Ithaca Energy (AIM, TSX-V: IAE) said that the Galaxy II heavy duty jack-up rig that has been contracted by the company to drill an appraisal well on the Stella field in the North Sea has been mobilized to the spud location and will start drilling this month.
The company assumed operatorship of the field and discoveries Hurricane and Harrier in November last year and has since hired the Transocean-owned Galaxy II rig and the services of ADTI to manage appraisal well operations under 'turnkey' contract arrangements.
The well programme, which is expected to be completed in 79 days, is aimed to confirm Ithaca’s assessment of the in-place volume of hydrocarbons, understand changes in the composition of hydrocarbon fluids with depth and verify the distribution and quality of the reservoir.
The appraisal well is planned to reach total depth in the Cretaceous chalk layers which lie below the principal Stella reservoir target Andrew. An earlier well encountered hydrocarbons in the Ekofisk chalk reservoir and tested further rich gas-condensate reserves which could be developed at the same time as the main pool.
Ithaca said that timely development of Stella will allow it to consider the potential neighbouring Harrier and Hurricane discoveries as additional tiebacks to the field.
Stella’s proven and probable reserves currently stand at 8.94 million barrels of oil equivalent net to Ithaca after consideration of the farmout agreement with Challenger Minerals, which will pay 27% of gross Stella appraisal well costs in exchange for an 18% equity interest in the Stella and Harrier discoveries, thereby carrying a part of Ithaca's share of drilling costs and leaving Ithaca with a 50.33% interest. Upon successful appraisal, CMI will also disproportionately fund a further Stella or Harrier development well.
Disclosure: The author holds no positions in the company