SOURCE: Ithaca Energy Inc

August 02, 2016 02:00 ET

Ithaca Energy Inc Announces GSA Satellites Acquisitions

ABERDEEN, SCOTLAND--(Marketwired - Aug 2, 2016) - Ithaca Energy Inc. (TSX: IAE) (LSE: IAE)

TSX: IAE; LSE: IAE

Not for Distribution to U.S. Newswire Services or for Dissemination in the United States

Ithaca Energy Inc.
GSA Satellites Acquisitions
2 August 2016

Ithaca Energy Inc. (TSX: IAE) (LSE: IAE) ("Ithaca" or the "Company") announces that it has expanded its core position in the Greater Stella Area ("GSA"), with four agreements entered into for the acquisition of additional interests in the "Vorlich" discovery and an operated interest in the "Austen" discovery.

Highlights 

  • Interest in the Vorlich discovery increased from approximately 17% to 33% -- additional licence interests acquired from ENGIE E&P, INEOS and Maersk
  • Approximately 4 MMboe1 of net proven and probable reserves added to the portfolio from the additional Vorlich licence interests
  • Acquisition from ENGIE E&P of a 75% interest and operatorship of the Austen discovery, which lies approximately 30 kilometres from the GSA production hub
  • Total acquisition costs including potential future contingent payments of under $6 million

Les Thomas, Chief Executive Officer, commented:
"We are very pleased to announce this group of low cost acquisitions that further expand our core Greater Stella Area portfolio. This is in line with our "hub and spoke" strategy for maximising the value of the central infrastructure that has been put in place for the start-up of production from the Stella field."

Further Information

Vorlich
Sale and purchase agreements ("SPAs") have been executed with ENGIE E&P, INEOS and Maersk to acquire a 100% interest and operatorship of Licence P1588 (Block 30/1f), effective 1 January 2016.

Licence P1588 contains approximately 10-20% of the Vorlich discovery, with the balance of the discovery being located in licence P363 (Block 30/1c). When taking into account the P363 licence interest acquired from TOTAL in January 2016, execution of the SPAs increases Ithaca's overall interest in the Vorlich discovery to approximately 33%.

Vorlich was discovered and appraised in 2014 with exploration well 30/1f-13A,Z and 13Z. The well encountered hydrocarbons in a Palaeocene sandstone reservoir in Block 30/1c and a subsequent side-track into Block 30/1f confirmed the westerly extension of the discovery. The well was flow tested at a maximum rate of 5,350 boepd (approximately 80% oil).

Vorlich is located approximately 10 kilometres north of the Company's GSA production hub and is estimated to contain gross proven and probable undeveloped reserves of approximately 24 MMboe1. Following completion of the Vorlich appraisal programme in 2014, current activities are focused on planning and preparation of an FDP.

Upon completion of the acquisitions, the overall Vorlich licence interests will be as follows:

  • Licence P363: BP (Operator), 80%; Ithaca, 20%
  • Licence P1588: Ithaca (Operator), 100%

Austen
An SPA has been executed with ENGIE E&P to acquire a 75% interest and operatorship of Licence P1823 (Block 30/13b), effective 1 May 2016. The licence contains the Austen discovery, which is located approximately 30 kilometres south-east of the GSA hub.

Austen is an Upper Jurassic oil / gas-condensate accumulation on which a number of wells have been drilled, the most recent being appraisal well 30/1b-10,10Z drilled by ENGIE E&P in 2012 that was flow tested at a maximum rate of 7,820 boepd (approximately 50% oil).

The gross contingent resources ("1C" to "3C") associated with Austen are estimated by Ithaca to be in the range of 4-28 MMboe2. An independent assessment will be completed at the end of the year as part of the usual annual reserves evaluation exercise.

Upon completion of the acquisition, the Austen licence interests will be as follows:

  • Ithaca (Operator), 75%; Premier Oil, 25%.

It is planned for further subsurface and development engineering studies to be completed in order to advance preparation of an FDP for approval prior to January 2019.

Acquisition Completion
Initial considerations are payable at completion of the acquisitions, with additional contingent payments at FDP approval and upon reaching reserves recovery thresholds.

The licence acquisitions are expected to complete in the second half of 2016 and are subject to normal regulatory and partner approvals, including approval for the transfer of operatorship. At completion the considerations paid will be subject to normal industry adjustments to reflect costs incurred since the effective dates of the transactions.

The Company notes that the previously announced acquisition of the Vorlich working interest from TOTAL was completed in July 2016.

FPF-1 Update
Since the recent departure of the "FPF-1" floating production facility from the Remontowa shipyard in Poland, the majority of the required deep water marine system trials have been successfully completed. The final remaining trials are expected to be completed in the coming days. An update will be provided once the FPF-1 commences sail-away to the Stella field.

