LONDON (Alliance News) - Ithaca Energy Inc Monday said it has entered a deal with Sumitomo Corp to acquire interests in three producing oil fields onshore and offshore in the UK for a total payment of USD170 million, providing a large increase in reserves and adding to its 2014 production guidance.
Ithaca didn't provide details of how it is financing the acquisition.
The North Sea oil and gas exploration and development company said the deal allows it to acquire a further 20% interest in the Cook field, bringing its total holding at the site to 61.346%, while it will also acquire its first 7.48% interest in the Pierce field and 7.43% interest in the Wytch Farm field.
The company said the deal represents an increase in its net proved and probable reserves by roughly 12.0 million barrels of oil equivalent, or 20%.
In all, the new assets produced roughly 2,500 barrels of oil equivalent per day in 2013, including a period of seven months in which the Pierce field was shut in order to modify and improve its floating production, storage and offloading vessel.
The company said the acquisition is expected to increase its 2014 production guidance by 2,500 barrels per day, to between 13,500 and 15,500 barrels per day.
Ithaca Energy added that integration of the new interests into its existing portfolio of assets is likely to have a positive impact on its average unit operating cost per barrel, which should remain broadly unchanged in 2014 but be reduced after that with the benefit of further production from the Pierce field.
"The transaction is directly in line with our strategy to further diversify and expand our producing asset portfolio," Ithaca Chief Executive Officer Les Thomas said in a statement. "Moreover, each of the assets has clearly defined upsides that provide the opportunity to generate significant additional value."
The company said the deal, which is subject to certain approvals, is expected for completion in the third quarter.
By Tom McIvor; tommcivor@alliancenews.com; @TomMcIvor1
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