Iona Energy Inc.
TSX VENTURE : INA

Iona Energy Inc.

May 23, 2013 14:35 ET

Iona Energy Sets New Production Level and Builds Interest in Huntington Development Core

CALGARY, ALBERTA--(Marketwired - May 23, 2013) -

NOT FOR DISTRIBUTION TO UNITED STATES NEWS WIRE SERVICES OR DISSEMINATION IN UNITED STATES

Iona Energy Inc. ("Iona" or the "Company") (TSX VENTURE:INA) is pleased to announce an operational update for its Huntington and Trent & Tyne producing fields, to which Iona has a 15% working plus 2.55% royalty interest and 20% working interest, respectively. On May 14th, 2013 the Company produced a new record production level of approximately 2,960 boepd, which is expected to increase in the coming weeks to approximately 4600 boepd and reach a new production threshold of 7,500 boepd by the end of June, based on the anticipated increase of the Company's working interest in Trent & Tyne from 20% to 37.5% and the anticipated increase in Huntington production to maximum capacity (4,500 bbls/d of oil and 4.0 MMcf/d of natural gas, both net to Iona) as described below.

Huntington

At the Huntington field, the Company has been informed by the Operator that production, which commenced Friday April 12th, 2013, has reached a rate of 7,625 bbls/d. Production is expected to increase to the predetermined Floating Production Storage and Offloading unit (FPSO) capacity of 30,000 bbls/d of oil and 27 MMcf/d of natural gas once the gas compression systems have been commissioned, which is scheduled to occur shortly. Once the gas compression has been initiated, production should ramp up to full capacity during June.

Production at Huntington is lifted in approximately 200,000 barrel increments, and the first shipment occurred on May 16th, 2013. Huntington produces 43º API light oil, which yields a premium to Brent, and Iona estimates current operating costs to be USD$15/boe.

Iona engaged Gaffney, Cline & Associates Ltd. ("GCA") to prepare an independent reserves evaluation of the Huntington Field and expects to provide their findings shortly. The Huntington Oil Field has discoveries made in three horizons, the Paleocene Forties formation, the Jurassic Fulmar formation and the Triassic Skagerrak formation. At this time, reserves will only be assigned to the Paleocene Forties formation, which has been developed through four production and two water-injection wells to achieve the aforementioned capacity figures. Huntington discovery well 22/14b-5 drilled by a previous operator tested at peak rates of up to 4600 bbls/d and 1.6 MMcf/d from the Fulmar sand, suggesting that development of this reservoir could extend the economic life of Huntington. Iona is considering joint venture appraisal drilling of the adjacent Fulmar compartment. Additionally, work is ongoing to evaluate the recoverable resources within the Jurassic Fulmar and Triassic Skagerrak oil-bearing intervals which Iona believe could be significant if tied back to the Huntington production facility. Iona will provide a further update once the results of this evaluation are completed.

The working interests in the Huntington field are E.ON Ruhrgas UK E&P (25% Operator), Premier Oil plc (40%), Norwegian Energy Company ASA (20%), and Iona (15%). In addition to the working interest, Iona holds a gross overriding royalty of 2.55% of the total Huntington production, payable from the Huntington Joint Venture Partners.

The Company is also pleased to announce that it has entered into a binding Sales and Purchase Agreement for the acquisition of a 100% working interest in part of UKCS block 22/14d from Carrizo Oil & Gas, Inc., and is awaiting final completion pending formal regulatory approval from the UK DECC.

Block 22/14d is located in the Central North Sea, immediately to the south of Block 22/14b, containing the Huntington Palaeocene oil field, the Jurassic Fulmar, and the Triassic Skagerrak discoveries in which Iona has a 15% stake.

As described above, and based on 3D seismic mapping, Iona has identified two undrilled Fulmar appraisal targets to the south of the Huntington Area, one within 22/14b (Iona 15%), and one within the newly acquired block (Iona 100%).

