Iona Energy Inc.

June 07, 2012 12:23 ET

Iona Energy Significantly Increases Kells Reserves

CALGARY, ALBERTA--(Marketwire - June 7, 2012) -


Iona Energy Inc. ("Iona" or the "Company") (TSX VENTURE:INA) is pleased to announce today that Gaffney Cline & Associates Ltd. ("GCA") has completed an independent reserves report evaluating Iona's UK North Sea 100% owned Kells development project effective as of March 31, 2012. GCA has determined, the Pre-Tax Net Present Value, discounted at 10% ("NPV10"), of Kells Proved plus Probable ("2P") reserves have increased to USD$358.4 million, up from USD$164.9 million as previously reported, an increase of more than 117%. Post-Tax NPV10 valuation of Kells 2P reserves increased from USD$88.4 million to USD$161.3 million, an increase of more than 82%. Based on the GCA report, Iona reports a significant increase in Kells 2P reserves to 8.9 MMboe from the 6.6 MMboe previously disclosed by Iona, an increase of 35%.

The addition of the Kells reserves to Iona's year end reserve report covering Iona's interests in the Orlando Oil Field (35% Iona) and Trent & Tyne Gas Fields (20% Iona), raises the Company's Proved plus Probable reserves from 6 MMboe to 14.9 MMboe with a summed total 2P Pre-Tax NPV10 reserve valuation up from USD$182.69 million to USD$541.1 million (total summed 2P Post-Tax NPV10 reserve values increased from USD$78.4 million to USD$239.7 million). See note (1) below for further details.

Since October 31st 2011, the Kells Field Development Plan ("FDP") has been revised by Iona. Both the FDP and Environmental Statement ("ES") were updated to include two-phased production wells tied back through a subsea completion, and have been submitted to the Department of Energy and Climate Change. Technical and economic reserve inputs to the Final FDP have changed from those effective at 31st of October 2011 based upon the enhanced two well development programme. All references in this press release to the previously reported Kells reserves and related information refer to those contained in the Kells reserves report prepared by GCA effective as of October 31, 2011.

On submission of the Kells Field Development Plan, Iona engaged GCA to complete an independent reserves report prepared in accordance with National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities evaluating Iona's 100% owned Kells project to reflect the revised development plan effective as of March 31, 2012 using GCA's forecast costs and prices. Based on the findings in the Report Iona can disclose an increase in 2P reserves by 35% from 6.6 to 8.9 MMboe, with additional High Case Contingent Resources ("3C") increasing from 3.4 to 7 MMboe through the employment of late field life water injection (both as compared to the October 31, 2011 GCA Kells reserve report). The reserves and contingent resource estimates for Kells Main Field as of March 31, 2012 given in Table 1 below are provided by GCA.


AS AT 31

Proved 1P (MMbbl) Proved+Probable 2P(MMbbl) Proved+Probable+Possible 3P (MMbbl)
2.6 4.2 5.2
Proved 1P (Bcf) Proved+Probable 2P (Bcf) Proved+Probable+Possible 3P (Bcf)
4.6 28.0 33.1
1C Low Case (MMbbl) 2C Best Case (MMbbl) 3C High Case (MMbbl)
2.0 4.0 7.0

Table 2 given below summarizes GCA's evaluation of the Net Present Values of the Proved, Proved plus Probable, and Proved plus Probable plus Possible Reserves for Iona's 100% Working Interest in the Kells field. The dollar amounts appearing in this table have been expressed in millions of USD (US$ MM).


KELLS 0% 5% 10%
Proved Undeveloped 124.1 96.8 73.0
Total Proved 124.1 96.8 73.0
Probable 348.2 313.4 285.5
Proved+Probable 472.3 410.2 358.4
Possible 144.1 123.5 107.6
Proved+Probable+Possible 616.3 533.7 466.0
KELLS 0% 5% 10%
Proved Undeveloped 90.2 67.4 48.4
Total Proved 90.2 67.4 48.4
Probable 129.2 120.2 112.9
Proved+Probable 219.4 187.6 161.3
Possible 54.7 47.0 40.9
Proved+Probable+Possible 274.1 234.6 202.2

Iona previously disclosed on April 30, 2012 that its year end reserves for the Orlando and Trent & Tyne fields as of December 31, 2011 were:

  • Net 1P Reserves of 3.1 MMboe,
  • Net 2P Reserves of 6.0 MMboe, and
  • Net 3P Reserves of 8.3 MMboe, with a
  • Net 2P Reserves Before Tax Net Present Value, assuming a discount rate of 10%, of USD$183 million.

