CALGARY, ALBERTA--(Marketwire - July 16, 2012) -
NOT FOR DISTRIBUTION TO UNITED STATES NEWS WIRE SERVICES OR DISSEMINATION IN UNITED STATES
Iona Energy Inc. ("Iona" or the "Company") (TSX VENTURE:INA) is pleased to provide an operational and corporate update following the recent completion of the acquisition of Sorgenia E&P (UK) Ltd. and MPX North Sea Limited's combined 65% interests in the Orlando Oil Development ("Orlando").
- Drilling of Tyne T5z development gas well to commence at end of July;
- Obtained an extension on West Wick oil field Purchase and Sale Agreement, expected to close before end of August, which will take Iona's total Proved plus Probable ("2P") reserves to 32MMboe with a Pre-Tax NPV10 of USD$1.19 billion;(1)
- A total portfolio, operational and engineering review has led to the decision to advance the development of the Orlando oil field ahead of the Kells oil and gas field;
- Re-engineered Field Development Plan ("FDP") at Orlando to provide management estimated peak flow rates above 14,000 barrels of oil per day ("bopd");
- The Company has entered into discussions with potential partners to share in the development of the Orlando and Kells assets;
- Current cash position of $94MM; and
- Iona has submitted a number of targeted bids in the UK's 27th Licensing Round for additional proved undeveloped discoveries.
Trent & Tyne
The Company's net production from its 20% owned Trent & Tyne gas fields averaged over 2.3 million cubic feet per day ("MMcf/d") in the second quarter with average realized gas prices over that period of $8.67/per mcf (55p/therm). The operator of Tyne, Perenco, has informed the Company that the Ensco 80 jack-up rig is expected to arrive at the end of July to commence drilling of the T5z production sidetrack well. Drilling operations are expected to take up to 75 days to complete. On success, management expects production from Trent and Tyne to increase from 2.3 MMcf/d to 8 MMcf/d net to Iona (20% W.I.).
As of July 10, 2012 the Company sought and received a completion date extension to its previously announced Purchase and Sale Agreement. All partner consents have been received and the Company expects to receive UK Department of Energy and Climate Change ("DECC") approval of the license transfer within the next 45 days.
Orlando and Kells
As part of the Orlando acquisition, Iona performed an engineering and portfolio review of the operator's development plans and its own development plans at Kells to determine the optimal go forward program. As a result, it was determined the ideal sequencing put the Orlando development ahead of the Kells development. The results of the review were driven by several factors, including:
- Orlando is expected to deliver higher net revenue due to greater initial Brent oil production (Orlando 14,000 bopd vs. Kells 5,800 bopd);
- Preferential alignment with CNRL International Limited's ("CNRL") work program at Orlando's tie-back host, the Ninian Central Platform ("NCP"), during its planned maintenance shutdown window in August and September;
- First Orlando development well is currently suspended awaiting re-entry and bottom-hole completion;
- In addition to contracted Ocean Nomad rig, Iona is currently negotiating with multiple rig owners for a second rig slot;
- Delay in the expected arrival of the Ocean Nomad semi-submersible drilling rig to drill the development well at Kells.
The Orlando Environmental Statement and consultation with DECC is now complete. A re-engineered Orlando FDP is being finalized for submission. Optimized engineering for Orlando will provide peak capacity above 14,000 bopd. The Company has also secured two subsea Xmas trees and additional subsea equipment and services to advance the Orlando development. The Company expects to receive final DECC FDP approval in the third quarter of 2012.
The Kells oil and gas FDP has been submitted to DECC. The FDP submission reflects a recently reported 2P reserve upgrade by Iona's reserve evaluators, Gaffney Cline & Associates Ltd. ("GCA") from 6.6 to 8.9MMboe.(2) Engineering work is ongoing on the NCP for the Kells production entry point and processing stream. Iona has secured two subsea Xmas trees for Kells. Management expects to receive final DECC FDP approval early in the first quarter of 2013.
In light of its acquisition of the remaining interest in the Orlando development and corresponding planned capital expenditures, the Company is in the process of seeking aligned partners to share in the development of both the Orlando and Kells assets. The Company does not intend to issue further equity to fund these developments.
In addition to $94MM of cash on hand, the Company continues to work with its lenders to close its previously announced USD$130MM credit facility. Management believes it can increase its go forward credit capacity.
(1) Based on reserves and net present value information attributed to Iona's interests in the Orlando and Trent & Tyne fields by GCA, using forecast prices and costs effective as of December 31, 2011 (as disclosed in Iona's Form 51-101F1 for the year ended December 31, 2011.), together with reserves and net present value information attributed to Iona's interests in the Kells and West Wick fields by GCA, using forecast prices and costs effective as of March 31, 2012. Barrels of oil equivalent (boes) are based on a conversion ratio of 6 mcf per bbl for natural gas.
(2) Based on reserves attributed to the Kells field by GCA effective as of March 31, 2012 (as disclosed in Iona's June 7, 2012 press release.).
Additional information relating to the Company is available on SEDAR at www.sedar.com.
About Iona Energy:
Iona is an oil and gas exploration, development and production company focused on oil and gas development and exploration in the United Kingdom's North Sea.
Some of the statements in this announcement are forward-looking, including statements regarding the completion and timing of the West Wick acquisition, Iona's plans with respect to development of the Orlando property, expected drilling results from Iona's properties, estimates of the quantities of proved reserves, probable reserves, and possible reserves, as well as estimates of the net present value of future net revenue of proved reserves, probable reserves, and possible reserves. Forward-looking statements include statements regarding the intent, belief and current expectations of Iona Energy Inc. or its officers with respect to various matters, including reserves, production, first oil, drilling activity or otherwise. When used in this announcement, the words "expects," "believes," "anticipate," "plans," "may," "will," "should", "scheduled", "targeted", "estimated" and similar expressions, and the negatives thereof, are intended to identify forward-looking statements. Such statements are not promises or guarantees, are based on various assumptions by Iona's management and are subject to risks and uncertainties that could cause actual outcome to differ materially from those suggested by any such statements, including without limitation, the risk that Iona does not complete the West Wick acquisition for any reason, the risk that Iona's development plans change as a result of new information or events, and the risk that drilling results differ materially from management's current estimates. These forward-looking statements speak only as of the date of this announcement. Iona 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 except as required by applicable securities laws.
Notes Regarding Oil and Gas Disclosure
As used in this press release, "boe" means barrel of oil equivalent on the basis of 6 mcf of natural gas to 1 bbl of oil. Boes may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
It should not be assumed that the present worth of estimated future net revenue represents the fair market value of the reserves disclosed in this press release. The reserve and related revenue estimates set forth in this press release are estimates only and the actual reserves and realized revenue may be greater or less than those calculated. The estimates of reserves and future net revenue for individual properties may not reflect the same confidence level as estimates of reserves and future net revenue for all properties, due to the effects of aggregation.
As used in this press release, "possible reserves" are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.
Additionally, this press release uses certain abbreviations as follows:
|Oil and Natural Gas Liquids||Natural Gas|
|bbls||barrels||mcf||thousand cubic feet|
|MMbbls||millions of barrels||MMcf||million cubic feet|
|MMboe||million barrels of oil equivalent||Bcf||billion cubic feet|
|bopd||barrels of oil per day|
Neill A. Carson
Chief Executive Officer
+011 (44)(0)1224 228400
Iona Energy Inc.
Brad G. Gunn
Chief Financial Officer