CALGARY, ALBERTA--(Marketwire -07/09/12)- NOT FOR DISTRIBUTION TO UNITED STATES NEWS WIRE SERVICES OR DISSEMINATION IN UNITED STATES
Iona Energy Inc. ("Iona" or the "Company") (INA.V) is pleased to announce that its UK Subsidiary, Iona Energy Company (UK) Limited, has 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 in exchange for the obligation to pay certain historical costs and future payments out of production. The UK Department of Energy and Climate Change ("DECC") has now approved the assignment of working interest and operatorship. Iona expects final Field Development Plan ("FDP") approval for the field in Q3 2012 with a first oil target date of Q3 2013. Further details regarding the effects of the acquisition are contained in Iona's press release dated June 12, 2012.
The Orlando Oil field lies in the UK sector of the North Sea within Block 3/3b, approximately 10 km north east of the Ninian Central Platform and was successfully appraised with the 3/3b-11 (1989) and 3/3b-13 (2012) and sidetrack wells. Based on its previous NI 51-101 reserve report effective Dec. 31, 2011 at 100% working interest, Iona calculates Proved ("1P") reserves for the field of 6.8 MMbbls, Proved plus Probable ("2P") reserves of 11.1 MMbbls, and Proved plus Probable plus Possible ("3P") reserves of 16.2 MMbbls(1). Early analysis by Iona of the results of the 3/3b-13 well and sidetrack are consistent with previously reported year end reserve volumes. Iona intends to update its NI 51-101 Orlando reserve report upon Orlando FDP approval by the DECC.
Pursuant to the terms of the sale and purchase agreements with MPX and Sorgenia, within 14 business days after the earlier of the date of Orlando FDP approval by DECC or December 30, 2012, Iona will refund to Sorgenia and MPX their historical costs of the Orlando Development to-date, approximating USD$48.25 million. Additionally, future staged payments will be made by Iona to Sorgenia and MPX commencing six months after first production from Orlando. The first payment will be USD$7.0 million with additional payments of USD$7.0 million, USD$7.0 million, USD$4.0 million, and USD$4.0 million made every six months thereafter respectively, amounting to a total payment of USD$29.0 million over 3 years.
(1) Based on reserves information attributed to the Orlando field by Iona's reserves evaluators, Gaffney Cline & Associates Ltd. ("GCA") effective as of December 31, 2011 (as disclosed in Iona's Form 51-101F1 for the year ended December 31, 2011.).
Additional information relating to the Company is available on SEDAR at www.sedar.com.
About Iona Energy:
Iona is an oil and gas exploration, development and production company focused on oil and gas development and exploration in the United Kingdom's North Sea.
Forward-Looking and Cautionary Statements
Some of the statements in this announcement are forward-looking, including statements regarding Iona's plans with respect to development of the Orlando property, Iona's payment schedule to MPX and Sorgenia in relation to the acquisition of the Orlando interests held by MPX and Sorgenia, and estimates of the quantities of proved reserves, probable reserves, and possible reserves. Forward-looking statements include statements regarding the intent, belief and current expectations of Iona Energy Inc. or its officers with respect to various matters, including reserves, production, first oil, drilling activity or otherwise. When used in this announcement, the words "expects," "believes," "anticipate," "plans," "may," "will," "should", "scheduled", "targeted", "estimated" and similar expressions, and the negatives thereof, are intended to identify forward-looking statements. Such statements are not promises or guarantees, are based on various assumptions by Iona's management 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 risks that, for any reason, DECC does not approve Iona's FDP for the Orlando property or Iona does not reimburse MPX and Sorgenia for their historical costs of the Orlando development as scheduled. If Iona does not reimburse MPX and Sorgenia for their historical costs as discussed above, MPX and Sorgenia will have the right but not the obligation to re-acquire their interests in the Orlando property from Iona. 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.
Notes Regarding Oil and Gas Disclosure
As used in this press release, "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 Bcf billion cubic foot
MMbbls millions of barrels MMcf million cubic feet
MMboe million barrels of oil equivalent
Neither the TSX Venture Exchange Inc. nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Iona Energy Inc.
Neill A. Carson
Chief Executive Officer
+011 (44)(0)1224 228400
Iona Energy Inc.
Brad G. Gunn
Chief Financial Officer