towards the mid term objective of creating a highly
profitable 25,000 boepd oil and gas production company.
The Company's net share of remaining capital expenditure prior to first
hydrocarbons from the GSA production hub is $395 million. This figure
reflects completion of all the major contracting required to achieve first
hydrocarbons from the development and is within ten percent of the budget
specified at the time of the development concept select decision in October
The Company will fund the forecast capital expenditure from its existing cash
balance, the anticipated cash flow generated by its producing asset portfolio
and some of its undrawn $430 million debt facility.
Further information is available on the Company's website,
Iain McKendrick, CEOimckendrick@ithacaenergy.com +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:
Jon Fitzpatrick email@example.com
+44 (0) 207 397 8900
+44 (0) 131 220 6939
RBC Capital Markets:
Tim Chapman firstname.lastname@example.org
+44 (0) 207 653 4641
Matthew Coakesmatthew.email@example.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 industry.
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 anticipated development activity
schedules, the anticipated timing of first hydrocarbons from the GSA
production hub or the estimated reserves and production levels associated with
the fields using the hub 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
DRLDFLFFLFFFFBQ -0- Nov/12/2012 07:00 GMT
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