During the period Ithaca achieved admission to the AIM market in London and also the TSX Venture Exchange in Canada. The Company has adopted US dollars as its reporting currency.
--Completion of 300 km2 3-D seismic program over 90% owned licenses in the Outer Moray Firth area --Contracting of the semi-submersible drilling rig Bredford Dolphin for the drilling of the Company's first well on the Athena prospect in the outer Moray Firth --Contracting of a jack-up drilling rig for the drilling of two wells in 2007 --Application for Licenses in the United Kingdom's 24th round --Contracted 3-D seismic for license P1245 over the Morpheus prospect in the Southern North Sea gas basin
--Successfully raised a total of CAD$59.5 million (£28 million) in an Initial Public Offering on June 6, 2006 simultaneously on the London Stock Exchange's AIM Market and the TSX Venture Market in Canada. --29.6 million common shares were issued in the IPO at a price of US$1.90 --A loss of $974,024 for the second quarter ended June 30, 2006, in line with expectations --Strong cash position of US$59 Million at June 30, 2006.
"Of most significance during the period was the completion of the Company's IPO," said Lawrie Payne, Ithaca's CEO. "Ithaca successfully obtained a quote on both the AIM and TSX-V Markets raising almost US$60 million and achieving its objective in what were challenging market conditions. The Company is now well supplied with opportunities, initiatives, funds and people to enable it to move towards its objectives of solid oil and gas reserve development and early production from the UK North Sea." Background
Ithaca was started with the objective of exploiting the remaining oil and gas resources in the UK North Sea, where through the use of modern technology, the management of Ithaca believes that substantial reserves remain to be discovered and developed. The focus is on stratigraphic traps which, while often initially involving a greater degree of risk, open an entirely new opportunity into the exploration business in the North Sea.
The focus in 2004 and 2005 was to establish a solid inventory of prospective exploratory and development prospects. This was accomplished in the 22nd and 23rd Licensing Rounds in the UK and through acquisition. As a result, the Company now has an established inventory of 28 blocks and partial blocks under 16 licenses. Our interests in the most part range from 60% to 100%, providing the opportunity to dilute in return for financing while retaining a meaningful interest.
In an effort to establish production as early as possible, Ithaca's strategy has been to establish interests in assets containing previous discoveries that may be commercial under prevailing economic conditions. To this end, a 20% interest in the Barbara gas and condensate discovery was purchased and licenses over the Athena oil discovery (90%) and surrounding the Beatrice oilfield were acquired in the 23rd Round.
In order to develop these assets further, the Company successfully contracted, in a very tight rig market, a semi-submersible rig to drill the Athena prospect in September of this year and a jack-up rig to drill Beatrice and one other prospect in the first half of 2007. Ithaca anticipates that the development of the Barbara accumulation will also commence in 2007. First production from these three projects is expected in 2008.
In the first and second quarters of the year, Petro-Canada conducted a 3-D seismic program over a large area of the Outer Moray Firth. Ithaca participated in 300 Km≤ over its 90% owned licenses covering blocks 13/16b, 13/17 and 13/18. This area has, in the Company's opinion, significant exploration potential. The data from the survey will be processed and interpreted by year end.
At this time, the Athena project has most of the Company's immediate attention. Athena is an oil accumulation previously encountered in two wells. Two sands have tested oil but in quantities that were not commercial at the time. In September of this year, Ithaca will commence a well to drill into the oil-bearing sands at a 60-degree angle from vertical to expose more formation and potentially greater productivity. Should the well be successful, development of the pool will follow with first production anticipated for mid 2008. Independent Engineers, Gaffney Cline and Associates have estimated the net probable reserves to be 22 million barrels. The Company believes the prospect to have substantial upside potential.
Ithaca has made applications for several licenses in the UK's 24th Licensing Round. The results of these applications are expected to be known in September. The Company has applied selectively for licenses which support existing projects as well as providing new opportunities.
Looking forward, the Company anticipates the results of the Athena well and the drilling of two projects with the jack-up rig slots it has contracted as well as the results of new 3-D seismic programs conducted at Triton and Morpheus. The results of applications in the UK's 24th Licensing Round may also provide further opportunities and the process of selective relinquishment of previously acquired acreage will begin in the fourth quarter of 2006. The market response to the IPO was exceptional and we look forward to the second half of the year with confidence.
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