With the addition of the new Kells reserves, Iona now has(1):

  • Net 1P Reserves of 6.5 MMboe,
  • Net 2P Reserves of 14.9 MMboe, and
  • Net 3P Reserves of 19.0 MMboe.
  • The corresponding value update as of March 31st 2012 sums Orlando (35%), Trent & Tyne (20%), and Kells (100%) Net 2P Reserves Before Tax Net Present Value, assuming a discount rate of 10%, to USD$541 million.


(1) Based on Orlando and Trent & Tyne reserves and net present value information prepared by GCA (using forecast prices and costs) as of December 31, 2011 and on Kells reserves and net present value information prepared by GCA (using forecast prices and costs) as of March 31, 2012.

It should be noted that on March 21st, 2012 it was announced by the UK Government that the "Small Field Allowance" would increase from GBP 75 million to GBP 150 million and that this positive tax effect has not been applied as yet to any of Iona's qualifying properties. As an indication to the impact on the Kells Project, GCA were able to provide an estimate to Iona that the After Tax Net Present Value improvement would be approximately USD$28 million, at today's current foreign exchange rates.

Iona's Chief Executive Officer, Neill Carson commented: "This reserve increase in Kells is a good example of the lower risk nature of our assets, where we can add significant value into the Company through acquisition, and also increase that value through improved plans for development and operational traction. We are also looking forward to the completion on our executed Sales and Purchase agreement for 58% of the West Wick Oil Field acquisition such that these reserves can also be reported as significant additions to our portfolio."

Additional information relating to the Company is available on SEDAR at

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 plans with respect to development of the Kells property, anticipated effects of the UK small field allowance, estimates of the quantities of proved reserves, probable reserves, possible reserves and contingent resources, as well as estimates of the net present value of future net revenue of proved reserves, probable reserves, and possible reserves. 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 Kells reserves, 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 and are subject to risks and uncertainties that could cause actual outcome to differ materially from those suggested by any such statements. 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.

It should not be assumed that the present worth of estimated future net revenue represents the fair market value of the reserves disclosed in this press release. The reserve and related revenue estimates set forth in this press release are estimates only and the actual reserves and realized revenue may be greater or less than those calculated. The estimates of reserves and future net revenue for individual properties may not reflect the same confidence level as estimates of reserves and future net revenue for all properties, due to the effects of aggregation.

As used in this press release, "possible reserves" are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.

"Contingent Resources" is defined in the Canadian Oil and Gas Evaluation Handbook as those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. Contingencies may include factors such as economic, legal, environmental, political, and regulatory matters, or a lack of markets. It is also appropriate to classify as contingent resources the estimated discovered recoverable quantities associated with a project in the early evaluation stage. Contingent resources are further classified in accordance with the level of certainty associated with the estimates and may be subclassified based on project maturity and/or characterized by their economic status.

The contingencies precluding the contingent resources for the Kells field from being classified as reserves include the current absence of the water injection well from Iona's draft FDP for the development of Kells. A decision by Iona to proceed with a water injection well would be based upon the economics and the performance of the initial production well.

The contingent resources estimates are estimates only and the actual results may be greater than or less than the estimates provided herein. There is no certainty that it will be commercially viable or technically feasible to produce any portion of the resources.

Additionally, this press release uses certain abbreviations as follows:

Oil and Natural Gas Liquids Natural Gas
bbls barrels Bcf billion cubic foot
MMbbls millions of barrels MMcf million cubic feet
MMboe million barrels of oil equivalent

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
    +011 (44) 7919 057989

    Iona Energy Inc.
    Brad G. Gunn
    Chief Financial Officer
    (403) 775-7442