Iona Energy Announces Production Operational Update and Reserves Information
13 June 2013 - 6:45AM
Marketwired Canada
NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR DISSEMINATION IN
UNITED STATES
Iona Energy Inc. (TSX VENTURE:INA) ("Iona" or the "Company") is pleased to
provide an operational update regarding production and reserves and that gas
compression has commenced at the Huntington Field.
Huntington and Corporate Production
On June 5th, 2013, first gas was exported from the Huntington Field, of which
Iona owns a 15% working interest and a 2.55% royalty interest. Production from
Huntington on June 7th was approximately 10,500 boepd gross (1,842 boepd net to
Iona including the royalty interest).
Production has been steady since gas compression commenced and is expected to
continue to increase until it reaches the predetermined Floating Production
Storage and Offloading unit capacity of 30,000 bbls/d of oil and 27 MMcf/d by
the end of June 2013. As a result of the aforementioned, Iona has reached a new
production record of approximately 3,464 boepd, which is expected to increase to
over 7,500 boepd as Huntington reaches production capacity.
The working interests in the Huntington field are E.ON Ruhrgas UK E&P (25%
Operator), Premier Oil plc (40%), Norwegian Energy Company ASA (20%), and Iona
(15%). In addition to the working interest, Iona holds a gross overriding
royalty of 2.55% of the total Huntington production, payable from the Huntington
Joint Venture Partners.
Corporate Reserves
The Company is also pleased to announce that independent reserves evaluator
Gaffney, Cline & Associates Ltd. ("GCA") has completed its evaluation of Iona's
interest in the Huntington property. GCA evaluated, effective as of December 31,
2012, the reserves and net present values of future revenue associates
therewith, and using forecast prices and costs. The proved and probable reserves
from Huntington net to Iona based on a 15.75% interest (15% working interest and
0.75% differential lifting entitlement) are 4.58 MMboe (4.14 MMbbls of oil and
2.64 Bcf of gas), not including the additional royalty interest of 1.8%., the
results of which are integrated into Iona's full portfolio as set forth below.
Readers should note that these figures are based on the approved field
development plan for Huntington and do not take full account for the recent
development drilling results on the property. Iona expects to provide a further
update on the reserves associated with Huntington later in 2013 once production
results associated with Huntington's expected maximum production capacity have
been analyzed. Also, the updated reserves and net present values listed below
accurately reflect Iona's current working interests in its Orlando and Kells
properties. The previously disclosed reserve report (released April 30th, 2013)
included Orlando and Kells reserves and net present values at 100% working
interest, while the figures below reflect a 75% working interest.
Specifically, the changes from Iona's reserve report released on April 30, 2013
and the figures below are as follows (gas converted to barrels of oil equivalent
by Iona at 6,000 cubic feet per 1 barrel of oil):
-- Proved pre-tax net present value 10% increased from US$483.38 million to
US$620.59 million, up 28%.
-- Proved plus probable pre-tax net present value 10% increased from
US$1,184.64 million to US$1,255.94 million, up 6%.
-- Proved post-tax net present value 10% increased from US$293.03 million
to US$408.15 million, up 39%.
-- Proved plus probable post-tax net present value 10% increased from
US$643.91 million to US$755.31 million, up 17%.
-- Adjusting for Orlando and Kells working interest adjustment proved
reserves increased from 15.2 MMboe to 18.8 MMboe, up 24%.
-- Adjusting for Orlando and Kells working interest adjustment proved plus
probable reserves increased from 29.7 MMboe to 34.3 MMboe, up 15%.
SUMMARY OF IONA INTEREST RESERVES (CUMULATIVE) GCA FORECAST PRICES AND ESCALATED
COSTS AS AT 31ST DECEMBER, 2012
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Company Interest Oil &
Condensate
Reserves
MMbbls
------------------------------
Proved
plus
Proved Probable
plus Plus
Field Proved Probable Possible
---------------------------------------------------------------------------
Orlando 5.87 11.53 16.17
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West Wick 5.10 9.71 12.18
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Kells 1.42 3.15 3.86
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Trent & Tyne - 0.01 0.01
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Huntington 3.31 4.14 4.85
---------------------------------------------------------------------------
Total 15.70 28.54 43.08
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Company Interest Gas Reserves
Bcf
------------------------------
Proved
plus
Proved Probable
plus Plus
Field Proved Probable Possible
---------------------------------------------------------------------------
Kells 14.75 20.65 24.83
---------------------------------------------------------------------------
Trent & Tyne 1.94 11.43 14.90
---------------------------------------------------------------------------
Huntington 2.08 2.64 3.15
---------------------------------------------------------------------------
Total 18.77 34.72 42.88
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NET PRESENT VALUES AGGREGATED NORTH SEA ASSETS AS AT 31ST DECEMBER, 2012 (US$ MM)
Pre-Tax
---------------------------------------------------------------------------
0% 5% 10% 15% 20%
---------------------------------------------------------------------------
Proved Developed Producing 7.90 8.23 8.48 8.66 8.79
---------------------------------------------------------------------------
Proved Developed Non-Producing 278.90 265.70 253.19 241.48 230.60
---------------------------------------------------------------------------
Proved Undeveloped 724.19 507.56 358.92 254.70 180.21
---------------------------------------------------------------------------
Total Proved 1,010.99 781.49 620.59 504.84 419.60
---------------------------------------------------------------------------
Probable 1,179.00 848.07 635.35 491.79 390.78
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Proved + Probable 2,189.99 1,629.56 1,255.94 996.62 810.38
---------------------------------------------------------------------------
Possible 909.42 579.81 398.60 289.95 220.15
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Proved + Probable + Possible 3,099.41 2,209.37 1,654.54 1,286.57 1,030.53
---------------------------------------------------------------------------
Post-Tax
---------------------------------------------------------------------------
0% 5% 10% 15% 20%
---------------------------------------------------------------------------
Proved Developed Producing 7.90 8.23 8.48 8.66 8.79
---------------------------------------------------------------------------
Proved Developed Non-Producing 176.15 171.00 165.63 160.27 155.05
---------------------------------------------------------------------------
Proved Undeveloped 498.26 341.47 234.04 158.92 105.47
---------------------------------------------------------------------------
Total Proved 682.31 520.70 408.15 327.85 269.31
---------------------------------------------------------------------------
Probable 637.03 460.69 347.16 270.38 216.20
---------------------------------------------------------------------------
Proved + Probable 1,319.34 981.39 755.31 598.23 485.52
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Possible 356.09 234.20 164.78 121.84 93.56
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Proved + Probable + Possible 1,675.43 1,215.59 920.09 720.06 579.08
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Notes:
1. Iona's Interest reserves are based upon a 75% working interest in
Orlando.
