Ithaca Energy Inc.
GSA Satellites Acquisitions
2 August 2016
Ithaca Energy Inc. (TSX: IAE, LSE AIM: IAE) ("Ithaca" or the "Company") announces that it has expanded its core position in the Greater Stella Area ("GSA"), with four agreements entered into for the acquisition of additional interests in the "Vorlich" discovery and an operated interest in the "Austen" discovery.
Highlights
· Interest in the Vorlich discovery increased from approximately 17% to 33% - additional licence interests acquired from ENGIE E&P, INEOS and Maersk
· Approximately 4 MMboe1 of net proven and probable reserves added to the portfolio from the additional Vorlich licence interests
· Acquisition from ENGIE E&P of a 75% interest and operatorship of the Austen discovery, which lies approximately 30 kilometres from the GSA production hub
· Total acquisition costs including potential future contingent payments of under $6 million
Les Thomas, Chief Executive Officer, commented:
"We are very pleased to announce this group of low cost acquisitions that further expand our core Greater Stella Area portfolio. This is in line with our "hub and spoke" strategy for maximising the value of the central infrastructure that has been put in place for the start-up of production from the Stella field."
Further Information
Vorlich
Sale and purchase agreements ("SPAs") have been executed with ENGIE E&P, INEOS and Maersk to acquire a 100% interest and operatorship of Licence P1588 (Block 30/1f), effective 1 January 2016.
Licence P1588 contains approximately 10-20% of the Vorlich discovery, with the balance of the discovery being located in licence P363 (Block 30/1c). When taking into account the P363 licence interest acquired from TOTAL in January 2016, execution of the SPAs increases Ithaca's overall interest in the Vorlich discovery to approximately 33%.
Vorlich was discovered and appraised in 2014 with exploration well 30/1f-13A,Z and 13Z. The well encountered hydrocarbons in a Palaeocene sandstone reservoir in Block 30/1c and a subsequent side-track into Block 30/1f confirmed the westerly extension of the discovery. The well was flow tested at a maximum rate of 5,350 boepd (approximately 80% oil).
Vorlich is located approximately 10 kilometres north of the Company's GSA production hub and is estimated to contain gross proven and probable undeveloped reserves of approximately 24 MMboe1. Following completion of the Vorlich appraisal programme in 2014, current activities are focused on planning and preparation of an FDP.
Upon completion of the acquisitions, the overall Vorlich licence interests will be as follows:
· Licence P363: BP (Operator), 80%; Ithaca, 20%
· Licence P1588: Ithaca (Operator), 100%
Austen
An SPA has been executed with ENGIE E&P to acquire a 75% interest and operatorship of Licence P1823 (Block 30/13b), effective 1 May 2016. The licence contains the Austen discovery, which is located approximately 30 kilometres south-east of the GSA hub.
Austen is an Upper Jurassic oil / gas-condensate accumulation on which a number of wells have been drilled, the most recent being appraisal well 30/1b-10,10Z drilled by ENGIE E&P in 2012 that was flow tested at a maximum rate of 7,820 boepd (approximately 50% oil).
The gross contingent resources ("1C" to "3C") associated with Austen are estimated by Ithaca to be in the range of 4-28 MMboe2. An independent assessment will be completed at the end of the year as part of the usual annual reserves evaluation exercise.
Upon completion of the acquisition, the Austen licence interests will be as follows:
· Ithaca (Operator), 75%; Premier Oil, 25%.
It is planned for further subsurface and development engineering studies to be completed in order to advance preparation of an FDP for approval prior to January 2019.
Acquisition Completion
Initial considerations are payable at completion of the acquisitions, with additional contingent payments at FDP approval and upon reaching reserves recovery thresholds.
The licence acquisitions are expected to complete in the second half of 2016 and are subject to normal regulatory and partner approvals, including approval for the transfer of operatorship. At completion the considerations paid will be subject to normal industry adjustments to reflect costs incurred since the effective dates of the transactions.
The Company notes that the previously announced acquisition of the Vorlich working interest from TOTAL was completed in July 2016.
FPF-1 Update
Since the recent departure of the "FPF-1" floating production facility from the Remontowa shipyard in Poland, the majority of the required deep water marine system trials have been successfully completed. The final remaining trials are expected to be completed in the coming days. An update will be provided once the FPF-1 commences sail-away to the Stella field.