The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Press release from Marketwire

Acquisition of Non-Operated Interests

Tuesday, October 09, 2012

Acquisition of Non-Operated Interests06:16 EDT Tuesday, October 09, 2012ABERDEEN, SCOTLAND--(Marketwire - October 09, 2012) -TSXV:IAENot for Distribution to U.S. Newswire Services or for Dissemination inthe United States Ithaca Energy Inc. Acquisition of Non-Operated Interests in Cook and MacCulloch UK North Sea Producing Fields 9 October 2012Ithaca Energy Inc. announces that it has entered into agreements withNoble Energy Capital Limited (a subsidiary of Noble Energy Inc., NYSE:NBL) to acquire two wholly owned UK subsidiary companies that will holdnon-operated interests in UK North Sea producing fields; a 12.885%interest in the Cook field and a 14% interest in the MacCulloch field.Highlightso 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 theCentral North Sea. The field has been developed as a single wellsubsea tie-back to the Shell operated Anasuria floating production,storage and offloading vessel ("FPSO"), which serves as a hostprocessing facility to several nearby fields, with oil exported fromthe FPSO via shuttle tankers and gas via pipeline to shore.The acquisition will result in the Company increasing its existing Cookfield interest from 28.46% to 41.345%, furthering its position as thefield's largest owner. Based on the independent reserves assessmentperformed by Sproule International Limited ("Sproule"), effective as of31 December 2011, remaining net proved and probable reserves associatedwith the additional 12.885% interest (as of that date) are 2.0 mmboe.The MacCulloch oil field, currently operated by ConocoPhillips, lies inBlocks 15/24b in the Central North Sea (transfer of field operatorshipto Endeavour Energy UK Limited is pending completion of a previouslyannounced transaction). The field is producing from four subsea wellstied back to the North Sea Producer FPSO, with processed oil and gasexported via pipelines to shore. Remaining net proved and probablereserves effective as of 31 December 2011 are estimated by Ithaca to beapproximately 1.4 mmboe. An assessment of the field reserves will beperformed by Sproule as part of the normal year end reserves evaluationexercise.Net production from the two fields is anticipated to average 1,100boepd over 2012, with the contribution from each field being broadlyequal. This estimate takes into account actual field performance,including the impact of planned maintenance shutdowns on the fields andthe anticipated operational performance of the fields over theremainder of the year (including a planned shutdown of approximately 15days on the MacCulloch field in the final quarter of 2012). The fieldsare anticipated to contribute approximately the same level of netproduction in 2013.Completion of the transactions is anticipated in early 2013 and issubject to normal regulatory and joint venture approvals, includingreaching 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 industryadjustments to reflect the income and costs incurred since theeffective date. The Company anticipates that the resulting net cashconsideration payable at completion will be under US$30 million, basedon the 1 January 2012 effective date and assuming completion occurs inearly 2013. Following completion, the Company's available taxallowances mean that the resulting net cash flow from the assets isforecast to deliver a rapid payback of the total consideration.Iain McKendrick, Chief Executive Officer, commented:"This is the Company'sfirst acquisition post the announcement of thenew enlarged debt facility and is in line with the stated objective ofacquiring producing reserves in the UKCS to both diversify theCompany's production base and accelerate the utilisation of existingtax allowances. I am particularly pleased to be acquiring theinterests in these fields, where we see large potential production andreserve upsides. These acquisitions represent highly accretive andquick pay-back additions to our growing production base. The Companyis cautiously optimistic of being able to add further assetacquisitions to its portfolio, given its efforts to continue drivingforward the growth of the Company."Enquiries:Ithaca Energy:Iain McKendrick,CEO +44 (0) 1224 650 261Graham Forbes, CFO +44 (0) 1224 652 151FTI Consulting:Billy Clegg +44 (0) 207 269 7157Edward Westropp +44 (0) 207 269 7230Georgia Mann +44 (0) 207 269 7212Cenkos Securities plc:Jon Fitzpatrick +44 (0) 207 397 8900Ken Fleming +44 (0) 131 220 6939RBC Capital Markets:Tim Chapman +44 (0) 207 653 4641Matthew Coakes +44 (0) 207 653 4871Notes to oil and gas disclosure:In accordance with AIM Guidelines, John Horsburgh, BSc (Hons)Geophysics (Edinburgh), MSc Petroleum Geology (Aberdeen) and SubsurfaceManager at Ithaca is the qualified person that has reviewed thetechnical information contained in this press release. Mr Horsburghhas over 15 years operating experience in the upstream oil and gasindustry.The report prepared by Sproule International Limited, effective as of31 December 2011, was prepared in accordance with the Canadian Oil andGas Evaluation Handbook ("COGEH") reserves definitions and evaluationpractices and procedures as specified by National Instrument 51-101("NI 51-101"). The estimates of reserves for individual properties maynot reflect the same confidence level as estimates of reserves for allproperties due to the effects of aggregation. The NI 51-101 summarydata is available under Company's Profile on SEDAR at reserves for the MacCulloch oil fieldare based on Ithaca'sinternal evaluation of the asset.The term "boe" may be misleading, particularly if used in isolation. Aboe conversion of 6 Mcf: 1 bbl is based on an energy equivalencyconversion method primarily applicable at the burner tip and does notrepresent a value equivalency at the wellhead.About Ithaca Energy:Ithaca Energy Inc. (TSX: IAE, LSE AIM: IAE) and its wholly ownedsubsidiary Ithaca Energy (UK) Limited ("Ithaca" or "the Company"),is anoil and gas operator focused on production, appraisal and developmentactivities on the United Kingdom Continental Shelf. The goal ofIthaca, in the near term, is to maximize production and achieve earlyproduction from the development of existing discoveries on propertiesheld by Ithaca, to originate and participate in exploration andappraisal on properties held by Ithaca when capital permits, and toconsider other opportunities for growth as they are identified fromtime to time by Ithaca.Not for Distribution to U.S. Newswire Services or for Dissemination inthe United StatesForward-looking statementsSome 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 officerswith respect to various matters. When used in this announcement, thewords "anticipate", "continue", "estimate", "expect", "may","will","project", "plan", "should", "believe", "could", "target" andsimilarexpressions, and the negatives thereof, whether used in connection withthe closing of the acquisitions referred to herein, including thetiming thereof and the anticipated net cash consideration payabletherewith, the reserves and production of the field interests beingacquired, the Company's other fields or otherwise are intended toidentify forward-looking statements. Such statements are not promisesor guarantees, and are subject to known and unknown risks anduncertainties and other factors that may cause actual results or eventsto differ materially from those anticipated in such forward-lookingstatements or information. These forward-looking statements speak onlyas of the date of this announcement. Ithaca Energy Inc. expresslydisclaims any obligation or undertaking to release publicly any updatesor revisions to any forward-looking statement contained herein toreflect any change in its expectations with regard thereto or anychange in events, conditions or circumstances on which anyforward-looking statement is based except as required by applicablesecurities laws. -ENDS- This information is provided by RNS The company news service from the London Stock ExchangeENDFOR FURTHER INFORMATION PLEASE CONTACT: CustomerRNSServices0044-207797-4400rns@londonstockexchange.com