Glossary

boe Barrel of oil equivalent
boepd Barrels of oil equivalent per day
ENGIE E&P ENGIE E&P UK Limited (formerly GDF Suez)
FDP Field Development Plan
INEOS INEOS UK SNS Limited
Maersk Maersk Oil North Sea Limited
MMboe Million barrels of oil equivalent
Premier Oil Premier Oil E&P UK Limited
TOTAL TOTAL E&P UK Limited

Notes
In accordance with AIM Guidelines, John Horsburgh, BSc (Hons) Geophysics (Edinburgh), MSc Petroleum Geology (Aberdeen) and Subsurface Manager at Ithaca is the qualified person that has reviewed the technical information contained in this press release. Mr Horsburgh has over 15 years operating experience in the upstream oil and gas industry.

1. Based on the independent reserves assessment performed by Sproule International Limited ("Sproule"), effective as of 31 December 2015, and prepared in accordance with the Canadian Oil and Gas Evaluation Handbook maintained by the Society of Petroleum Engineers (Calgary Chapter), as amended from time to time.

2. Estimates of the gross 1C to 3C contingent resource (Development Pending) range associated with the Austen discovery have been prepared by Ithaca, effective as of 1 July 2016, and not by an independent qualified reserves evaluator or assessor. These figures are estimates only and the actual results may be greater than or less than the estimates provided herein, with the resource range reflecting uncertainties and risks associated with compartmentalisation of the reservoir. There is no certainty that it will be commercially viable to produce any portion of these resources.

The estimates of reserves and resources stated herein for individual properties may not reflect the same confidence level as estimates of reserves and resources for all properties, due to the effects of aggregation. The well test results disclosed in this press release represent short-term results, which may not necessarily be indicative of long-term well performance or ultimate hydrocarbon recovery therefrom.

The Company's total proved and probable reserves at 31 December 2015 plus the estimated reserves associated with the Vorlich licence acquisition from TOTAL, which completed in July 2016, were 57 MMboe. These reserves were independently assessed by Sproule, a qualified reserves evaluator.

References herein to barrels of oil equivalent ("boe") are derived by converting 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: 1 bbl is based on an energy conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6 Mcf: 1 bbl, utilising a conversion ratio at 6 Mcf: 1 bbl may be misleading as an indication of value.

About Ithaca Energy
Ithaca Energy Inc. (TSX: IAE) (LSE: IAE) is a North Sea oil and gas operator focused on the delivery of lower risk growth through the appraisal and development of UK undeveloped discoveries and the exploitation of its existing UK producing asset portfolio. Ithaca's strategy is centred on generating sustainable long term shareholder value by building a highly profitable 25kboe/d North Sea oil and gas company. For further information please consult the Company's website www.ithacaenergy.com.

Forward-looking Statements
Some of the statements and information in this press release are forward-looking. Forward-looking statements and forward-looking information (collectively, "forward-looking statements") are based on the Company's internal expectations, estimates, projections, assumptions and beliefs as at the date of such statements or information, including, among other things, assumptions with respect to production, drilling, construction and maintenance times, well completion times, risks associated with operations, required regulatory, partner and other third party approvals, commodity prices, future capital expenditures, continued availability of financing for future capital expenditures, future acquisitions and dispositions and cash flow. The reader is cautioned that assumptions used in the preparation of such information may prove to be incorrect. When used in this press release, the words and phrases like "anticipate", "continue", "estimate", "expect", "may", "will", "project", "plan", "should", "believe", "could", "target", "in the process of", "on track","set to" and similar expressions, and the negatives thereof, whether used in connection with operational activities, remaining work activities prior to the FPF-1 being towed to the Stella field and the timing thereof, timing of commencement of towing the FPF-1 to the Stella field, timing of future FPF-1 updates regarding the status of the FPF-1 operational programme, the anticipated timing for completion of the Vorlich and Austen acquisitions and the effects thereof, expected future payments in connection with such acquisitions, statements relating to reserves, planned future activities in connection with the Vorlich and Austen interests, the timing of completion of the independent assessment of the Austen interests, or otherwise, are intended to identify forward-looking statements. Such statements are not promises or guarantees, and are subject to known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. The Company believes that the expectations reflected in those forward-looking statements are reasonable but no assurance can be given that these expectations, or the assumptions underlying these expectations, will prove to be correct and such forward-looking statements included in this press release should not be unduly relied upon. These forward-looking statements speak only as of the date of this press release. Ithaca 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.

Additional information on these and other factors that could affect Ithaca's operations and financial results are included in the Company's Management Discussion and Analysis for the quarter ended 31 March 2016 and the Company's Annual Information Form for the year ended 31 December 2015 and in reports which are on file with the Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com).

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