NEWS Acquisition of UK North Sea AssetsAug 04, 2010 08:00 ET
Ithaca Announces Acquisition of UK North Sea Assets
FOR: ITHACA ENERGY INC.
AIM, TSX VENTURE SYMBOL: IAE
August 4, 2010
Ithaca Announces Acquisition of UK North Sea Assets
LONDON, UNITED KINGDOM and CALGARY, ALBERTA--(Marketwire - Aug. 4, 2010) -
NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
Ithaca Energy Inc. (TSX VENTURE:IAE)(AIM:IAE) and its wholly owned subsidiary Ithaca Energy (UK) Limited
("Ithaca" or the "Company"), an independent oil & gas company with exploration, development and production
assets in the UK sector of the North Sea, announces that the Company has entered into an agreement to acquire
certain UK North Sea gas interests from GDF SUEZ E&P UK Ltd for a cash consideration of GBP 11.25 million
(approximately US$16.9 million) (the "Acquisition").
The Acquisition includes operated interests in the producing Anglia Field, for which the assumption of
operatorship is subject to certain approvals, and the Garnet and Opal discoveries, and a non operated interest
in the producing Topaz Field. The Company believes the Acquisition has the potential to create significant
additional value through the further exploitation and optimization of the acquired interests. The effective
date of the Acquisition is January 1, 2010.
Key Acquisition Highlights
The Acquisition strengthens and diversifies Ithaca's existing UK North Sea production asset portfolio by
providing a number of significant operational and financial benefits, including:
-- the addition of the Anglia Field (operatorship of which is subject to
partner and regulatory approval) that provides diversification to the
Company's other operated assets that include the producing
Beatrice/Jacky fields and the Athena and Greater Stella Area
developments
-- the enlargement and diversification of the Company's production base
through the addition of net estimated 2010 production of over 6 million
standard cubic feet per day (1,000 barrels of oil equivalent per day)
based on management's estimates
-- the Acquisition being valued by management on the basis of net 2P
reserves in excess of 3 million barrels of oil equivalent ("mmboe").
Information on the Acquired UK North Sea Interests
Ithaca has agreed to acquire an interest in each of the areas described below.
Anglia Field - Operated (subject to partner and regulatory approvals)
Ithaca has agreed to acquire a 30% interest in and subject to approvals, may become operator of the producing
Anglia Field which is located in Blocks 48/18b, 48/19b and 48/19e of the UK North Sea gas basin. On or about
the date of this press release, GDF SUEZ E&P UK Ltd estimates that in excess of 2 mmboe of additional net
possible reserves lie within the field. GDF SUEZ E&P UK Ltd is currently the operator of the Anglia Field and
the gas is currently contracted for the life of the field.
Topaz Field - Non Operated
Ithaca has agreed to acquire a 35% interest in the producing Topaz Field which is located in Blocks 49/1a and
49/2a in the UK Southern North Sea. The gas is currently uncontracted.
Garnet Field - Operated
Ithaca has agreed to acquire a 68.33% interest in and, subject to regulatory approvals, operatorship of the
undeveloped Garnet Field which is located in Block 44/27a in the UK Southern North Sea. The Garnet Field was
discovered in 1986 and to date one well has been drilled, and one further appraisal well has been drilled off
structure.
Opal Field - Operated
Ithaca has agreed to acquire a 53.84% interest in and, subject to regulatory approvals, operatorship of the pre-
development Opal Field which is located in Block 43/25a in the UK Southern North Sea. The Opal Field was
discovered in 2005 and to date one well has been drilled which was geologically sidetracked to appraise the
limits of the field.
Terms of the Acquisition
The Acquisition will be effected through a sale and purchase agreement ("SPA") between Ithaca Energy (UK)
Limited, as the purchaser, and GDF SUEZ E&P UK LTD, as the seller. The Acquisition has an effective date of 1st
January 2010. The SPA contains customary provisions for a transaction of this nature in the oil and gas sector.
The consideration will be a cash payment by Ithaca at completion of GBP 11.25 million (approximately US$16.9
million), subject to customary transaction adjustments, including the deduction of net revenue from the
effective date. The Acquisition is expected to close on or before the end of Q4 2010.
Financing of the Acquisition
Ithaca will fund the Acquisition through cash on hand.
Advisor
CIBC World Markets plc acted as Exclusive Financial Advisor to Ithaca on the Acquisition.
Iain McKendrick, CEO, commented:
"This acquisition demonstrates that the Company is executing on its stated strategy which includes the
acquisition of existing production and discoveries on attractive terms. The interests being acquired will add
immediate production and additional cash flow to Ithaca while offering medium-term development and enhancement
potential. The Company shall continue to pursue similar accretive opportunities to grow."
Notes to oil and gas disclosure:
Estimates of reserves contained in this press release in connection with the Acquisition may not have been
prepared in accordance with the COGE Handbook and have not been prepared by a qualified reserves evaluator of
the Company. Sproule International Limited will evaluate the reserves associated with Acquisition at the end of
2010 as part of their annual evaluation of the Company's assets.
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.
The estimates of reserves and future net revenue for individual properties may not reflect the same confidence
level as estimates of reserves and future net review for all properties, due to effects of aggregation.
Possible reserves are those additional reserves that are less certain to be recovered than probable reserves.
Possible reserves are those additional reserves that are less certain to be recovered than probable reserves.
There is an equal probability that the quantities actually recovered will be greater or less than the sum of
proved plus probable reserves. There is a 10% probability that at least the sum of the estimated proved
reserves plus probable reserves plus possible reserves will be recovered.
In accordance with AIM Guidelines, Lawrie Payne, MA Marine Geology (Alberta & Columbia) and Non-Executive
Chairman of Ithaca is the qualified person that has reviewed the technical information contained in this press
release.