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Press release from Marketwire

Ithaca Announces Stella A2 Well Test Results

Wednesday, January 08, 2014

Ithaca Announces Stella A2 Well Test Results

02:00 EST Wednesday, January 08, 2014

ABERDEEN, SCOTLAND--(Marketwired - January 07, 2014) -

TSX: IAENot for Distribution to U.S. Newswire Services or for Dissemination inthe United States Ithaca Energy Inc. Successful Stella A2 Well Test Results and GSA Development Update 8 January 2014Ithaca Energy Inc. (TSX: IAE, LSE AIM: IAE) ("Ithaca" or the "Company")announces completion of flow test operations on the second developmentwell on the Stella field and provides an update on Greater Stella Area("GSA") development activities.Highlights- The second Stella field development well, "A2", flowed at a maximum rate of 10,442 barrels of oil equivalent per day ("boepd") on a 44/64-inch choke, with the full production potential of the well limited by the capacity of the well test equipment on the drilling rig.- The rate of 10,442 boepd comprised 7,281 barrels of oil per day ("bopd") and 19 million standard cubic feet per day ("MMscf/d") of associated gas. The oil is of high quality, approximately 39 degrees API.- The flow test results achieved on the first two Stella development wells substantially de-risk the initial annualised production forecast of approximately 30,000 boepd (100%), 16,000 boepd net to Ithaca, from the four wells planned for start-up of the GSA hub.- A2 drilling operations were executed according to plan, with only the harsh weather conditions that have recently effected operations across the North Sea slowing the completion of the scheduled flow test.- Following suspension of the A2 well, the ENSCO 100 will be moved approximately three kilometres to the Stella northern drilling centre location to drill the third and fourth development wells.- The 2013 subsea infrastructure installation campaign being executed by Technip UK Limited ("Technip") has been successfully closed out, with approximately 65% of the overall subsea work programme having now been completed.- The forecast duration of the "FPF-1" modifications work, which is being performed by Petrofac Facilities Management Limited ("Petrofac") under a lump sum incentivised contract, indicates that first hydrocarbons from the GSA hub is now anticipated to be at the end of 2014.- The current focus of the FPF-1 vessel modifications programme is on preparation of the main deck and construction of the pre-assembled processing plant units that are scheduled to be lifted on to the vessel in the first quarter of 2014.Les Thomas, Chief Executive Officer, commented:"The excellent results ofthe A2 well represent another important stepin de-risking the forecast production from the Stella field andrealising the significant shareholder value that lies within theGreater Stella Area. Whilst the FPF-1 modification works are nowforecast to take longer than initially anticipated, the new processingfacilities being installed on the vessel will ensure that a highquality production facility is deployed at the centre of the GSA hub." Further InformationDrillingWell 30/6a-A2Z ("A2") is the second 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 measured depth subsea of 14,455 feet,with a 3,123 foot horizontal reservoir section completed in thePalaeocene Andrew sandstone reservoir, within the targeted oil rim ofthe field.The reservoir quality encountered by the well was in line with previousappraisal wells drilled on the field. The well intersected a netreservoir interval of 2,514 feet (81% net pay).As with the first Stella development well, "A1", a clean-up flow testhas been performed on the A2 well in order to effectively remove thedrilling fluids used to complete the well and gain additional reservoirdata and fluid samples.The well flowed at a maximum rate of 10,442 boepd on a 44/64-inchchoke, with the full production potential of the well limited by thecapacity of the well test equipment on the drilling rig. Fluid samplesshow that the oil is of high quality, approximately 39 degrees API.The maximum flow rate of 10,442 boepd comprised 7,281 bopd of oil and19 MMscf/d of associated gas. This compares to the results of the "A1"well completed in late September 2013, which achieved a maximum flowrate of 10,835 boepd (6,499 bopd and 26 MMscf/d) on a 56/64-inchchoke. The proportionately higher A2 oil rate is driven by thelocation of the well entirely within the oil rim of the field.The test results achieved on the first two Stella development wellssubstantially de-risk the initial annualised production forecast forthe GSA hub of approximately 30,000 boepd (100%), 16,000 boepd net toIthaca, which was announced at the time the development concept wasselected in October 2011.The A2 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 well suspension operations the ENSCO 100will be moved approximately three kilometres to the Stella northerndrilling centre location to drill the third and fourth developmentwells.A2 drilling operations were executed according to plan, with only theharsh weather conditions that have recently effected operations acrossthe North Sea slowing the completion of the scheduled flow test.