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Ithaca Energy Inc IAE Greater Stella Area Development Update



  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
                                United States

 

 

                              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.

 

Highlights

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 
hub.

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."

 

 

                                       

                              Further Information

 

 

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
GSA.

 

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.

 

Drilling Programme

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.

 

GSA Strategy

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 
2011.

 

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, 
www.ithacaenergy.com.

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 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
                                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 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.

 

                                    -ENDS-

                     This information is provided by RNS
           The company news service from the London Stock Exchange
 
END
 
 
DRLDFLFFLFFFFBQ -0- Nov/12/2012 07:00 GMT
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