Ithaca Energy (TSX:IAE)
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2 Years : From Sep 2012 to Sep 2014
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the United States
Ithaca Energy Inc.
Greater Stella Area Development Update
12 November 2012
Ithaca Energy (TSX: IAE, LSE AIM: IAE) provides an update on the
progress made with its Greater Stella Area ("GSA") development
activities and schedule.
o The modifications contract for the "FPF-1" floating production unit
has been awarded to the Remontowa shipyard in Gdansk, Poland. The
FPF-1 is now located In Gdansk.
o The Ensco 100 drilling rig is now forecast to commence the
development drilling campaign in Q1-2013, due to delays in the
completion of drilling programmes for other operators.
o Four initial Stella wells are to be drilled over a period of
approximately twelve months prior to the arrival of the FPF-1 for
hook-up and commissioning, currently anticipated in H1-2014.
o Detailed design has been completed for the subsea infrastructure
that is to be installed in 2013 by Technip, a world leader in the
execution of subsea projects. Fabrication of the required linepipe is
o A suite of gas transportation and processing agreements has been
executed for export of gas processed on the FPF-1 via the Central Area
Transmission System ("CATS") and Teeside Gas and Liquids Processing
o The Company's net share of remaining capital expenditure prior to
first hydrocarbons from the GSA production hub is $395 million, which
will be funded from existing financial resources.
o The successful appraisal of the Hurricane discovery in Q3-2012 and
the offer of Block 29/5e, adjacent to Hurricane, in the 27th UK
Offshore License Round in October 2012, have further augmented the
opportunity set for the GSA hub.
o The Company's partners in the GSA are Dyas UK Limited, a long
established privately owned North Sea oil and gas producer, and
Petrofac, a leading international service provider to the oil and gas
industry listed on the FTSE 100 in London.
Iain McKendrick, Chief Executive Officer, commented:"This is exciting
progress towards the creation of a 25kboe/d North Sea
oil and gas operator and unlocks substantial value by monetising over
30Mboe of the Company's reserves base. We are pleased with the
significant milestones achieved by all the major service providers to
this development. The Company is firmly focused on executing the
project safely and efficiently and creating further long term value by
building upon its position in the GSA."
FPF-1 Modification Works
The contract for the modification of the FPF-1 for deployment on the
GSA production hub was awarded to Petrofac in October 2011. Following
completion of detailed design studies and removal of the existing
topsides processing equipment in Teeside, Petrofac, under the terms of
its lump sum incentivised modification contract with the GSA
co-venturers, will install new processing equipment on the FPF-1. The
decision to install new equipment, rather than partially re-use the
existing facilities, will lead to a higher quality vessel capable of
achieving high operational uptime performance being deployed on the
The contract for completion of the FPF-1 modification works has been
awarded to the Remontowa shipyard in Gdansk, Poland, where the vessel
is now located. The shipyard is located approximately 10 days towing
time from its future final location at the Stella field.
The immediate work programme in the shipyard is focused on the
performance of a detailed inspection to verify the requirements of the
envisaged marine systems workscope and preparation for dry dock works,
which are anticipated to commence in Q1-2013. Once these activities
have been completed and the vessel is in the dry dock, the schedule for
completion of the full modification work programme will be finalised.
A contract was signed with Ensco Offshore UK Limited ("Ensco") in
November 2011 for use of the Ensco 100 heavy duty jack-up drilling rig
on the Stella and Harrier development drilling campaign. The rig is
currently anticipated to be on location at the Stella field around late
Q1-2013, later than originally anticipated when the contract with Ensco
was signed, due to delays in the completion of drilling programmes for
previous users of the rig.
As previously announced, to maximise initial oil and condensate
production and fill the gas processing facilities on the FPF-1, four
Stella wells are planned for the start-up of production from the hub.
Each well is anticipated to take approximately 90 days to drill,
complete and undergo a clean-up test designed to give further assurance
around flow rates prior to start-up of the field. Further wells on
Stella and Harrier, plus other potential targets, including Hurricane,
will then be drilled post first hydrocarbons from Stella to maintain
the gas processing facilities on plateau.
Subsea Infrastructure Construction & Installation Activities
An Engineering, Procurement, Installation and Construction ("EPIC")
contract was awarded to Technip UK Limited in July 2012, for completion
of the major subsea works that are to be conducted on the GSA hub. The
engineering and construction activities associated with the subsea work
programme are progressing as planned and remain on target for the main
installation works to be performed in 2013.
During October 2012, terms were finalised for use of the BP operated
CATS pipeline for the transportation of gas from the FPF-1 to shore and
for processing of the gas in the TGLP terminal, owned and operated by
Teeside Gas Processing Plant Limited. The gas processing that will be
performed at the TGLP terminal involves the separation of natural gas,
which will be sold to the UK spot market on a daily basis, and the
associated propane, butane and condensate from within the gas exported
from the FPF-1, with such natural gas liquids being sold by TGLP at
prevailing market prices.
The Company's focus on the GSA is driven by monetisation of 31.7
million barrels of oil equivalent of net proven and probable reserves,
as independently assessed by Sproule International Limited, and
generation of additional value via the wider opportunities provided by
the range of undeveloped discoveries surrounding the infrastructure
Initial annualised production from the hub is anticipated to be
approximately 16,000 barrels of oil equivalent per day ("boepd") net to
Ithaca, thereby pushing the Company's annualised production over
20,000boepd and achieving a significant step towards the mid term objective
of creating a highly profitable 25,000 boepd oil and gas production
The Company's net share of remaining capital expenditure prior to first
hydrocarbons from the GSA production hub is $395 million. This figure
reflects completion of all the major contracting required to achieve
first hydrocarbons from the development and is within ten percent of
the budget specified at the time of the development concept select
decision in October 2011.
The Company will fund the forecast capital expenditure from its
existing cash balance, the anticipated cash flow generated by its
producing asset portfolio and some of its undrawn $430 million debt
Further information is available on the Company's website,
Iain McKendrick, CEO email@example.com +44 (0) 1224 650 261
Graham Forbes, CFO firstname.lastname@example.org +44 (0) 1224 652 151
Billy Clegg email@example.com +44 (0) 207 269 7157
Edward Westropp firstname.lastname@example.org +44 (0) 207 269 7230
Georgia Mann email@example.com +44 (0) 207 269 7212
Cenkos Securities plc:
Jon Fitzpatrick firstname.lastname@example.org +44 (0) 207 397 8900
Ken Fleming email@example.com +44 (0) 131 220 6939
RBC Capital Markets:
Tim Chapman firstname.lastname@example.org +44 (0) 207 653 4641
Matthew Coakes email@example.com +44 (0) 207 653 4871
Notes to oil and gas disclosure:
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 industry.
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.
About Ithaca Energy:
Ithaca Energy Inc. (TSX: IAE, LSE AIM: IAE) and its wholly owned
subsidiary Ithaca Energy (UK) Limited ("Ithaca" or "the Company"), is
an oil and gas operator focused on production, appraisal and
development activities on the United Kingdom Continental Shelf. 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
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
expressions, and the negatives thereof, whether used in connection with
anticipated development activity schedules, the anticipated timing of
first hydrocarbons from the GSA production hub or the estimated
reserves and production levels associated with the fields using the hub
or otherwise are intended to identify forward-looking statements. 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.
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