UK: Ithaca Acquires Non-Operated Interests in Cook and MacCulloch Fields
Ithaca Energy Inc. announces that it has entered into agreements with Noble Energy Capital Limited (a subsidiary of Noble Energy Inc.) to acquire two wholly owned UK subsidiary companies that will hold non-operated interests in UK North Sea producing fields; a 12.885% interest in the Cook field and a 14% interest in the MacCulloch field.
o The acquisitions are forecast to result in net incremental production, predominantly oil, for the Company of approximately 1,100 barrels of oil equivalent per day (“boepd”) in 2012.
o The two fields are anticipated to increase the Company’s net proven and probable reserves by 3.4 million barrels of oil equivalent (“mmboe”), based on the effective date of the transactions of 1 January 2012.
o The total consideration is US$38.5 million, implying an acquisition cost of US$11.3 per barrel of proven and probable reserves.
o The acquisition is in line with the Company’s strategy of further diversifying and expanding its producing asset portfolio and accelerating the monetisation of its existing pool of UK tax allowances.
The Cook oil field, operated by Shell, lies in Block 21/20a in the Central North Sea. The field has been developed as a single well subsea tie-back to the Shell operated Anasuria floating production, storage and offloading vessel (“FPSO”), which serves as a host processing facility to several nearby fields, with oil exported from the FPSO via shuttle tankers and gas via pipeline to shore.
The acquisition will result in the Company increasing its existing Cook field interest from 28.46% to 41.345%, furthering its position as the field’s largest owner. Based on the independent reserves assessment performed by Sproule International Limited (“Sproule”), effective as of 31 December 2011, remaining net proved and probable reserves associated with the additional 12.885% interest (as of that date) are 2.0 mmboe.
The MacCulloch oil field, currently operated by ConocoPhillips, lies in Blocks 15/24b in the Central North Sea (transfer of field operatorship to Endeavour Energy UK Limited is pending completion of a previously announced transaction). The field is producing from four subsea wells tied back to the North Sea Producer FPSO, with processed oil and gas exported via pipelines to shore. Remaining net proved and probable reserves effective as of 31 December 2011 are estimated by Ithaca to be approximately 1.4 mmboe. An assessment of the field reserves will be performed by Sproule as part of the normal year end reserves evaluation exercise.
Net production from the two fields is anticipated to average 1,100 boepd over 2012, with the contribution from each field being broadly equal. This estimate takes into account actual field performance, including the impact of planned maintenance shutdowns on the fields and the anticipated operational performance of the fields over the remainder of the year (including a planned shutdown of approximately 15 days on the MacCulloch field in the final quarter of 2012). The fields are anticipated to contribute approximately the same level of net production in 2013.
Completion of the transactions is anticipated in early 2013 and is subject to normal regulatory and joint venture approvals, including reaching agreement in respect of decommissioning cost security.
The acquisition will be funded from Ithaca’s existing cash resources. At completion the consideration paid will be subject to normal industry adjustments to reflect the income and costs incurred since the effective date. The Company anticipates that the resulting net cash consideration payable at completion will be under US$30 million, based on the 1 January 2012 effective date and assuming completion occurs in early 2013. Following completion, the Company’s available tax allowances mean that the resulting net cash flow from the assets is forecast to deliver a rapid payback of the total consideration.
Iain McKendrick, Chief Executive Officer, commented:
“This is the Company’s first acquisition post the announcement of the new enlarged debt facility and is in line with the stated objective of acquiring producing reserves in the UKCS to both diversify the Company’s production base and accelerate the utilisation of existing tax allowances. I am particularly pleased to be acquiring the interests in these fields, where we see large potential production and reserve upsides. These acquisitions represent highly accretive and quick pay-back additions to our growing production base. The Company is cautiously optimistic of being able to add further asset acquisitions to its portfolio, given its efforts to continue driving forward the growth of the Company.”
Press Release, October 09, 2012; Image: Endeavour