Iona Energy Significantly Increases Kells Reserves
08 June 2012 - 2:23AM
Marketwired Canada
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
announce today that Gaffney Cline & Associates Ltd. ("GCA") has completed an
independent reserves report evaluating Iona's UK North Sea 100% owned Kells
development project effective as of March 31, 2012. GCA has determined, the
Pre-Tax Net Present Value, discounted at 10% ("NPV10"), of Kells Proved plus
Probable ("2P") reserves have increased to USD$358.4 million, up from USD$164.9
million as previously reported, an increase of more than 117%. Post-Tax NPV10
valuation of Kells 2P reserves increased from USD$88.4 million to USD$161.3
million, an increase of more than 82%. Based on the GCA report, Iona reports a
significant increase in Kells 2P reserves to 8.9 MMboe from the 6.6 MMboe
previously disclosed by Iona, an increase of 35%.
The addition of the Kells reserves to Iona's year end reserve report covering
Iona's interests in the Orlando Oil Field (35% Iona) and Trent & Tyne Gas Fields
(20% Iona), raises the Company's Proved plus Probable reserves from 6 MMboe to
14.9 MMboe with a summed total 2P Pre-Tax NPV10 reserve valuation up from
USD$182.69 million to USD$541.1 million (total summed 2P Post-Tax NPV10 reserve
values increased from USD$78.4 million to USD$239.7 million). See note (1) below
for further details.
Since October 31st 2011, the Kells Field Development Plan ("FDP") has been
revised by Iona. Both the FDP and Environmental Statement ("ES") were updated to
include two-phased production wells tied back through a subsea completion, and
have been submitted to the Department of Energy and Climate Change. Technical
and economic reserve inputs to the Final FDP have changed from those effective
at 31st of October 2011 based upon the enhanced two well development programme.
All references in this press release to the previously reported Kells reserves
and related information refer to those contained in the Kells reserves report
prepared by GCA effective as of October 31, 2011.
On submission of the Kells Field Development Plan, Iona engaged GCA to complete
an independent reserves report prepared in accordance with National Instrument
51-101 - Standards of Disclosure for Oil and Gas Activities evaluating Iona's
100% owned Kells project to reflect the revised development plan effective as of
March 31, 2012 using GCA's forecast costs and prices. Based on the findings in
the Report Iona can disclose an increase in 2P reserves by 35% from 6.6 to 8.9
MMboe, with additional High Case Contingent Resources ("3C") increasing from 3.4
to 7 MMboe through the employment of late field life water injection (both as
compared to the October 31, 2011 GCA Kells reserve report). The reserves and
contingent resource estimates for Kells Main Field as of March 31, 2012 given in
Table 1 below are provided by GCA.
TABLE 1
SUMMARY OF GROSS OIL & GAS RESERVES AND CONTINGENT RESOURCES
AS AT 31ST MARCH 2012
---------------------------------------------------------------------------
Proved+Probable+Possible
Proved 1P (MMbbl) Proved+Probable 2P(MMbbl) 3P (MMbbl)
---------------------------------------------------------------------------
2.6 4.2 5.2
---------------------------------------------------------------------------
Proved+Probable+Possible
Proved 1P (Bcf) Proved+Probable 2P (Bcf) 3P (Bcf)
---------------------------------------------------------------------------
4.6 28.0 33.1
---------------------------------------------------------------------------
1C Low Case (MMbbl) 2C Best Case (MMbbl) 3C High Case (MMbbl)
---------------------------------------------------------------------------
2.0 4.0 7.0
---------------------------------------------------------------------------
Table 2 given below summarizes GCA's evaluation of the Net Present Values of the
Proved, Proved plus Probable, and Proved plus Probable plus Possible Reserves
for Iona's 100% Working Interest in the Kells field. The dollar amounts
appearing in this table have been expressed in millions of USD (US$ MM).
