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Ithaca Energy

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By Bobwins

Posted: Thursday Apr 22 10:12:39AM 2010

IAE.v +.01 to C$2.70 More confirmation that IAE.v is getting healthier and more respect. Credit facility to assist in buildout of Stella and acquisitions. Ithaca Mandates Bank of Scotland for US$140 Million Facility LONDON, UNITED KINGDOM and CALGARY, ALBERTA, Apr 22, 2010 (Marketwire via COMTEX News Network) -- 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, is pleased to announce that it has mandated Bank of Scotland Plc ("BOS"), part of Lloyds Banking Group, as Lead Arranger for the provision of a US$140 million Senior Secured Borrowing Base Facility ("the Facility") to principally fund the development of the recently appraised Stella field and the satellite discoveries Harrier and Hurricane and/or fund future potential acquisitions of production properties in the North Sea. A Term Sheet has been agreed between the Company and BOS. The Term Sheet is structured such that US$30 million is immediately available to the company on execution of the Facility documents. Engineering scoping work has already started on the Stella development and satellite discoveries, Harrier and Hurricane based on the outcome of the Stella appraisal well. A full development plan will be defined during 2010. The facility contemplates that a further US$110 million can be made available to Ithaca for the Greater Stella Area development based on an engineering assessment of the field(s), FDP approval and final credit approval. Flexibility within the Facility also permits Ithaca to debt finance acquisitions of production asset(s) subject to credit approval. Under the terms of the Mandate Letter, the parties shall negotiate and finalize the Facility documents on or before June 30, 2010. The completion of the Facility documents are subject to customary conditions including completion of due diligence. An update will be provided upon execution. Iain McKendrick (Chief Executive Officer) commented: "Further to our strong 2009 financial results and the very encouraging Stella appraisal well, the Company is well positioned to grow. This facility provides a major building block towards funding the capital expenditure required for the development of the Greater Stella Area but also the flexibility to finance a significant acquisition. The high level of support offered by the Bank of Scotland to Ithaca reinforces our view of the underlying strength of the Company cash flow and reserves".

By Bobwins

Posted: Wednesday Apr 21 9:24:46AM 2010

IAE.v +.13 to C$2.58 writeup from April 21, 2010 Ithaca Energy Caps A Year Of Great Progress In 2009 With News That The Stella Appraisal Well has Come In Much Better Than Expected To get a proper handle on what the results statement for the twelve months ending in December 2009 from Toronto TSX-V and London AIM Listed Ithaca Energy are telling us, it is a good idea to go back to before the interim results issued in August 2009 --back to April 2009, in fact. Ithaca is a one of a raft of companies which focused on the North Sea during the oil price boom of the years 2003-2008 feeling there was further money to be made even though the North Sea is supposedly in decline. The company assembled interests ranging from 20 per cent to 100 per cent in 30 blocks or part blocks under sixteen licences covering 514,000 acres across the gamut of near production, appraisal, development and exploration prospects. When the oil price started to tumble and the credit crunch began to bite Ithaca found itself a little bit caught out. Its main project at this time was a revisit to an old discovery, the Athena field. The trouble was even though the oil was there, production was some way off and so was cash flow. Ithaca got out of its financial strait jacket by a rather clever assets swop. Late in 2008 it entered into an agreement with Dyas UK that Dyas would buy, for a cash payment of US$40 million and a reconfiguration of a loan worth US$61 million parts of Ithaca’s portfolio. Initially Dyas would purchase some of the leased Beatrice field, in the Inner Moray Firth, where there was some small production. There was to be a part purchase of the Jacky discovery. Jacky sits in block 12/21c right at the top of Beatrice and was being developed for first production in 2009 with a production and export facility through Beatrice. An interest in Athena was passed on. A stake in the Stella gas condensate discovery was to go over. Stella was scheduled to be appraised in 2009 with possible production in 2010. With some financial wherewithal behind it Ithaca was able to get quickly into production. In April 2009 April Jacky came on stream as planned. Beatrice Alpha, Beatrice Bravo and Jacky together produced 673,073 barrels (463,688 barrels net to Ithaca) by June 30. This meant some 7,500 bpd gross and 5,180 bopd net to Ithaca. So the company was able to report positive cash flow for the half year and a maiden profit against a loss. So what has happened in the second half? Reporting on the 12 months results, CEO Iain McKendrick said 2009 was a year of great progress and financial transformation”. The Dyas acquisition eliminated debt to drive forward the re-balanced portfolio albeit with lower average net working interest.. However, these smaller interests were offset by rising prices and this impacted on the financials. Production was described as sustained, at an exit figure of 4,193 bopd. But prices realised was up at US$68.65 a barrel. This meant that oil sales were US$101.3 million for total revenues of US$110.8 million. There were strong earnings before interest, depreciation and tax of US$61.6 million and a full net year profit of US$7.9 million. There was also good news on the reserves front. The acquisition of additional interest in Stella and the subsequent Challenger Minerals (North Sea) Ltd farm-out gave access with operator control to the important Greater Stella Area. The production performance of Jacky, work on optimising Beatrice well delivery and quantification of the Stella and Harrier Reserves, together with the Carna non-operated discovery resulted in proved and probable reserves updgrades of approximately 115 per cent from 17.20 million of oil equivalent (mmboe) to 37.19 mmboe as at December 31. Going forward, the results statement said the successful workover campaign at Beatrice Bravo should add 1,500 bopd to gross production. But the best news came on April 15, three days after the results announcement. This was to the effect that the Stella appraisal well was more significant than first thought. Well 30/6a was drilled to appraise a large down flank extension of the Stella, field, located in the Central North Sea. The total measured hydrocarbon column height is in excess of 820 feet, significantly increasing reserves beyond those previously independently assessed. The well confirmed hydrocarbons more than 500 feet lower than in any previous wells and this has demonstrated that connected hydrocarbons are presented in the field down to geological spill. On test the well flowed in excess of 5,000 barrels of liquid per day (oil plus water) consisting of 2,850 barrels of light oil (39 degrees API) per day and 2,150 barrels of water per day. Appraisal wells drilled on the crest of the Stella structure produced up to 17 million standard cubic feet of gas per day and 3000 barrels of condensate per day with no water. The light oil encountered at this new location, 500 feet deeper in then structure, is entirely consistent with predictions of gas, condensate and oil coexisting within the same reservoir. Nick Muir, Chief Exploration Officer, commented: “This is a great moment for Ithaca. The results of this appraisal well have proved very sizeable additions to the hydrocarbons originally encountered in the Stella discovery. The field is clearly even more significant than we thought and the results of this well and the test have exceeded all our expectations.” Last but not least the results statement says: “Other near term projects include Athena, with production expected in 2011”. So, the statement that 2009 was a year of real progress is not hyperbole.

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