SOURCE: Ithaca Energy Inc

August 31, 2010 16:45 ET

Ithaca Energy Inc. Second Quarter 2010 Financial Results

Substantial Increase in Net Profit to $10.5 Million and Positive Cash Flow of $38.3 Million

CALGARY, AB--(Marketwire - August 31, 2010) -  Ithaca Energy Inc. (TSX-V: IAE)

Half Yearly 2010 Financial Results

Net profit $15.9 million

Cash flow positive $42.2 million

SUMMARY OF KEY RESULTS

For the second quarter ended 30 June 2010

Financial

  • Net profit of US$10.5 million for the quarter ended June 30, 2010, resulting in net profit of US$15.9 million for the six months ended June 30, 2010

  • Positive cash flow from operating activities of US$38.3 million for the quarter ended June 30, 2010 ($6.2 million for quarter ended June 30, 2009) and positive cashflow of US$42.2 million for the six months ended June 30, 2010 (US$3.3 million positive cashflow for the six months ended June 30, 2009)

  • Cash balance as at June 30, 2010 of US$51.0 million and no drawn debt ($29.9 million as at 31 December 2009) (pre-equity raise)

  • Weighted average realized price for Q2 of US$73.98/barrel (weighted average realised price of $60.38/barrel for quarter ended June 30,2009)

  • On July 28, the Company closed an equity raise consisting of a Canadian bought deal and UK private placement, issuing 92.7 million common shares of Ithaca for aggregate gross proceeds of approximately US$150 million.

  • On July 12, the Company signed a borrowing facility agreement for up to US$140 million with Bank of Scotland Plc

Operational

  • The Company announced a significant increase in reserves post the success of the Stella well. Total Proved ("1P") reserves increased 30.6% from 15.99 million barrels of oil equivalent ("mmboe") to 20.88 mmboe and total Proved plus Probable ("2P") reserves increased 12.8% from 37.19 mmboe to 41.96 mmboe following an independent evaluation of the Company's petroleum and natural gas reserves by Sproule International Limited (www.sproule.com).

  • Combined production from Jacky and Beatrice averaged 10,217 barrels of oil per day ("bopd") gross (4,914 bopd net to Ithaca) over the three month period from April to June 2010 as measured at the Nigg storage facility. Production in the second quarter increased as a result of the Beatrice Field coming strongly back on line combined with the Jacky field performing above expectation.

  • Coiled tubing work commenced on the Beatrice Alpha platform to undertake preparatory 'clean up' work on five production wells prior to mobilization of a Hydraulic Workover Unit ("HWU") to the platform in early July 2010. 

  • On August 4, the Company entered into an agreement to acquire certain UK North Sea gas interests from GDF SUEZ E&P UK Ltd for a cash consideration of £11.25 million (approximately US$16.9 million). This acquisition includes producing assets and further development potential. Completion will be in the fourth quarter, with effective date of January 1, 2010

  • On August 5, the Company announced that a revised corporate presentation had been released on its corporate website. The presentation states that production for July 2010 from the Jacky and Beatrice fields averaged 10,884 barrels of oil per day ("bopd") gross (5,225 bopd net to Ithaca), as measured at the Nigg storage facility. In addition, the presentation gives details of the workover operations currently ongoing using a HWU which was installed on the Beatrice Alpha platform in July. The results and impact of the first of five workover operations will be reported in September.

Iain McKendrick, CEO, commented,
"Our strong second quarter / half yearly results represent another major step forward for the Company, in particular the doubling of net profits from the first quarter. Cash flows from operations have been very healthy, despite lower commodity prices during the second quarter. The Company's projects are moving ahead at pace. Athena FDP and the finalization of all services contracting agreements are expected shortly. In the Greater Stella Area, export route surveys have already been completed and a full suite of pre Front End Engineering and Design studies is ongoing. During the fourth quarter, the Company aims to complete the acquisition of various interests from GDF SUEZ E&P UK Ltd and we continue to be active in the asset acquisition market. Early in the fourth quarter the Company will announce an ambitious 2011 work programme across all its assets."

Full details on the above are provided in the Consolidated Financial Statements and Management's Discussion and Analysis for the second quarter ended June 30, 2010, which will be filed with the securities regulatory authorities in Canada. These documents will be available on the System for Electronic Document Analysis and Retrieval at www.sedar.com (together with a copy of this announcement) on the Company's website:

http://www.ithacaenergy.com/uploads/IthacaPressReleaseFull100827.pdf

The calculation of barrels of oil equivalent ("boe") is based on a conversion rate of six thousand cubic feet of natural gas ("mcf") to one barrel of crude oil ("bbl"). 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. 

In accordance with AIM Guidelines, Lawrie Payne, MA Marine Geology (Alberta & Columbia) and Chairman of Ithaca Energy is the qualified person that has reviewed the technical information contained in this press release.

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 "expects," "believes," "anticipate," "plans," "may," "will," "should", "scheduled", "targeted", "estimated" and similar expressions, and the negatives thereof, whether used in connection with the estimated production levels, anticipated time of first oil, oil in place, hydrocarbon composition or otherwise, are intended to identify forward-looking statements. Such statements are not promises or guarantees, 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. 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.

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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