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Press release from Marketwire

Stella Development Well-Successful Test Results

Wednesday, September 11, 2013

Stella Development Well-Successful Test Results

02:00 EDT Wednesday, September 11, 2013

ABERDEEN, SCOTLAND--(Marketwired - September 10, 2013) -

(TSX VENTURE: IAE) (LSE: IAE)TSX VENTURE: IAENot for Distribution to U.S. Newswire Services or for Dissemination in the United States Ithaca Energy Inc. Stella Development Well - Successful Test Results 11 September 2013Ithaca Energy Inc. (TSX: IAE, LSE: IAE) ("Ithaca" or the "Company")announces completion of a highly successful flow test on the firstdevelopment well drilled on the Stella field and provides a progressupdate on the Greater Stella Area development activities.Highlights- The first Stella field development well, "A1", flowed at a maximumrate of 10,835 barrels of oil equivalent per day ("boepd") on a 7/8-inch choke, with the full production potential of the well limited bythe capacity of the well test equipment on the drilling rig.- Fluid samples have confirmed the high oil content of thehydrocarbons that will be produced from the well. The maximum rate of10,835 boepd corresponds to 6,499 barrels of oil per day ("bopd") and26 million standard cubic feet per day ("MMscf/d") of "liquids rich"gas.- The well intersected a high quality net reservoir interval of 1312feet, with reservoir properties in line with previous wells drilled onthe field. The oil is of high quality, approximately 42degrees API.- The facilities that will be used on the "FPF-1" floatingproduction facility to separate and export oil and gas produced fromthe field will increase the overall oil relative to gas production rateassociated with the A1 well, by processing more efficiently than thesimple separation facilities available for the purposes of the welltest.- Following suspension of the A1 well, the ENSCO 100 will move on todrilling of the second Stella development well from the same drillingcentre location.- Excellent progress continues to be made by Technip UK Limited("Technip") with execution of the 2013 subsea infrastructureinstallation works. The most weather sensitive activities in thisyear's work programme have now been completed.- Completion of the dry dock works being undertaken by PetrofacFacilities Management Limited ("Petrofac") on the FPF-1 are progressingwell and the focus of fabrication activities is moving on to theinitial works required to commence installation of the new processingplant on the vessel.- The capital expenditure and start-up target schedule for the GSAhub remain unchanged from that previously issued.Iain McKendrick, Chief Executive Officer, commented:"This well and thehighly successful test are outstanding results forthe Company. This is an enormous leap forward in de-risking of theGreater Stella Area development and the creation of a major newproduction hub in the UK Central North Sea. The well has accessed thereserves it was designed to recover and the test confirms the presenceand extremely high quality and deliverability of the reservoir sands.When these results are combined with progress that has been made onboth the successful execution of the 2013 subsea installation works andthe FPF-1 modifications programme, the development can be seen to beconfidently driving forward at pace." Further InformationGreater Stella Area Development StrategyIthaca's focus on the Greater Stella Area ("GSA") is driven by themonetisation of reserves within the existing portfolio and thegeneration of additional value via the wider opportunities provided bythe range of undeveloped discoveries surrounding the production hub.The development involves the creation of a production hub based ondeployment of the FPF-1 floating production facility located over theStella field, with onward export of oil and gas. The FPF-1 will serveas the processing hub for production from the Stella and Harrierfields, plus potential incremental production from Hurricane and othertie-back opportunities in the area.Ithaca's GSA joint venture partners are Dyas UK Limited (25.34%), along established privately owned North Sea oil and gas producer, andPetrofac GSA Limited (20%), a subsidiary of Petrofac plc, the leadinginternational oil and gas services provider listed in the FTSE 100 inLondon.DrillingWell 30/6a-A1Z ("A1") is the first of four development wells that areto be drilled on the Stella field prior to the start-up of production.The well was drilled to a total vertical depth subsea of 9739 feet,with a 2499 foot horizontal reservoir section completed in thePalaeocene Andrew sandstone reservoir, close to the targeted transitionbetween the oil rim and gas condensate cap.As anticipated prior