Ithaca Energy Inc.

Ithaca Energy Inc.

May 16, 2011 02:00 ET

Ithaca Energy Inc.: North Sea Assets Acquisition-Confirmation of Cook Reserves and Pre-Emption on Maclure Field



Ithaca Energy Inc. (TSX VENTURE:IAE)(AIM:IAE) announces that further to the announcement of the Sale and Purchase Agreement ("SPA") with Hess Limited ("Hess"):

  • The Company has been informed that Hess has received an exercising notice in relation to the existing Maclure field coventurers' rights to pre-empt the Maclure part of the Transaction
  • Sproule International Limited ("Sproule") has completed its Reserves Audit Opinion on the Cook field and considers Management's view of combined remaining Proved plus Probable ("2P") reserves of 5.75million barrels of oil equivalent ("mmboe") net to Ithaca as at 1st January 2011 to be reasonable
  • Adjusted consideration of US$62.5 million and the transfer from Ithaca to Hess of a 10% interest in three Southern North Sea exploration blocks

As announced on April 4, 2011, Ithaca entered into the SPA to acquire interests in the Cook oil field ("Cook") and Maclure oil field ("Maclure") from Hess and to transfer certain blocks to Hess (the "Transaction"). Subject to completed documentation being executed by Hess and any pre-empting parties, the interest in the Maclure field will be removed from the Transaction and the consideration will be adjusted accordingly such that Ithaca shall acquire a 28.46% non-operated interest in only Cook from Hess. The effective date of the Transaction remains 1st January 2011.

The Company commissioned Sproule to undertake an independent audit of Management's estimate of remaining oil and gas reserves in the Cook field. Management estimate that the acquisition of the Cook interest will increase the Company's remaining 2P net reserves by 5.75 mmboe from 46.05 to 51.80 mmboe and this estimate has been considered reasonable by the findings of the audit. The audit was performed in accordance with the Canadian Oil and Gas Evaluation Handbook ("COGEH") reserves definitions and evaluation practices and procedures as specified by National Instrument 51-101 ("NI 51-101").

Based on 5.75 mmboe of 2P reserves remaining in Cook, the acquisition is priced at 10.87 US$ per boe. Management anticipates that average production from Cook for 2011 to be approximately 1,900 boepd net to Ithaca.

The Transaction is anticipated to complete in Q3 2011 and is subject to DECC and co-venturer approvals. At completion, the consideration will be subject to normal industry adjustments to reflect the income and costs incurred since the effective date.

Notes to oil and gas disclosure:

In accordance with AIM Guidelines, Hugh Morel, BSc Physics and Geology (Durham), PhD Hydrogeology (London) and senior petroleum engineer at Ithaca Energy is the qualified person that has reviewed the technical information contained in this press release. Dr Morel has 30 years operating experience in the upstream oil industry.

About Ithaca Energy:

Ithaca Energy Inc. and its wholly owned subsidiary Ithaca Energy (UK) Limited ("Ithaca" or "the Company"), is an oil and gas exploration, development and production company active in the United Kingdom's Continental Shelf ("UKCS"). The goal of Ithaca, in the near term, is to maximize production and achieve early production from the development of existing discoveries on properties held by Ithaca, to originate and participate in exploration and appraisal on properties held by Ithaca when capital permits, and to consider other opportunities for growth as they are identified from time to time by Ithaca.

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

Forward-looking statements

Some of the statements in this announcement are forward-looking. Forward-looking statements include statements regarding the intent, belief and current expectations of Ithaca Energy Inc. or its officers with respect to various matters. When used in this announcement, the words "anticipate", "continue", "estimate", "expect", "may", "will", "project", "plan", "should", "believe", "could", "target" and similar expressions, and the negatives thereof, whether used in connection with the estimated production levels, anticipated time of completion of the Transaction or reserves associated with the Transaction are intended to identify forward-looking statements. The reserves for individual properties may not reflect the same confidence level as estimates of reserves of all properties, due to the effects of aggregation. Such statements are not promises or guarantees, and are subject to known and unknown risks and uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements or information. These forward-looking statements speak only as of the date of this announcement. 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.

The term "boe" may be misleading, particularly if used in isolation. A boe conversion 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.

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

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