Iona Energy Announces Sale of Interest in the Orlando & Kells Fields

abarrelfullabarrelfull wrote on 17 Dec 2012 12:04
Tags: europe iona north-sea uk upstream

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Iona Energy Inc. ("Iona" or the "Company") (TSX VENTURE:INA) is pleased to announce today that its UK subsidiary Iona Energy Company (UK) Limited has 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. Volantis Exploration Limited, a wholly owned subsidiary of Atlantic Petroleum P/F ("Atlantic") has agreed to pay Iona a USD$3.4 million deposit immediately and a base payment of USD$30.6 million upon closing. Consequent to completion of the transaction, Atlantic has informed Iona that Atlantic will commit to pro-rata funding of the Orlando and Kells developments commensurate with its 25% working interest and will provide the necessary financial assurances to the U.K.'s Department of Energy and Climate Change ("DECC") enabling the Joint Venture partners to obtain final Field Development Plan ("FDP") approvals.

In addition to the payments outlined above, pursuant to the agreement, Atlantic has committed to pay:

USD$1.25 million upon Kells FDP approval;
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 respectively; and
a proportionate share of royalties payable to the previous owner of the Kells field, Fairfield Energy.
Completion of this transaction is subject to DECC approval, expected before the end of January, 2013 and will result in Iona retaining operatorship and a 75% net interest in each field. Effective as of September 30, 2012, Gaffney Cline and Associates Ltd. ("GCA") reported Orlando's 100% gross proved reserves ("1P") of 7.83 million barrels of oil ("MMbbls"), gross proved plus probable ("2P") reserves of 15.37 MMbbls, and gross proved plus probable plus possible ("3P") reserves of 21.56 MMbbls. Effective as of March 31, 2012, GCA reported Kells 100% gross 1P reserves of 3.4 million barrels of oil equivalent ("MMboe"), 2P reserves of 8.9 MMbse, and 3P reserves of 10.7 MMboe.

Iona continues advanced stage negotiations with further parties for the sale of an additional 25% non-operated working interest in each of the Orlando and Kells Fields. Further information regarding the joint venture offering will be released as it becomes available.

Iona remains engaged with TD Securities in London, who have assisted in the Company's divestiture process though the identification of purchasers, development of marketing and sales documentation, and support in the sales negotiation process.

Iona's Chief Executive Officer, Neill Carson, commented: "We are looking forward to working with our newly constructed joint venture that is focused on the delivery of these two ready-made developments. As Operator, Iona will strive for first oil on both projects as soon as possible, and will build on the operational synergies offered through their co-development, with each field being a short distance from a common host. We've added significant value to the Company through recent reserve additions at Orlando and Kells and have reduced our development capital needs on competitive commercial terms."

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