UK: Ithaca Expects its Daily Production in 2011 to be Between 5500 and 6000 boepd

Ithaca Energy Inc.announces combined sales for the first quarter totalled 314,340 barrels of oil equivalent (“boe”) net to Ithaca. The Company’s sales volumes in Q1 2011 include contributions from the Beatrice and Jacky oil fields and from the Anglia and Topaz gas fields and are summarised as follows:

Q1 2011 Net to Ithaca (boe)

January 131,796

February 112,051

March 70,493

Average net sales were 3,493 boe per day. As previously notified, this figure is approximately 20% below the net average daily target for Q1 due to mechanical issues with the drilling mud handling system on the contracted  rig, the Energy Enhancer(photo), drilling the J03 well, and mechanical failure of a downhole packer in the Beatrice Alpha A28 workover well. As previously announced, drilling of the J03 well has now recommenced. Operations to rerun the A28 completion have progressed; a replacement downhole packer has been successfully ‘set’ and the final stage of re-commissioning the well is underway. The average realised price for oil sales in January and February was $107.40 per barrel (prior to hedging and any uplift at point of sale). Deliveries of oil for March are currently being priced.

The average realised price for gas production from Anglia and Topaz was 44.85 pence per therm ($7.56 per thousand standard cubic feet (‘mcf’)). In order to benefit from the recent rise in oil price, Ithaca purchased a ‘Put  Option’ with a floor price of $105 per barrel for 804,500 barrels of oil for the period March to December 2011. The ‘Put Option’ delivers a minimum price on the specified volume of oil and leaves the Company to benefit from any oil price upside above $105 per barrel.

Management anticipates that net sales will be increased in the second quarter by a sequence of operations that are scheduled to complete including an assumed successful Jacky second production well and the completion of  workovers at Beatrice Alpha. Management continues to anticipate net average production for 2011 to be between 5,500 to 6,000 boepd net to Ithaca subject to a successful J03 well and Athena start up in November 2011. Further to the recent announcement of the acquisition of assets from Hess Limited, the Company will add production upon completion of that transaction, anticipated in Q3 2011.

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Source:Ithaca , April 7, 2011