Iona Energy Inc. Announces 2012 Financial Results and Year End Reserves
Press Release: Iona Energy Inc. – 10 hours ago
finance.yahoo.com
CALGARY, ALBERTA--(Marketwired - Apr 29, 2013) -
NOT FOR DISTRIBUTION TO UNITED STATES NEWS WIRE SERVICES OR DISSEMINATION IN UNITED STATES
Iona Energy Inc. ("Iona" or the "Company") (TSX VENTURE:INA) announces its financial results for the twelve months ended December 31, 2012 and the Company's independently evaluated reserves as of the same date.
HIGHLIGHTS FOR THE YEAR ENDED DECEMBER 31, 2012
Financial
Closed a CAD$92 million equity financing of common shares in April 2012. No short or long term debt as at December 31, 2012 (December 31, 2011 - CAD$Nil). Total assets of CAD$203.5 million (December 31, 2011 - CAD$72.1 million). Net loss of CAD$10.6 million for the year (2011 - CAD$5.1 million).
Operational
The Trent and Tyne average production rate over the first 6 months of 2012 was 2.4 MMscf/d. Following the annual shutdown, the average monthly rate reached 2.8 MMscf/d. The average yearly rate was 1.9 MMscf/d, mainly due to the production outage for the annual shutdown The average realized gas price for the year was strong at $9.05/mscf. During August 2012, the Ensco 80 jack-up rig commenced operations to side-track the Trent & Tyne T6 production gas well with first gas from the well achieved in January 2013. Completion of the Orlando well and side-track in April 2013 with better than expected results. The Company performed an engineering and portfolio review and advanced Orlando development ahead of the Kells Development. Installed process isolation valving and pipework on Ninian Central to allow future hook up and tie in of Orlando without need for shutdown of host platform process. Completed the Orlando Environmental Statement and consultation with the Department of Energy and Climate Change ("DECC") and obtained final Field Development Approval on April 16, 2013. Iona was awarded three UK North Sea Blocks at 100% working interest, including two oil discoveries from DECC in the 27th Licencing Round. The three awarded Blocks, 3/7c (part), 3/8c, and 3/12 (part), are located in the Northern North Sea, to the south-west of the Ninian field and immediately adjacent to Iona's 100% Block 3/8d which includes the to-be-developed "Kells" Oil and Gas field and the "Ossian" Oil discovery.
Acquisitions
Completed the acquisition of the 100% operated interest in the Kells field in the first quarter. Exploration operatorship application was approved by DECC and the Company submitted an FDP and Environmental Statement to DECC during the year. Completed the purchase of its partners' interests, MPX North Sea Limited ("MPX") (30%) and Sorgenia E&P (UK) Ltd ("Sorgenia") (35%), in the Orlando Oil field during the third quarter of 2012 in exchange for the payment of historical costs and future payments out of production. Completed the acquisition of an operated 58.73% interest in U.K. Block 13/21a containing the West Wick Oil Field from Centrica Venture Production Company ("CVPC") in the third quarter. On December 28, 2012, the Company entered into a definitive Sale and Purchase Agreement with Carrizo Oil & Gas, Inc. ("Carrizo") to acquire the entire share capital of its wholly owned subsidiary, Carrizo UK Huntington Ltd ("Carrizo UK"), including its 15% interest in License P1114 of UK North Sea Block 22/14b including the near-producing Huntington oil field development ("Huntington"). The deal completed on February 22, 2013.
Corporate
Mr. Alan Curran joined the Company as Chief Operating Officer in March 2012. In March 2012, the UK Government doubled the Small Field Allowance ("SFA") tax shelter from £75 million to £150 million, which is expected to benefit Iona but has not yet been applied to any of Iona's qualifying properties. Iona's Orlando and Kells fields will each qualify for SFA, representing a total of £300 million of supplementary charge tax shelter. 17,280,000 and 150,000 stock options were granted during the second and third quarters of 2012 respectively. During September 2012, the UK Government announced the Brown Field Allowance ("BFA"), which is a new tax relief to encourage investment in older oil and gas fields. The BFA will shield up to £250m of income in qualifying brown field projects, or £500m for projects in fields paying Petroleum Revenue Tax, from the 32% Supplementary Charge rate (providing tax relief of up to £80m or £160m respectively). The Company welcomes this announcement and hopes to utilize it on its qualifying projects in the future. On December 13, 2012 the Company announced that it had entered into a definitive agreement for the sale of a 25% non-operated working interest in each of its 100% owned Orlando and Kells fields. The sale to Volantis Exploration Limited completed on February 21, 2013 for total gross proceeds of USD$34 million on close and a pro-rata share of future staged payment obligations: USD$1.25 million upon Kells FDP approval; and staged payments commencing six months after first production from Orlando of USD$1.8 million, USD$1.8 million, USD$1.8 million, USD$0.925 million, and USD$0.925 million made every six months thereafter.
