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Press release from Marketwire

Ithaca Announces Operations Update & 2014 Outlook

Wednesday, January 15, 2014

Ithaca Announces Operations Update & 2014 Outlook

02:00 EST Wednesday, January 15, 2014

ABERDEEN, SCOTLAND--(Marketwired - January 14, 2014) - Ithaca Energy Inc

(TSX VENTURE: IAE) (LSE: IAE)

TSX: IAENot for Distribution to U.S. Newswire Services or for Dissemination inthe United States Ithaca Energy Inc. Operations Update & 2014 Outlook 15 January 2014Ithaca Energy Inc. (TSX: IAE; LSE: IAE) ("Ithaca" or the "Company")provides an operational update and guidance on its planned 2014production and capital expenditure programme.Highlights- Total pro-forma 2013 production in line with prior guidance at approximately 13,000 barrels of oil equivalent per day ("boepd"); this reflects inclusion of full year production from the assets acquired as part of the Valiant Petroleum plc ("Valiant") acquisition, which completed on 19 April 2013.- 2014 production is anticipated to be in the range of 11,000 to 13,000 boepd, approximately 95% oil.No production from the Greater Stella Area ("GSA") hub is incorporated in the guidance range.- First hydrocarbons are anticipated from the GSA hub at the end of 2014, resulting in net initial annualised production for the Company of approximately 16,000 boepd.- 2014 capital expenditure is anticipated to total $295 million, reflecting investment in execution of the GSA development and a number of production enhancement activities.- Net drawn debt at 31 December 2013 of $348 million (excluding $33 million drawn down on the Norwegian tax rebate facility).- In line with the Company's strategy to restructure its Norwegian portfolio, a licence swap has been executed with Tullow Norge AS ("Tullow") to exchange the Company's non-operated interests in two Barents Sea licences, including the licence containing the Langlitinden well, for a non-operated position in a Tullow operated Norwegian North Sea licence.2013 ProductionTotal pro-forma production in 2013 was approximately 13,000 boepd, 95%oil; this reflects inclusion of full year production from the assetsacquired as part of the Valiant acquisition, which completed on 19April 2013.Average production in the fourth quarter of 2013 was approximately11,300 boepd, 96% oil.2014 Operations OutlookIn 2014 the Company's operational focus will be on the delivery offirst hydrocarbons from the Stella field and investment in productionenhancement activities.Greater Stella AreaAs reported in the recent GSA operational update, the focus of the 2014work programme is on drilling of the third and fourth Stella fielddevelopment wells and completion of the subsea infrastructureinstallation and FPF-1 modification programmes. First hydrocarbons areanticipated from the GSA hub at the end of 2014, resulting in netinitial annualised production for the Company of approximately 16,000boepd.Causeway AreaThree key production enhancement activities are to be completed in theCauseway Area during 2014.Operations are progressing on plan to enable the start-up of electricalsubmersible pump ("ESP") support for the Causeway and Fionn productionwells. The electrical plant has been installed on the platform and thefocus is now on hook-up and commissioning activities to enable start-upof the ESPs in the first half of 2014.The work required to enable the start-up of water injection on theCauseway field in the first half of the year is progressing well, withthe water injection riser connecting the subsea infrastructure for thewell to the host platform having been successfully installed inNovember 2013. The outstanding work to be finished is the hook-up andcommissioning of the injection riser and platform pipework.Operations are underway on the sidetrack of the Fionn field productionwell, delivery of which is forecast to substantially boost production.Harsh weather in December and January has resulted in operationaldelays, with the well now expected to be in production in the secondquarter of the year.DonsThe joint venture is planning to drill a new infill production well onthe Don Southwest field during 2014 as part of the expected longer termdrilling programme designed to maximise production and reservesrecovery from the field. Drilling rig contract negotiations are beingfinalised, with the potential for production to commence in the firsthalf of the year.AthenaIt is intended that a workover will be performed on the "P4" wellduring the second half of 2014 in order to replace the failed ESPpackage in the well. The process for securing a drilling rig isunderway.CookAn approximate eight week shutdown of the Shell-operated Anasuriafloating production, storage and offloading vessel ("FPSO") is plannedfor the second half of 2014 to enable vessel life extension works to beundertaken. A new production riser for the Cook field will also beinstalled during the shutdown. These works are focused on improvingthe operational efficiency and