Ithaca Mobilizes GSF Galaxy II for Stella Appraisal

Ithaca reported that the GSF Galaxy II heavy duty jackup rig, contracted by Ithaca to drill an appraisal well on the Stella field, has now come on hire and has been mobilized to the spud location to commence drilling this month.

In November 2009, Ithaca Energy became operator of the rich gas-condensate, Stella field and two additional discoveries, namely Hurricane and Harrier. The Company has since contracted the Galaxy II drilling unit, owned by Transocean, and the services of ADTI to manage appraisal well operations under 'turnkey' contract arrangements. The well programme, which is scheduled to take around 79 days to complete, has been designed to satisfy three primary objectives that will influence development. The primary objectives are as follows:

  • Confirm Ithaca's assessment of the in-place volume of hydrocarbons
  • Understand changes in composition of hydrocarbon fluids with depth
  • Verify the distribution and quality of the reservoir

The drilling schedule includes drill stem testing and a contingent sidetrack to ensure that the well objectives are fully satisfied and field upside is appraised prior to development. A further update will be provided when the initial bore has been completed and prior to commencement of any sidetrack.

The appraisal well is planned to reach total depth in the Cretaceous chalk layers which lie below the principal Stella (Andrew) reservoir target. An earlier well (30/6-3Z) encountered hydrocarbons in the Ekofisk chalk reservoir and tested further rich gas-condensate reserves which could be developed at the same time as the main pool.

Timely development of Stella will allow the Company to consider the potential development of the neighbouring Harrier and Hurricane discoveries as additional tiebacks to Stella in this prolific gas-condensate area.

As reported in October 2009, Challenger Minerals Inc. ("CMI") will pay 27% of gross Stella appraisal well costs in exchange for an 18% equity interest in the Stella and Harrier discoveries, thereby carrying a part of Ithaca's share of drilling costs and leaving Ithaca with a 50.33% interest. Upon successful appraisal, CMI will also disproportionately fund a further Stella or Harrier development well.

The latest reserves report issued by Sproule International Limited for year ended December 31 2009, ascribed Proved and Probable reserves to Stella (both Andrew and Ekofisk reservoirs) of 8.94 million barrels of oil equivalent net to Ithaca after consideration of the CMI farm-out.

Current Joint Venture Partners in block 30/6 (Stella and Harrier) are Ithaca (68.33%), Dyas UK Ltd (31.67%) but post completion of the farm out to CMI will be Ithaca (50.33%), Dyas UK Ltd (31.67%), CMI (18.00%).

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