Ithaca Confirms Reserves at Cook Field

Ithaca announced that further to the announcement of the Sale and Purchase Agreement ("SPA") with Hess:

  • The Company has been informed that Hess has received an exercising notice in relation to the existing Maclure field coventurers' rights to pre-empt the Maclure part of the Transaction
  • Sproule has completed its Reserves Audit Opinion on the Cook field and considers Management's view of combined remaining Proved plus Probable ("2P") reserves of 5.75 million barrels of oil equivalent ("mmboe") net to Ithaca as at January 1, 2011 to be reasonable
  • Adjusted consideration of US $62.5 million and the transfer from Ithaca to Hess of a 10% interest in three Southern North Sea exploration blocks

As announced on April 4, 2011, Ithaca entered into the SPA to acquire interests in the Cook oil field ("Cook") and Maclure oil field from Hess and to transfer certain blocks to Hess. Subject to completed documentation being executed by Hess and any pre-empting parties, the interest in the Maclure field will be removed from the Transaction and the consideration will be adjusted accordingly such that Ithaca shall acquire a 28.46% non-operated interest in only Cook from Hess. The effective date of the Transaction remains January 1, 2011.

The Company commissioned Sproule to undertake an independent audit of Management's estimate of remaining oil and gas reserves in the Cook field. Management estimate that the acquisition of the Cook interest will increase the Company's remaining 2P net reserves by 5.75 mmboe from 46.05 to 51.80 mmboe and this estimate has been considered reasonable by the findings of the audit. The audit was performed in accordance with the Canadian Oil and Gas Evaluation Handbook ("COGEH") reserves definitions and evaluation practices and procedures as specified by National Instrument 51-101 ("NI 51-101").

Based on 5.75 mmboe of 2P reserves remaining in Cook, the acquisition is priced at 10.87 USD per boe. Management anticipates that average production from Cook for 2011 to be approximately 1,900 boepd net to Ithaca.

The Transaction is anticipated to complete in 3Q 2011 and is subject to DECC and co-venturer approvals. At completion, the consideration will be subject to normal industry adjustments to reflect the income and costs incurred since the effective date.