Ithaca ups reserves estimate

Ithaca Energy, the Canadian oil and gas firm focused on the North Sea, said Challenger Minerals (CMI) is to pay a share of the costs of the initial well on the Hurricane discovery, as part of an earn-in agreement.The Hurricane discovery is in block 29/10b within the Ithaca operated Greater Stella development area of the North Sea. CMI will pay a share of the costs of the initial well in Block 29/10b, in return for which it has an option, exercisable no later than 90 days following abandonment or suspension of the initial appraisal and any sidetrack well, to take an interest in Block 29/10b. CMI will pay 40% of gross Hurricane initial appraisal well costs in exchange for a 31% equity interest in Block 29/10b, thereby carrying a part of Ithaca's share of all costs of drilling an initial appraisal well. In addition, upon successful appraisal, CMI will pay 40% of gross costs of a drill stem well test of any sidetrack. All additional costs, including those for planned sidetrack drilling, will be apportioned such that CMI shall pay its 31% pro rata share. Ithaca currently holds 100% equity interest in the Hurricane discovery and Block 29/10b.In a separate statement, Ithaca announced profit before tax US$38.04m in 2010, up from US$7.94m the year before, on revenues that surged to US$135.23m from US$110.81m in 2009."The company has transformed its financial position over the past year. Earnings of US$54million combined with a US$150 million equity raise have delivered a strong balance sheet with cash of over US$200 million. These resources, together with the Company's undrawn debt facility underpin the execution of the Company's ongoing development projects, Athena and Stella, and provide a platform from which to continue with the delivery of its successful asset acquisition strategy." Asserted Iain McKendrick, Ithaca's chief executive officer.The company said the estimate of proved plus probable (2P) reserves had been lifted to 46.1m barrels of oil equivalent from 37.2m barrels at the end of 2010.Net 2P reserves pre-tax net present value increased to US$912.37m from the end-2009 figure of US$768.35m. ---jh