Ithaca Energy Inc (LON:IAE) announced this morning that the Galaxy II rig has now been mobilised and will commence drilling this month.
In November 2009, Ithaca, the oil and gas company with exploration, development and production assets in the UK sector of the North Sea, became the operator of the prospects Hurricane and Harrier. Since then, they have hired the Transocean-owned Galaxy II rig and the services of ADTI to manage appraisal well operations. Today Ithaca announced that the heavy duty jack up rig, contracted to drill an appraisal well on the Stella field area, has now been mobilised location and will commence imminent drilling.
The drilling programme, expected to take 79 days to complete, is expected to confirm Ithaca's assessment of hydrocarbon volumes, to offer further understanding about the composition of hydrocarbon fluids with depth and to verify the distribution and quality of the reservoir.
An earlier well already encountered hydrocarbons in the chalk reservoir and tested further gas-condensate deposits. It is expected that the principle well 'Stella' will reveal similar reserves. The results from the Stella field area investigational expected to impact if and how the company develops the neighbouring mines of Harrier and Hurricane.
To fund the drill, Challenger Minerals will pay 27% of the appraisal well costs in exchange for an 18% equity interest in the Stella and Harrier discoveries. If the appraisal is successful, Challenger Minerals have also agreed to fund further developments at the Stella and Harrier prospects.
An Independent report issued by Sproule International in Dec 2009 claimed the Stella field area contains 'proved and probable reserves of 8.94 million barrels of oil equivalent net to Ithaca after consideration of the Challenger Minerals farm-out'.
Currently Ithaca and Dvas UK fund the development at the Stella and Harrier prospects but post completion of the farm-out to Challenger Minerals, the share will be divided between Ithaca (50.33%), Dvas UK (31.67%) and Challenger Minerals (18.00%).