2. Iona's Interest reserves are based upon a 58.73% working interest in
West Wick.
3. Iona's Interest reserves are based upon a 75% working interest in Kells.
4. Iona's Interest reserves are based upon a 20% working interest in Trent
& Tyne.
5. Iona's Interest reserves are based upon a 15% working interest plus a
0.75% royalty in Huntington.
6. In addition to the above working interest in Huntington, Iona receives
an additional 1.8% revenue interest payable less certain cost deductions
which is included in the above NPV estimates.
7. The post-tax net present value of Iona's oil and gas properties here
reflects the tax burden on the properties on a stand-alone basis. It
does not consider the business-entity-level tax situation, or tax
planning. It does not provide an estimate of the value at the level of
the business entity, which may be significantly different. The financial
statements and management's discussion & analysis (MD&A) of Iona should
be consulted for information at the business entity level.
8. In addition to the items set forth in the table below, key assumptions
for post-tax net present value of Iona's oil and gas properties include
the utilization of existing tax pools, the application of the recently-
enacted U.K. small field allowance to Iona's interest in the Kells
field, and use of GCA's forecast prices and costs. No other adjustments
have been made for cash balances, inventories, indebtedness or other
balance sheet effects.
FUTURE NET REVENUE PERTAINING TO IONA'S NORTH SEA INTERESTS UNDISCOUNTED AS AT
31ST DECEMBER, 2012 (US$ MM)
---------------------------------------------------------------------------
Before After
Tax Net Income Tax Net
Revenue Royalty OPEX CAPEX ABEX Revenue Taxes Revenue
---------------------------------------------------------------------------
Proved 1,792.31 5.84 303.59 393.88 78.02 1,010.99 328.67 682.31
---------------------------------------------------------------------------
Proved +
Probable 3,325.31 18.20 523.07 470.68 123.36 2,189.99 870.65 1,319.34
---------------------------------------------------------------------------
Proved +
Probable
+
Possible 4,355.13 21.46 635.58 470.68 128.00 3,099.41 1,423.97 1,675.44
---------------------------------------------------------------------------
Notes:
1. OPEX = Operating Costs, CAPEX = Development Capital Costs, ABEX =
Abandonment Costs.
2. Royalty is payable to Fairfield Energy on production from the Kells
Field.
3. The table shows minor rounding errors.
4. Iona's Interest Reserves are based upon a 15% Working interest plus a
0.75% royalty in Huntington.
5. In addition to the above Reserves Interest, Iona receives an additional
1.8% revenue interest payable less certain cost deductions in
Huntington, which is included in the above NPV estimates.
6. The post-tax net present value of Iona's oil and gas properties here
reflects the tax burden on the properties on a stand-alone basis. It
does not consider the business-entity-level tax situation, or tax
planning. It does not provide an estimate of the value at the level of
the business entity, which may be significantly different. The financial
statements and management's discussion & analysis (MD&A) of Iona should
be consulted for information at the business entity level.
7. In addition to the items set forth in the table above, key assumptions
for post-tax net present value of Iona's oil and gas properties include
the utilization of existing tax pools, the application of the recently-
enacted U.K. small field allowance to Iona's interest in the Kells
field, and use of GCA's forecast prices and costs. No other adjustments
have been made for cash balances, inventories, indebtedness or other
balance sheet effects.
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 estimates of the quantities of reserves, associated net
present values of future revenue therefrom, and contingent resources in the
Huntington field. 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 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, including the
assumption with respect to the timing and effects of commissioning gas
compression systems for Huntington which are beyond Iona's control, 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 of unanticipated delays impacting production rates at
Huntington. 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
boepd barrels of oil equivalent per day
bopd barrels of oil per day
FOR FURTHER INFORMATION PLEASE CONTACT:
Iona Energy Inc.
Neill A. Carson
Chief Executive Officer
+44 1224 228400
Iona Energy Inc.
Graham A. Heath
Interim Chief Financial Officer
+44 7508 936982
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