Ithaca Acquires UK North Sea Assets

Ithaca 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 January 1, 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.

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."
 

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