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Media/Investor Relations
News Release
NOT FOR RELEASE IN THE UNITED STATES OR DISTRIBUTION TO US NEWS SERVICES
ITHACA ENERGY REPORTS 2006 YEAR END RESULTS
LONDON, U.K. - CALGARY, ALBERTA, April 30, 2007 -- Ithaca Energy Inc. (LSE-AIM: IAE, TSX-V: IAE), a Canadian independent oil and gas company with exploration and development assets in the UK North Sea, is pleased to announce its financial results and reserves data for the year ended December 31, 2006.
Ithaca enjoyed a particularly successful year, the highlights of which are:
Operations:
- The drilling of a successful first well on its 70% owned Athena prospect which tested at up to 1,330 barrels of oil per day ("bopd"). The well has been cased and suspended as a future producer. Prior to drilling the well, Ithaca entered into a farm-out agreement with EWE Akiengesellschaft ("EWE") for the latter to pay 45% of the well costs in return for a 20% interest. Ithaca then raised US$6.0 million from the Gemini Fund II in a non-recourse financing for the well, to be repaid out of production. As a result, Ithaca paid 28% of the costs of the well and retained a 70% interest in the project. Plans are under way to drill a second well in the third quarter of 2007 and to prepare an application for field development.
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Ithaca participated in a 3-D seismic program on its 90% owned licenses in the Triton area of the Outer Moray Firth which is being interpreted in anticipation of future drilling.
- Ithaca conducted a 3-D seismic program over its 60% owned Morpheus license in the Southern Gas Basin and subsequently farmed out an interest. Under the terms of the agreement, Ithaca will pay for 25% of both a well and the previously shot seismic, and will retain a 34% interest in the project.
- A 2-D seismic program was conducted over the Company’s 100% owned Beatrice area license. Drilling is being conducted at present.
- The Company contracted for two drilling slots on a Jack-up rig and one on a Semi-submersible rig for drilling in 2007
- Ithaca was awarded 7 new blocks in the 24th Licensing Round, adding several new prospects as well as expanding existing areas of development.
- Sproule International prepared an independent engineering evaluation in accordance with NI 51-101 for reserve volumes and values as at December 31, 2006.
- Total Proven plus Probable plus Possible reserves net to the Company’s interest were 28.50 MMBoe at December 31, 2006. Comparative numbers are not available as Possible reserves were not evaluated by Gaffney Cline & Associates in 2005.
- At December 31, 2005, Ithaca’s net interest in the Barbara gas property was evaluated by GCA as containing Proven reserves of 1.6 MMBoe. On re-evaluation, Sproule have chosen to reclassify the reserves as Probable and Possible as at December 31, 2006, thereby eliminating Ithaca’s net Proven reserves when compared with 2005.
- Total Probable reserves net to the Company’s interest at December 31, 2006 were 20.02 MMBoe compared to 22.73 MMBoe at December 31, 2005, a decrease of 11.92% primarily as a result of the farmout at Athena as well as the re-evaluation of reserves at Barbara.
- Possible reserves net to the Corporation’s interest were evaluated by Sproule to be 8.49 MMBoe at December 31, 2006. Comparative numbers are not available as Possible reserves were not evaluated in 2005 by GCA.
- Sproule evaluated the commerciality of the pools at December 31, 2006 and calculated a net present value of total Probable reserves net to Ithaca’s interest, discounted at 10% per annum, of US$343.97 million before tax and a comparable after tax net present value of US$166.33 million. Total Probable and Possible reserves net to Ithaca’s interest are evaluated as having a value of US$515.20 million before tax and $252.62 million after tax. The values were computed using forecast prices and costs.
Financial:
- While expanding its operations in the UK North Sea, Ithaca significantly strengthened its balance sheet during 2006.
- On June 5, 2006, the Company successfully completed an initial public offering raising gross proceeds of US$54.1 million listing its shares on the TSX-Venture Exchange and on June 6, 2006, on the London Stock Exchange’s AIM market.
- On September 18, the Company entered into an innovative financing arrangement with Gemini Fund II, raising US$6.0 million in non-recourse funding related to the Company’s Athena well 14/18b-15.