Reserves
Company reserves assessed by Gaffney, Cline & Associates Ltd at the end of 2012: Net 1P Reserves increased 494% to 18.4 million barrels of oil equivalent ("mmboe") (2011:3.1 mmboe) Net 2P Reserves* increased 497% to 35.8 mmboe (2011:6.0 mmboe) Net 3P Reserves increased 465% to 46.9 mmboe (2011:8.3 mmboe) Net 2P Reserves Pre-Tax Net Present Value (assuming a discount rate of 10%) increased 548% to USD$1,185 million (2011: USD$183 million) *2P Reserves comprises 82% oil and 18% natural gas
Post Year End
On January 14, 2013, the Company announced that the 44/18-T6 ("T6") well on the Tyne Gas Field had been completed as a production well and had successfully flow tested at an average rate of 25 million standard cubic feet per day ("MMscf/d") with a peak rate of 28 MMscf/d. Iona owns a 20% non-operated working interest in both the Trent & Tyne Gas Fields with an option to increase interest in both fields to 37.5%. In February 2013, the Company closed a bought-deal private placement of common shares (the "Offering"). An aggregate amount of CAD$23 million was raised pursuant to the Offering. The Company completed a USD$60 million structured energy derivative transaction with Britannic Trading Ltd., a subsidiary of BP International Limited in February 2013 for notional quantities of 1,360,072 and 6,746,231 barrels of Brent blend crude oil over the period April 1, 2013 to March 31, 2014 and April 1, 2014 to March 31, 2018 and strike prices of USD$100 and USD$95 respectively. The Company also entered into a Marketing and Off-take Agreement with BP Oil International Limited in February 2013. On February 22, 2013, the Company announced the closing of its previously announced Senior Secured Borrowing Base Facility for up to USD$250 million of which USD$150 million is currently available with the Bank of America Merrill Lynch, Lloyds TSB Bank plc and BNP Paribas and entered into hedging contracts with these banks for a total of 1,330,791 barrels of oil over the period April 1, 2013 to March 31, 2014 at a strike price of USD$100. The Huntington Field commenced production on April 12, 2013. The field has been developed through four production and two water-injection wells and is tied back to Teekay's Floating Production Storage and Offloading ("FPSO") vessel, the Voyager Spirit, with production capacity of 30,000 barrels of oil per day and 27 million standard cubit feet of gas per day. On March 5, 2013, 7,420,000 of stock options were granted at a price of $0.63 per share. At the beginning of April 2013, Brad Gunn, Chief Financial Officer ("CFO") resigned as CFO for personal reasons and Graham Heath, currently Iona's VP Corporate Development, has assumed the position of interim CFO until the Company finds a suitable replacement. Also, Don Copeland, currently a member of the Company's Board of Directors, has been appointed as the non-executive chairman of the Board of Directors.
Notes:
The Company's petroleum and natural gas reserves (the "reserves") were independently evaluated by Gaffney, Cline & Associates Ltd ("GCA") in accordance with the Canadian Oil and Gas Evaluation Handbook ("COGEH") reserves definitions and evaluation practices and procedures as specified by National Instrument 51- 101 ("NI 51-101"). The evaluation uses GCA's forecast prices and costs at December 31, 2012. The Company's Form 51-101F1 Statement of reserves data for the year ended December 31, 2012 ("Statement of Reserves Data"), which includes the disclosure and reports relating to reserves data and other oil and gas information along with the Form 51-101F2 Report on Reserves Data by GCA and Form 51-101F3 Report of Management and Directors on Reserves Data and Other Information are available for review at www.sedar.com.
Further details on the above are provided in the Consolidated Financial Statements and Management's Discussion and Analysis for the year ended December 31, 2012, which have been filed with securities regulatory authorities in Canada. These documents are available on the System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com and on the Company's website: www.ionaenergy.com
Iona is an oil and natural gas acquisition, appraisal, and development corporation active through its 100% wholly owned United Kingdom subsidiary, Iona Energy Company (UK) Ltd. in the United Kingdom's Continental Shelf ("UKCS").
Forward-looking statements
Some of the statements in this announcement are forward-looking, including statements regarding Iona's plans for the development of its properties, anticipated effects of the UK small field allowance, and estimates of the net present value of future net revenue of proved and probable reserves from Iona's properties. Forward-looking statements include statements regarding the intent, belief and current expectations of Iona Energy Inc. or its officers with respect to various matters. When used in this announcement, the words "expects," "believes," "anticipate," "plans," "may," "will," "should", "scheduled", "targeted", "estimated" and similar expressions, and the negatives thereof, whether used in connection with estimated production levels and future activity or otherwise, are intended to identify forward-looking statements. Such statements are not promises or guarantees, 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 that Iona's development plans change as a result of new information or events, and the risk that drilling results differ materially from management's current estimates. 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.
Note: "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 | | Mbbls |
| thousand barrels |
| mcf/d |
| thousand cubic feet per day | | MMbbls |
| million barrels |
| scf |
| standard cubic foot | | bbls/d |
| barrels per day |
| MMscf |
| millions of standard cubic feet | | bopd |
| barrels of oil per day |
| MMscf/d |
| millions of standard cubic feet per day | | NGLs |
| natural gas liquids |
| Bscf |
| billion standard cubic feet |
Contact:
Iona Energy Inc.
Neill A. Carson
Chief Executive Officer
+011 (44) 7919 057989
Iona Energy Inc.
Graham Heath
Interim Chief Financial Officer
(403) 605-6726
info@ionaenergy.com
www.ionaenergy.com |
