Ithaca starts production at Jacky and Beatrice

2009-04-06 05:41 ET - News Release

Mr. Iain McKendrick reports

ITHACA ENERGY INC. FIRST OIL FROM THE JACKY FIELD AND RESUMPTION OF PRODUCTION FROM BEATRICE BRAVO FACILITY

Ithaca Energy Inc. and its wholly owned subsidiary Ithaca Energy (UK) Ltd. has commenced oil production from the Jacky oil field and restarted production from the Beatrice Bravo facility, as planned.

Initial production rates from the Jacky well and the Bravo facility are in line with expectations. Stabilized rates will be established and announced shortly. It is anticipated that Jacky and Beatrice production will average approximately 10,000 barrels of oil per day gross during the course of 2009.

Co-venturers in Jacky are Ithaca Energy (UK) Ltd. (67.275 per cent) Dyas UK Ltd. (22.725 per cent) and North Sea Energy (UK) Ltd. (10 per cent).

Evaluation of Jacky field performance will lead to a decision, during 2009, on drilling a further well or wells. An independent evaluation of reserves by Sproule assigns gross proven and probable reserves of 5.1 million barrels to that field.

Iain McKendrick (chief executive officer) said:

"This is a very significant achievement and a milestone for the company. Ithaca can now look forward to substantial cash flows from its producing fields, which will then feed through to development activity at the recently discovered Carna gas field and to further appraisal activity on our strategically important Stella field in the Central North Sea later this year.

"The Jacky development has been the major focus of the company's operational activity over the last 18 months. Our thanks go to the Ithaca development team, all contractors, the team on Beatrice Alpha, the field co-venturers and the U.K. authorities for helping to bring this development to fruition in a difficult time for the oil industry in general and for small independent companies in particular.

"With Wood Group managing the offshore operations and delivering continuing improvements in Beatrice production rates, we are also pleased to see the increase in activity that our presence has generated in the local economy around Nigg and the Moray Firth."

The Jacky field was discovered in April, 2007, and development approval was granted by the U.K. authorities in November, 2008. This field is located in block 12/21c in the U.K. continental shelf, approximately 12 miles from the Moray Firth coastline and six miles from the Beatrice oil field (held by Ithaca 74.75 per cent and Dyas 25.25 per cent). Jacky has been developed with a single production well, tied in through a normally unmanned wellhead platform, constructed by HSM Steel Structures BV, then via a subsea pipeline, installed by Subsea 7 Ltd., to the Beatrice Alpha production facility. From there Jacky production is exported, along with Beatrice oil, to the Nigg oil terminal in the Cromarty Firth (also held by Ithaca 74.75 per cent and Dyas 25.25 per cent).

As part of the same field development activity, Ithaca has restarted production from the Bravo facility within the Beatrice field. This platform was shut in by the previous field owners, approximately two years ago due to pipeline integrity issues. Ithaca has replaced the pipeline and installed a water injection pipeline to improve oil recovery from the northern end of the Beatrice field.

In accordance with AIM guidelines, Lawrie Payne, MA, marine geology (Alberta and Columbia) and chairman of Ithaca Energy, is the qualified person that has reviewed the technical information contained in this press release.

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