Ithaca Reports Substantial Increase in Reserves

Ithaca Energy has noted an increase in reserves. Net Proved reserves rose ~90% from 8.37 million barrels of oil equivalent ("mmboe") to 15.99 mmboe. This reflects primarily an upward adjustment of reserves at Beatrice and Jacky due to a re-evaluation based on actual production results as well as new reserves at Stella (Ekofisk) and Harrier that Sproule had not previously evaluated.

The report demonstrates an increase in net Proved and Probable ("2P") reserves of ~115%, from 17.20 mmboe to 37.19 mmboe as at December 31 2009. The overall rise in net 2P reserves is largely attributed to discoveries and reservoirs namely, Stella (Ekofisk), Hurricane, Harrier and Carna previously not evaluated by Sproule in the December 31, 2008 reserves report.

The figures have been adjusted for the 2nd Dyas transaction and assume that the farm-out to Challenger Minerals Inc. ("CMI") of the Stella and Harrier discoveries (specifically) will be completed after the Stella appraisal well is drilled, anticipated in the first quarter of 2010.

Ithaca has focused it’s development efforts on rational clusters of assets, with the Company now comprising four core clusters including Beatrice, Stella, Carna and Athena. Ithaca has developed a diversified portfolio of UK North Sea assets aligned with its stated strategy. The Greater Stella Area ("GSA") has seen significant activity and reserves improvement over the past months, adding to the existing Beatrice and Athena reserves. The GSA comprises the four discoveries of Stella (Andrew reservoir), Stella (Ekofisk reservoir), Harrier and Hurricane, as well as exploration acreage.

Summary of Reserve Changes

Major additions to reserves reported in the GSA have been achieved though considerable geological and geophysical study work conducted during the second half of 2009 in this, a prolific area of the Central North Sea:

  • The evaluation of Stella (Ekofisk) and Harrier discoveries has added significant additional 2P reserves in this important core area.
  • Block 29/10b was awarded to Ithaca (now 100% equity interest) in the 25th UKCS Licensing Round. The block contains the Hurricane discovery which has been attributed Probable reserves.
  • 2P Gross reserves for Stella (Andrew) have not changed pending the appraisal well result.

Combined 2P reserves for the GSA now amount to 25.52 mmboe representing ~70% of the total 2P reserves for the Company.

Other reserve changes have been made throughout the portfolio and are summarized below:

  • In March 2009 the Company announced the successful drilling of the Carna prospect and Proved reserves for this discovery have been ascribed to Ithaca.
  • The Jacky field was brought on line in April 2009 and has performed well above expectation. Previous assessed Proved reserves (December 31 2008 adjusted for Dyas transaction) for Jacky before first production were 0.68 mmboe net. Ithaca net production for 2009 was 0.97 mmboe; the latest assessment confirms 1.37 mmboe of remaining Proved reserves net to Ithaca.
  • Ithaca acquired the Beatrice field in November 2008 and has achieved steady daily production increases over the last 12 months. Further work designed to access additional reserves is planned for 2010 and this has been taken into account by Sproule. Previous assessed Proved reserves (December 31, 2008 adjusted for Dyas transaction) for Beatrice were 0.84 mmboe net. Ithaca net production for 2009 was 0.33 mmboe; the latest assessment confirms 1.65 mmboe of remaining Proved reserves net to Ithaca.
  • The Athena development has been updated with regard to project costs however no reserves change has occurred. The development project is awaiting imminent launch.

Iain McKendrick, CEO said, "I am pleased with the progress that the Company has made over 2009. The Company will continue to add significant value to the portfolio through strong technical and commercial collaboration. Ithaca’s technical team has identified significant
upside in the Greater Stella Area; in addition to the discoveries (Stella (Andrew and Ekofisk), Harrier and Hurricane), Ithaca now holds a 100% equity interest in neighbouring exploration acreage with rich gas-condensate potential. The combination of Stella, Harrier and Hurricane could become part of one much larger phased development. 2010 is going to be an exciting year for the Company which, in the near term, will see the launch of Athena and the appraisal of the Stella field."