Ithaca Energy acquires Challenger Minerals for $35 million

Ithaca Energy (LON:IAE) has boosted its interest in the Stella/Harrier fields through the acquisition of Challenger Minerals. The company has acquired the entire share capital of Challenger Minerals from Transocean Drilling U.K. for a consideration of $35 million - $25 million payable immediately and US$10 million upon approval of the Stella/Harrier Field Development Plan by the Department of Energy and Climate Change. The deal also gives Ithaca a non-operated interest in the producing Broom field and access to additional undeveloped North Sea discoveries. In detail the company has acquired through this transaction: An additional 18% interest in the Stella / Harrier fields. An 8% non-operated interest in the Broom producing field. Management estimate that net average production from Broom is currently approx. 470 barrels of oil per day (bopd), with net remaining proved plus probable reserves of approximately 0.9 million barrels of oil. A 10% interest in two undeveloped discoveries, Scolty and Torphins (Block 21/8a), located adjacent to the Forties field in the Central North Sea, plus a 10% interest in the nearby Crathes prospect (straddling Blocks 21/12c & 21/13a). Elsewhere the company agreed to has agreed to divest an interest in the Hurricane field to Dyas UK Limited. The company has also signed a contract letter of intent to secure a rig for drilling of the Hurricane appraisal well in early 2012. The Company has signed an agreement with Dyas to divest a 25.34% interest in Block 29/10b, which contains the Hurricane field, with an effective date of 1 January 2011. In consideration for the interest, Dyas will pay its pro-rata share of costs incurred since the effective date.

The transaction is subject to the submission for approval of a Stella/Harrier Field DECC. The Company has signed a rig contract letter of intent with Awilco Drilling plc to provide a semi-submersible drilling unit for the drilling of an appraisal well and performance of a well test on Hurricane commencing in Q1-2012. The company intends to manage the drilling of the well through turnkey arrangements. Ithaca has also concluded its development concept select process for the Greater Stella Area (GSA) fields, with the decision to create a production hub based on a floating production unit located over the Stella field. The GSA development concept involves the introduction of Petrofac as a new strategic partner; Petrofac is a global integrated energy services company listed in London on the FTSE 100 (LSE:PFC). The company will submit a Stella/Harrier Field Development Plan to the DECC at the end of 2011.