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 InfrastructureThe 2013 subsea infrastructure installation programme was successfullyclosed out in November 2013. The main subsea structures for theproduction and export of hydrocarbons (the manifolds and riser bases),the 60km gas export pipeline and the infield flowlines and umbilicalshave all been installed and the associated diver tie-in works completedduring the 2013 campaign. This means that approximately 65% of theoverall subsea work programme has now being completed; corresponding toa total of over 220 vessel days in 2013.Planning for the 2014 subsea infrastructure campaign is well advanced,with the key workscopes to be completed involving the tie-in of thewells, installation of the dynamic flexible risers and umbilicals thatwill connect the riser bases to the FPF-1, the vessel mooring spreadand the oil export facilities.Execution of the main subsea infrastructure manufacturing andinstallation programme is being completed by Technip under anintegrated Engineering, Procurement, Installation and Constructioncontract.FPF-1 Modification WorksThe forecast duration of the FPF-1 modifications work indicates thatfirst hydrocarbons from the GSA hub is now anticipated to be at the endof 2014.The extended duration of the works is attributable to thelonger than estimated time required to install the new, rather thanrefurbished, oil and gas processing plant on the vessel. While this isnow scheduled to take longer than if the original equipment on theFPF-1 had been re-used, the new facilities are designed to ensure thata quality vessel capable of achieving high operational uptimeperformance is deployed on the hub.The current focus on the FPF-1 modifications programme is thepreparation of the main deck and construction of the pre-assembledprocessing plant units for lifting on to the vessel in the firstquarter of 2014. The units will contain structural steel, pipeworkspools, cable trays and equipment that will make up key elements of thetopsides processing plant on the vessel. All the key long lead piecesof processing plant equipment that will be installed within andalongside the units are now on location at the Remontowa yard.Execution of the FPF-1 modifications work programme is being performedby Petrofac under the terms of a lump sum incentivised contract withthe GSA co-venturers.Greater Stella Area Development StrategyIthaca's focus on the GSA is driven by the monetisation of reserveswithin the existing portfolio and the generation of additional valuevia the wider opportunities provided by the range of undevelopeddiscoveries 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. - ENDS -Enquiries:Ithaca EnergyLes Thomas lthomas@ithacaenergy.com +44 (0)1224 650 261Richard Smith rsmith@ithacaenergy.com +44 (0)1224 652 172FTI ConsultingEdward Westropp edward.westropp@fticonsulting.com +44 (0)207 269 7230Georgia Mann georgia.mann@fticonsulting.com +44 (0)207 269 7212Cenkos SecuritiesNeil McDonald nmcdonald@cenkos.com +44 (0)131 220 6939Beth McKiernan bmckiernan@cenkos.com +44 (0)131 220 9778RBC Capital MarketsTim Chapman tim.chapman@rbccm.com +44 (0)207 653 4641Matthew Coakes matthew.coakes@rbccm.com +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 barrels of oil equivalent ("boe") are derived byconverting gas to oil in the ratio of six thousand cubic feet ("Mcf")of gas to one barrel ("bbl") of oil. Boe may be misleading,particularly if used in isolation. A boe conversion ratio of 6 Mcf: 1bbl is based on an energy conversion method primarily applicable at theburner tip and does not represent a value equivalency at the wellhead.Given the value ratio based on the current price of crude oil ascompared to natural gas is significantly different from the energyequivalency of 6 Mcf: 1 bbl, utilising a conversion ratio at 6 Mcf: 1bbl may be misleading as an indication of value.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 AIM: 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 targeting 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 websitewww.ithacaenergy.com.Not 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, construction times, well completion times, risksassociated with operations, future capital expenditures, futureacquisitions and cash flow. The reader is cautioned that assumptionsused in the preparation of such information may prove to be incorrect.When used in this press release, the words "anticipate","continue","estimate", "expect", "may", "will", "project", "plan","should","believe", "could", "target" and similar expressions, and thenegativesthereof, whether used in connection with operational activities,drilling plans, production forecasts, budgetary figures, potentialdevelopments or otherwise, are intended to identify forward-lookingstatements. Such statements are not promises or guarantees, and aresubject to known and unknown risks, uncertainties and other factorsthat may cause actual results or events to differ materially from thoseanticipated in such forward-looking statements. The Company believesthat the expectations reflected in those forward-looking statements andare reasonable but no assurance can be given that these expectations,or the assumptions underlying these expectations, will prove to becorrect and such forward-looking statements and included in this pressrelease should not be unduly relied upon. These forward-lookingstatements speak only as of the date of this press release. IthacaEnergy Inc. expressly disclaims any obligation or undertaking torelease publicly any updates or revisions to any forward-lookingstatement contained herein to reflect any change in its expectationswith regard thereto or any change in events, conditions orcircumstances on which any forward-looking statement is based except asrequired by applicable securities laws.Additional information on these and other factors that could affectIthaca's operations and financial results are included in the Company'sManagement's Discussion and Analysis for the year ended December 31,2012, and the Company's Annual Information Form for the year endedDecember 31, 2012 and in reports which are on file with the Canadiansecurities regulatory authorities and may be accessed through theCompany's profile on the SEDAR website (www.sedar.com). This information is provided by RNS The company news service from the London Stock ExchangeEND

FOR FURTHER INFORMATION PLEASE CONTACT:

Contact Information:
RNS
Customer
Services
0044-207797-4400
rns@londonstockexchange.com
http://www.rns.com

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