Ithaca Energy Inc. (TSX: IAE, LSE AIM: IAE) ("Ithaca" or the "Company") announces completion of flow test operations on the second development well on the Stella field and provides an update on Greater Stella Area ("GSA") development activities.
Les Thomas, Chief Executive Officer, commented:
"The excellent results of the A2 well represent another important step in de-risking the forecast production from the Stella field and realising the significant shareholder value that lies within the Greater Stella Area. Whilst the FPF-1 modification works are now forecast to take longer than initially anticipated, the new processing facilities being installed on the vessel will ensure that a high quality production facility is deployed at the centre of the GSA hub."
Well 30/6a-A2Z ("A2") is the second of four development wells that are to be drilled on the Stella field prior to the start-up of production. The well was drilled to a total measured depth subsea of 14,455 feet, with a 3,123 foot horizontal reservoir section completed in the Palaeocene Andrew sandstone reservoir, within the targeted oil rim of the field.
The reservoir quality encountered by the well was in line with previous appraisal wells drilled on the field. The well intersected a net reservoir interval of 2,514 feet (81% net pay).
As with the first Stella development well, "A1", a clean-up flow test has been performed on the A2 well in order to effectively remove the drilling fluids used to complete the well and gain additional reservoir data and fluid samples.
The well flowed at a maximum rate of 10,442 boepd on a 44/64-inch choke, with the full production potential of the well limited by the capacity of the well test equipment on the drilling rig. Fluid samples show that the oil is of high quality, approximately 39° API.
The maximum flow rate of 10,442 boepd comprised 7,281 bopd of oil and 19 MMscf/d of associated gas. This compares to the results of the "A1" well completed in late September 2013, which achieved a maximum flow rate of 10,835 boepd (6,499 bopd and 26 MMscf/d) on a 56/64-inch choke. The proportionately higher A2 oil rate is driven by the location of the well entirely within the oil rim of the field.
The test results achieved on the first two Stella development wells substantially de-risk the initial annualised production forecast for the GSA hub of approximately 30,000 boepd (100%), 16,000 boepd net to Ithaca, which was announced at the time the development concept was selected in October 2011.
The A2 well is in the process of being suspended. The suspension configuration is such that the well can be brought on to production without the requirement for any further well intervention activity once the FPF-1 is on location and hooked up.
Following completion of the well suspension operations the ENSCO 100 will be moved approximately three kilometres to the Stella northern drilling centre location to drill the third and fourth development wells.
A2 drilling operations were executed according to plan, with only the harsh weather conditions that have recently effected operations across the North Sea slowing the completion of the scheduled flow test.
The high-spec ENSCO 100 heavy duty jack-up drilling rig that is being used for the GSA development drilling campaign commenced operations on the Stella field in June 2013. Management of the drilling and completion operations is being performed by Applied Drilling Technology International ("ADTI") under "turnkey" contract arrangements.
Subsea Infrastructure
The 2013 subsea infrastructure installation programme was successfully closed out in November 2013. The main subsea structures for the production and export of hydrocarbons (the manifolds and riser bases), the 60km gas export pipeline and the infield flowlines and umbilicals have all been installed and the associated diver tie-in works completed during the 2013 campaign. This means that approximately 65% of the overall subsea work programme has now being completed; corresponding to a total of over 220 vessel days in 2013.
Planning for the 2014 subsea infrastructure campaign is well advanced, with the key workscopes to be completed involving the tie-in of the wells, installation of the dynamic flexible risers and umbilicals that will connect the riser bases to the FPF-1, the vessel mooring spread and the oil export facilities.
Execution of the main subsea infrastructure manufacturing and installation programme is being completed by Technip under an integrated Engineering, Procurement, Installation and Construction contract.
FPF-1 Modification Works
The forecast duration of the FPF-1 modifications work indicates that first hydrocarbons from the GSA hub is now anticipated to be at the end of 2014. The extended duration of the works is attributable to the longer than estimated time required to install the new, rather than refurbished, oil and gas processing plant on the vessel. While this is now scheduled to take longer than if the original equipment on the FPF-1 had been re-used, the new facilities are designed to ensure that a quality vessel capable of achieving high operational uptime performance is deployed on the hub.
The current focus on the FPF-1 modifications programme is the preparation of the main deck and construction of the pre-assembled processing plant units for lifting on to the vessel in the first quarter of 2014. The units will contain structural steel, pipework spools, cable trays and equipment that will make up key elements of the topsides processing plant on the vessel. All the key long lead pieces of processing plant equipment that will be installed within and alongside the units are now on location at the Remontowa yard.
Execution of the FPF-1 modifications work programme is being performed by Petrofac under the terms of a lump sum incentivised contract with the GSA co-venturers.
Greater Stella Area Development Strategy
Ithaca's focus on the GSA is driven by the monetisation of reserves within the existing portfolio and the generation of additional value via the wider opportunities provided by the range of undeveloped discoveries surrounding the production hub.
The development involves the creation of a production hub based on deployment of the FPF-1 floating production facility located over the Stella field, with onward export of oil and gas. The FPF-1 will serve as the processing hub for production from the Stella and Harrier fields, plus potential incremental production from Hurricane and other tie-back opportunities in the area.
Ithaca's GSA joint venture partners are Dyas UK Limited (25.34%), a long established privately owned North Sea oil and gas producer, and Petrofac GSA Limited (20%), a subsidiary of Petrofac plc, the leading international oil and gas services provider listed in the FTSE 100 in London.
Source: Ithaca Energy Inc.