longevity of the facilities, therebyenabling the full potential of the field to be delivered in the comingyears.The new "4D" seismic data acquired over the field in 2013 will beprocessed and interpreted over the course of the year. This willimprove the understanding of reservoir sweep, with the objective ofidentifying the potential for drilling a further well on the field.HandcrossOperations commenced at the end of December 2013 on the explorationwell being drilled on the Handcross prospect in the West of Shetlandssector of the UK Continental Shelf. As a result of previouslyannounced farm-out transactions, the Company is fully carried for itsforecast share of the well cost.NorwayA licence swap agreement has been executed with Tullow that will resultin the transfer to Ithaca of a 10% non-operated interest in licencePL507 in the Norwegian North Sea in exchange for its non-operatedinterests in licences PL659 (5%), which contains the Langlitindenprospect, and PL610 (12.5%), both of which lie in the Norwegian sectorof the Barents Sea.Licence PL507 contains the Lupus prospect, which is scheduled to bedrilled around mid-2014 using the Borgland Dolphin semi-submersibledrilling rig, and lies within approximately 40 kilometres of theexisting Oseberg field facilities. Following completion, which issubject to normal regulatory consents, the licence partners in PL507will be Tullow (70%, Operator), Explora (20%) and Ithaca (10%).2014 Production GuidanceThe Company's 2014 net production is anticipated to be in the range of11,000 to 13,000 boepd, approximately 95% oil. No production from theGSA hub is incorporated in the guidance range. The range reflects thedependency upon the timing of the various production enhancementactivities being executed during the year.The anticipated schedule of 2014 production enhancement activitiesmeans that production volumes are forecast to be weighted towards thesecond half of the year. Notably, production during the first quarteris estimated to be below the full year range driven primarily by anunplanned shutdown of the Cook field that is currently on-going torepair the gas export compressor on the Anasuria FPSO host facility.It is anticipated that the duration of the repairs will result in thefield being re-started in February 2014.As in previous years, the third quarter of the year is scheduled to bethe period in which the main planned infrastructure maintenanceshutdowns take place. Planned shutdowns are estimated to result in anoverall production deferral of around 1,000 boepd in 2014.The production forecast anticipates that 2014 will be the last year ofproduction from the Beatrice area facilities. Under the terms of theBeatrice facilities lease agreement executed with Talisman in 2008,Ithaca is able to re-transfer the facilities to Talisman fordecommissioning.2014 Capital ExpenditureThe Company anticipates net 2014 capital expenditure to totalapproximately $295 million.- $185 million relates to the GSA development.This reflects deferment of $60 million of capital expenditure that was previously anticipated for 2013 into 2014, together with $35 million of pre-first hydrocarbons cost growth resulting from the delay to start-up of production and the impact on drilling of the recent harsh weather in the UK North Sea.- $100 million relates to investments on the existing producing asset portfolio; $70million of drilling on the Fionn, Don Southwest and Athena fields and $30 million on enhancing the Cook and Causeway field facilities.- $10 million net of the 78% Norwegian tax refund relates to the Company's Norwegian portfolio.Business DevelopmentDuring 2014, the Company will continue to seek opportunities to enhancethe value of its existing UK portfolio. The Company's growth strategyremains focused on securing appraisal, development and productionopportunities with the potential to utilise the organisation's coresubsurface, commercial and project management skills to increase andaccelerate shareholder value.Net DebtNet drawn debt at 31 December 2013 was approximately $348 million.This excludes $33 million drawn down as of the same date on theCompany's Norwegian tax rebate facility, which serves to accelerate thepayment of the 78% tax rebate paid by the Norwegian government onexploration and appraisal activities.The Company has in place $710 million of long term senior bank debtfinancing facilities, which comprise a $610 million reserve basedlending facility and $100 million corporate facility.Additional InformationAn updated corporate presentation is available on the Company's websitewww.ithacaenergy.com.The Company intends to publish its full year 2013 accounts and year-endreserves, as evaluated by Sproule International Limited, on 31 March2014. - 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.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, continuedavailability of financing for 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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