TABLE 2
NET PRESENT VALUES APPLICABLE TO A 100% WORKING INTEREST
IN THE RESERVES OF THE KELLS FIELD DISCOUNTED AT (% PER YEAR) AS AT 31ST
MARCH, 2012
(US$MM) (BEFORE INCOME TAXES)
----------------------------------------------------------------------------
KELLS 0% 5% 10%
----------------------------------------------------------------------------
Proved Undeveloped 124.1 96.8 73.0
----------------------------------------------------------------------------
Total Proved 124.1 96.8 73.0
----------------------------------------------------------------------------
Probable 348.2 313.4 285.5
----------------------------------------------------------------------------
Proved+Probable 472.3 410.2 358.4
----------------------------------------------------------------------------
Possible 144.1 123.5 107.6
----------------------------------------------------------------------------
Proved+Probable+Possible 616.3 533.7 466.0
----------------------------------------------------------------------------
NET PRESENT VALUES APPLICABLE TO A 100% WORKING INTEREST
IN THE RESERVES OF THE KELLS FIELD DISCOUNTED AT (% PER YEAR) AS AT 31ST
MARCH, 2012
(US$MM) (AFTER INCOME TAXES)
----------------------------------------------------------------------------
KELLS 0% 5% 10%
----------------------------------------------------------------------------
Proved Undeveloped 90.2 67.4 48.4
----------------------------------------------------------------------------
Total Proved 90.2 67.4 48.4
----------------------------------------------------------------------------
Probable 129.2 120.2 112.9
----------------------------------------------------------------------------
Proved+Probable 219.4 187.6 161.3
----------------------------------------------------------------------------
Possible 54.7 47.0 40.9
----------------------------------------------------------------------------
Proved+Probable+Possible 274.1 234.6 202.2
----------------------------------------------------------------------------
Iona previously disclosed on April 30, 2012 that its year end reserves for the
Orlando and Trent & Tyne fields as of December 31, 2011 were:
-- Net 1P Reserves of 3.1 MMboe,
-- Net 2P Reserves of 6.0 MMboe, and
-- Net 3P Reserves of 8.3 MMboe, with a
-- Net 2P Reserves Before Tax Net Present Value, assuming a discount rate
of 10%, of USD$183 million.
With the addition of the new Kells reserves, Iona now has(1):
-- Net 1P Reserves of 6.5 MMboe,
-- Net 2P Reserves of 14.9 MMboe, and
-- Net 3P Reserves of 19.0 MMboe.
-- The corresponding value update as of March 31st 2012 sums Orlando (35%),
Trent & Tyne (20%), and Kells (100%) Net 2P Reserves Before Tax Net
Present Value, assuming a discount rate of 10%, to USD$541 million.
Note:
(1) Based on Orlando and Trent & Tyne reserves and net present value information
prepared by GCA (using forecast prices and costs) as of December 31, 2011 and on
Kells reserves and net present value information prepared by GCA (using forecast
prices and costs) as of March 31, 2012.
It should be noted that on March 21st, 2012 it was announced by the UK
Government that the "Small Field Allowance" would increase from GBP 75 million
to GBP 150 million and that this positive tax effect has not been applied as yet
to any of Iona's qualifying properties. As an indication to the impact on the
Kells Project, GCA were able to provide an estimate to Iona that the After Tax
Net Present Value improvement would be approximately USD$28 million, at today's
current foreign exchange rates.
Iona's Chief Executive Officer, Neill Carson commented: "This reserve increase
in Kells is a good example of the lower risk nature of our assets, where we can
add significant value into the Company through acquisition, and also increase
that value through improved plans for development and operational traction. We
are also looking forward to the completion on our executed Sales and Purchase
agreement for 58% of the West Wick Oil Field acquisition such that these
reserves can also be reported as significant additions to our portfolio."
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.
Forward-looking statements
Some of the statements in this announcement are forward-looking, including
statements regarding Iona's plans with respect to development of the Kells
property, anticipated effects of the UK small field allowance, estimates of the
quantities of proved reserves, probable reserves, possible reserves and
contingent resources, 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 Kells reserves, production, 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. 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.
"Contingent Resources" is defined in the Canadian Oil and Gas Evaluation
Handbook as those quantities of petroleum estimated, as of a given date, to be
potentially recoverable from known accumulations using established technology or
technology under development, but which are not currently considered to be
commercially recoverable due to one or more contingencies. Contingencies may
include factors such as economic, legal, environmental, political, and
regulatory matters, or a lack of markets. It is also appropriate to classify as
contingent resources the estimated discovered recoverable quantities associated
with a project in the early evaluation stage. Contingent resources are further
classified in accordance with the level of certainty associated with the
estimates and may be subclassified based on project maturity and/or
characterized by their economic status.
The contingencies precluding the contingent resources for the Kells field from
being classified as reserves include the current absence of the water injection
well from Iona's draft FDP for the development of Kells. A decision by Iona to
proceed with a water injection well would be based upon the economics and the
performance of the initial production well.
The contingent resources estimates are estimates only and the actual results may
be greater than or less than the estimates provided herein. There is no
certainty that it will be commercially viable or technically feasible to produce
any portion of the resources.
Additionally, this press release uses certain abbreviations as follows:
Oil and Natural Gas Liquids Natural Gas
----------------------------------------------------------------------------
bbls barrels Bcf billion cubic foot
MMbbls millions of barrels MMcf million cubic feet
MMboe million barrels of oil equivalent
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