Iona is also in the process of evaluating two Triassic Skagerrak discovery wells which encountered significant oil columns. Well 22/14-3 with a 389 ft oil column lies within the 22/14d block (Iona 100%), and 22/14-4 with a 139ft oil column is on the northern margin of the new block, located within block 22/14b (Iona 15%).

Iona plans to remap both the Jurassic targets and Triassic discoveries in the near-term, and future appraisal could see these as candidates for development through the existing infrastructure at the producing Huntington field.

Trent & Tyne

At the Trent & Tyne Fields, the Company has been informed by the Operator that, as of May 13th, 2013, both were producing at a combined production rate of 43.3 MMcf/d, net 8.7 MMcf/d to Iona. Production at the 44/18-T6 ("T6") well on the Tyne Gas Field has exceeded expectations and is currently producing at a stabilized rate of 28 MMcf/d. In January of this year, Iona announced that the T6 well was completed as a production well and flow-tested at an average rate of 25 MMcf/d, with a peak rate of 28 MMcf/d during an 8-hour production test. Iona realized USD$/mcf 9.82 gas price on May 14th, 2013, the day of the reported new peak production.

Iona holds an option to increase its working interest at Trent & Tyne from 20% to 37.5% after electing to drill the Tyne Northwest target at a capped cost of USD$34 million. Earlier in the year Iona notified the Operator that it intends to exercise its option in both fields and plans to announce at the earliest opportunity the completion of this transaction, which is subject to third party approvals, and has an economic date enabling Iona to fully benefit from the higher combined production from the two fields at its 37.5% working interest.

Additional information relating to the Company is available on SEDAR at www.sedar.com.

About Iona Energy:

Iona is an oil and gas exploration, development and production company focused on oil and gas development and exploration in the United Kingdom's North Sea.

Forward-looking statements

Some of the statements in this announcement are forward-looking, including statements regarding Iona's estimated production rates and timelines related to its Trent & Tyne and Huntington properties, the anticipated increase of Iona's working interest in Trent & Tyne from 20.0% to 37.5%, and the anticipated closing of Iona's acquisition of UKCS block 22/14d,. Forward-looking statements include statements regarding the intent, belief and current expectations of Iona Energy Inc. or its officers with respect to various matters, including production, drilling activity or otherwise. When used in this announcement, the words "expects," "believes," "anticipate," "plans," "may," "will," "should", "scheduled", "targeted", "estimated" and similar expressions, and the negatives thereof, are intended to identify forward-looking statements. Such statements are not promises or guarantees, are based on various assumptions by Iona's management, including the assumption that Iona increases its working interest in Trent & Tyne from 20.0% to 37.5%, the assumption that Trent & Tyne production rates remain stable, and assumptions with respect to the timing and effects of commissioning gas compression systems for Huntington which are beyond Iona's control, and are subject to risks and uncertainties that could cause actual outcome to differ materially from those suggested by any such statements, including without limitation, the risk that for any reason Iona does not increase its working interest in Trent & Tyne, the risk of unanticipated delays impacting production rates at Trent & Tyne or Huntington, and the risk that Iona does not close the acquisition of UKCS block 22/14d. These forward-looking statements speak only as of the date of this announcement. Iona 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.

Notes Regarding Oil and Gas Disclosure

As used in this press release, "boe" means barrel of oil equivalent on the basis of 6 mcf of natural gas to 1 bbl of oil. Boes may be misleading, particularly if used in isolation. A boe conversion ratio 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.

Additionally, this press release uses certain abbreviations as follows:

Oil and Natural Gas Liquids Natural Gas
bbls barrels mcf thousand cubic feet
MMbbls millions of barrels MMcf million cubic feet
MMboe million barrels of oil equivalent MMcf/d million cubic feet per day
boepd barrels of oil equivalent per day
bopd barrels of oil per day

Neither the TSX Venture Exchange Inc. nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • Iona Energy Inc.
    Neill A. Carson
    Chief Executive Officer
    +44 1224 228400

    Iona Energy Inc.
    Graham A. Heath
    Interim Chief Financial Officer
    +44 7508 936982