to drilling, the reservoir quality encountered bythewell was in line with previous appraisal wells drilled on thefield. The well intersected a net reservoir interval of 1312 feet.A clean-up and production flow test has been performed on the well.The purpose of this was to clean out the drilling fluids used tocomplete the well, to ensure that it is configured for the immediatestart-up of production following the hook-up of the FPF-1, gain furtherinformation on the productivity of the well and obtain hydrocarbonfluid samples.The well flowed at a maximum rate of 10,835 boepd on a 7/8-inch choke,with the full production potential of the well limited by the capacityof the well test equipment on the drilling rig. Fluid samples showthat the oil is of high quality, approximately 42degrees API.The maximum flow rate of 10,835 boepd corresponds to 6,499 bopd of oiland 26 MMscf/d of liquids rich gas.The processing facilities that will be used on the FPF-1 to separateand export oil and gas produced from the field will increase theoverall oil relative to gas production rate associated with the A1well, compared to that which can be achieved from the simple separationfacilities available for the purposes of the well test. This will betaken into account in finalising the decision on the most appropriateoil export route that is to be installed for the development.The A1 well is in the process of being suspended. The suspensionconfiguration is such that the well can be brought on to productionwithout the requirement for any further well intervention activity oncethe FPF-1 is on location and hooked up.Following completion of the A1 well suspension operations the ENSCO 100will commence drilling of the second development well on the Stellafield, the 30/6a-A2 ("A2") well. The well will be drilled from thesame drill centre location as the A1 well, which means that no rig moveis required to commence operations.The high-spec ENSCO 100 heavy duty jack-up drilling rig that is beingused for the GSA development drilling campaign commenced operations onthe Stella field in June 2013. Management of the drilling andcompletion operations is being performed by Applied Drilling TechnologyInternational ("ADTI") under "turnkey" contract arrangements.Subsea InfrastructureExecution of the main subsea infrastructure manufacturing andinstallation programme is being completed by Technip UK Limited underan integrated Engineering, Procurement, Installation and Constructioncontract.Significant progress has been made since the start of the year withexecution of the subsea infrastructure work programme. Initialinfrastructure fabrication works were completed in the second quarterof 2013 and the first offshore installation operations commenced inJune 2013.The 60km 10-inch gas export pipeline and main subsea structures havebeen installed and infield flowline trenching completed.Since the update provided at the time of the second quarter financialresults in early August 2013, trenching of the 60km gas export pipelinehas been completed and the trench backfill and as laid surveyactivities are now in progress.The offshore operations that have been performed have benefited fromexcellent weather conditions in the North Sea. The most weathersensitive activities in the 2013 programme have now been completed.The milestones to be completed in the next two months are installationof the flexible infield flowlines and static umbilicals that willconnect the Stella field drill centres to the FPF-1 riser base and theassociated diving operations required to complete the tie-in of the gasexport pipeline and flowlines, umbilicals and manifolds.FPF-1 Modification WorksExecution of the FPF-1 modifications work programme is being performedby Petrofac under the terms of a lump sum incentivised contract withthe GSA co-venturers. Following removal of the old processingequipment on the vessel, Petrofac transferred the FPF-1 to theRemontowa shipyard in Gdansk, Poland, in late 2012 for completion ofthe required modifications work programme. The two main aspects of themodification programme involve the completion of marine systemrefurbishment and hull life extension works and the installation of newoil and gas processing facilities and living quarters.Good progress has been made on execution of the FPF-1 marine systemworks following the transfer of the vessel to the "Remlift" dry dockfacility at Remontowa in April 2013. The hull tank refurbishmentoperations are nearing completion; involving inspection, repair andcoating of the tanks. Construction and installation of the steelworkblocks that will form the additional sponsons being added to thepontoons of the FPF-1 for enhanced buoyancy is advancing. Fabricationof the additional buoyancy "blisters" being added to the columns of thevessel is progressing.Equipment required at the start of the topsides installation phasecontinues to flow to the shipyard from various manufacturing locationsaround the world. Key long lead packages, including the gas exportcompressors, gas turbine equipment, production separators and exoticpipework and valves, are all now on-site.Central to the construction execution methodology for the initial phaseof the topsides processing plant fabrication and installation works isthe construction of pre-assembled units and racks, in which structuralsteel, pipework spools, cable trays and various equipment will beinstalled. Construction of these racks and associated pipework hascommenced and installation operations will take place once the FPF-1 isreturned to the water in the fourth quarter of 2013.Additional InformationA presentation summarising the recent activities that have beencompleted on the GSA development is available on the Company's website, - ENDS -Enquiries:Ithaca EnergyIain McKendrick, +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 8900Neil McDonald +44 (0) 131 220 6939RBC Capital Markets:Tim Chapman +44 (0) 207 653 4641Matthew Coakes +44 (0) 207 653 4871NotesIn 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.References herein to "boe" are derived by converting gas to oil in theratio of six thousand cubic feet ("Mcf") of gas to one barrel ("bbl")of oil. Boe may be misleading, particularly if used in isolation. A boeconversion ratio of 6 Mcf: 1 bbl is based on an energy conversionmethod primarily applicable at the burner tip and does not represent avalue equivalency at the wellhead.The well test results disclosed in this press release representshort-term results, which may not necessarily be indicative oflong-term well performance or ultimate hydrocarbon recovery therefrom.About Ithaca EnergyIthaca Energy Inc. (TSX: IAE, LSE: IAE) is a North Sea oil and gasoperator focused on the delivery of lower risk growth through theappraisal and development of UK undeveloped discoveries, theexploitation of its existing UK producing asset portfolio and aNorwegian exploration and appraisal business centred on the generationof discoveries capable of monetisation prior to development. Ithaca'sstrategy is centred on generating sustainable long term shareholdervalue by building a highly profitable 25kboe/d North Sea oil and gascompany. For further information please consult the Company's for Distribution to U.S. Newswire Services or for Dissemination inthe United StatesForward-looking statementsSome of the statements and information in this press release areforward-looking. Forward-looking statements and forward-lookinginformation (collectively, "forward-looking statements") are based onthe Company's internal expectations, estimates, projections,assumptions and beliefs as at the date of such statements orinformation, including, among other things, assumptions with respect toproduction, drilling, well completion times, future capitalexpenditures, future acquisitions and cash flow. The reader iscautioned that assumptions used in the preparation of such informationmay prove to be incorrect. When used in this press release, thewords"anticipate", "continue", "estimate", "expect", "may","will","project", "plan", "should", "believe", "could", "target" andsimilarexpressions, and the negatives thereof, whether used in connection withoperational activities, production forecasts, budgetary figures,potential developments or otherwise, are intended to identifyforward-looking statements. Such statements are not promises orguarantees, and are subject to known and unknown risks, uncertaintiesand other factors that may cause actual results or events to differmaterially from those anticipated in such forward-looking statements.The Company believes that the expectations reflected in thoseforward-looking statements and are reasonable but no assurance can begiven that these expectations, or the assumptions underlying theseexpectations, will prove to be correct and such forward-lookingstatements and included in this press release should not be undulyrelied upon. These forward-looking statements speak only as of the dateof this press release. Ithaca Energy Inc. expressly disclaims anyobligation or undertaking to release publicly any updates or revisionsto any forward-looking statement contained herein to reflect any changein its expectations with regard thereto or any change in events,conditions or circumstances on which any forward-looking statement isbased except as required by applicable securities laws. This information is provided by RNS The company news service from the London Stock ExchangeEND


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