- On December 19, 2006, the Company closed a second equity issue, raising gross proceeds of US$45.9 million.
- Property, plant and equipment increased from US$8.1 million at December 31, 2005, to US$40.3 million at December 31, 2006 primarily due to increased investment in the Company’s oil and gas properties.
- Working capital was significantly higher at December 31, 2006, at approximately $67.3 million versus $8.8 million for 2005.
- A net loss increased to approximately US$4.3 million in 2006 from approximately US$1.0 million in 2005. The loss reflects the Corporation’s increased evaluation, acquisition and exploration activity in the UK North Sea. The Corporation has been steadily increasing operations since the start of the year, and this has resulted in an increase in payroll, other administration costs and an increase in stock-based compensation expense.
- Ithaca began the year with 26,798,556 common shares outstanding; and as at December 31, 2006 it had 82,904,475 common shares outstanding.
Commenting on the 2006 results, Lawrie Payne, Chief Executive Officer, said:
"Ithaca has made a significant amount of progress in 2006. We successfully drilled and operated our first well at Athena, which has been cased for future production. We also acquired and are currently processing a significant amount of seismic data on several of the Company’s properties which is anticipated to provide future drilling opportunities. Ithaca has been well received by capital markets, successfully completing an Initial Public Offering and a second share placement, providing sufficient funds to capitalize on the opportunities available to the Company. We have also successfully farmed out a number of licenses, providing financial leverage while exercising risk management and retaining a strong equity position in each."
Brad G. Gunn, Ithaca Energy’s Chief Financial Officer commented:
"2006 was an enormous year for the Company. Assets grew by 537% and current assets grew by 648%. The financial and property assets established in 2006 places Ithaca in a strong position to develop further in 2007."
Ithaca Energy Inc. has filed its Annual Information Form for the year ended December 31, 2006, which includes the following reports required under National Instrument 51-101 Standard of Disclosure for Oil and Gas Activities: Form 51-101F1 Statement of Reserves Data and Other Oil and Gas Information; Form 51-101F2 Reports of Reserve Data by Independent Qualified Reserves Evaluators; and Form 51-101F3 Report of Management and Directors on Oil and Gas Disclosure. In addition to the Annual Information Form, the Company has also filed its Management Discussion and Analysis, and Audited Financial Statements. These documents can be found for viewing by electronic means on the System for Electronic Document and Analysis Retrieval at www.sedar.com.
Not for Distribution to U.S. Newswire Services or for Dissemination in the United States
The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.
Forward-looking statements
Some of the statements in this announcement are forward-looking. Forward-looking statements include statements regarding the intent, belief and current expectations of Ithaca Energy Inc. or its officers with respect to various matters. When used in this announcement, the words "expects", "believes", "anticipates", "plans", "may", "will", "should" and similar expressions, and the negatives thereof, are intended to identify forward-looking statements. Such statements are not promises or guarantees, and are subject to risks and uncertainties that could cause actual outcome to differ materially from those suggested by any such statements. These forward-looking statements speak only as of the date of this announcement. Ithaca Energy Inc. expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any change in its expectations with regard thereto or any change in events, conditions or circumstances on which any forward-looking statement is based.
In accordance with AIM Guidelines, Lawrie Payne, MA Marine Geology (Alberta & Columbia) and CEO of Ithaca Energy is the qualified person that has reviewed the technical information contained in this press release.
Enquiries:
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Ithaca Energy Inc:
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Office: |
Mobile |
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Lawrie Payne |
In London:
+44(0) 20 7590 3027 |
+44(0)7841 678668 |
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Brad Gunn |
In London:
+44(0) 20 7590 3026 |
+44(0)7920 019355 |
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In Calgary:
+1 (403) 668 9599 |
+1 (403) 389 4107 |
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Nabarro Wells & Co. Limited |
Office: |
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Marc Cramsie |
+44(0) 20 7710 7400 |
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| John Wilkes
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+44(0) 20 7710 7400 |
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Pelham Public Relations |
Office: |
Mobile |
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Charles Vivian |
+44(0) 20 7743 6673 |
+44(0)7977297903 |
| Philip Dennis
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+44(0) 20 7743 6363 |
+44(0)7947868206 |
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