RE: Ithaca Acquires Shell and Esso InterestsThis is a very good move by IAE.
This allows them access to proven reserves with upside at very little cost.
These wells are very productive in the 6,000+ boed range. That is important b/c it will cause the future production profile of IAE to really grow beyond the current 2010 estimates of 20k/d or at least maintain their expected 20k/d production profile for a longer time, depending on when these new reserves will come online. Just increasing the RLI will increase the CF multiple that the market will pay as multiples are dependant on the RLI.
Right now if I were running this ship I would drop all the gas blocks they have expect for maybe the 2 Carna blocks. They have small working interests in all those gas blocks, except for Carna (60% WI) and the net reserves they are going after are small. Why waste so much time and effort, if they are successful, to bring on a bunch of small fields? The fact you are not the operator in these blocks also puts a big question mark on when any successful fields would come online. They should sell their stake and use that $ to pay for this deal and spend the next year only appraisal drilling Athena, Athena East, and Stella with development drilling of Jacky. If they need to drill at least one exploration well on the Poseidon/Triton blocks to keep them b/c of timelines then I would farm them out and have the farmee drill the first well. I would hate to give up potential upside of 250 mmboe gross for nothing.
I expect with this acquisition that IAE will now change their focus of drilling and will overhaul their current drilling schedule and elevate these newly acquired assets, especially Stella, towards the top of their drilling inventory.
It will be interesting to see what Stella adds to the reserve base as management already believes the deposit to be economic with what currently exists so it must have some decent size to it already. All this and the gas/water contact hasn’t been found yet so there is at the very least more reserves upside as to the depth of the structure. Stella will be added to the current reserves that came out yesterday as well as to the remaining Beatrice reserves that were not part of yesterday’s report. Beatrice will be added once that deal closes. So it looks as if yesterdays report is already outdated and on the very low side of what IAE has.
Also add in Athena East and potentially Harrier Shallow and yesterday’s report could be 25+ mmboe net short with no more success from Athena, Athena East or Stella appraisal success!