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In December 2007 Ithaca announced that it had agreed to acquire the Beatrice field in the Moray Firth from Talisman for £ 10 million. This was its first producing field, and it came with three platforms and an onshore storage, transhipment and treatment terminal at Nigg near Inverness. In conjunction with the nearby Jacky field this is definitely the company's most important active asset. Jacky was a licence adjacent to the Beatrice oilfield that had earlier been relinquished by another Canadian oil producer, Talisman. " They recognised that it had potential, but it wasn't big enough for them to pursue," says Woods. " We picked it up in a government licencing round, drilled a well on it, and having confirmed the discovery, we approached Talisman to process the oil on our behalf. However, it proved more effective for us to buy the nearby Beatrice oilfield than for them to make modifications, so that's what we did, and it's now onstream for us and providing us with cash flow." Jacky is delivering 10,000 barrels of oil a day, worth at today's price around $ 700,000. But as he says, the development of assets is enormously expensive, and as there's such a high element of risk, companies typically try to get involved in a number of assets to spread the risk. " Clearly you can't afford to own 100 per cent of a large number of assets, and it's better business to have a small percentage of a larger number than a large percentage of a smaller number. Most operators share assets." In the case of Jacky, Ithaca owns just over 67 per cent and operates the field, and two minority partners share the equity. Until the end of May this year the well delivered around 8,800 barrels a day, a lot better than predicted. " It would come out on its own, but we can get it done quicker by pumping it," explains Woods. " But Jacky is a relatively small discovery with between five and eight million barrels recoverable, so pumping it at those rates will make it start to decline before the end of this year." Like most oilfields, it has a long ' tail' and he expects it to keep going until about 2015. But from Ithaca's point of view, Beatrice is close by producing almost 2,000 barrels a day, which basically pays for the facility, Woods says, and Jacky will continue to provide profit on top of that for about five years to come. Ithaca has other prospects in the Beatrice area that it will be drilling over that period in the hope of replicating the success of Jacky. It also has development projects in other North Sea regions. Its partner Maersk operates the Stella discovery, though Ithaca is in fact the majority partner there with a two-thirds interest, and Ithaca is the operator of the Athena field in the central North Sea, where it anticipates a project to install a floating production, storage and offloading vessel ( FPSO) will commence later this year. In addition, it has a 29 per cent interest in the Carna gas field, operated by Venture. 68 www. bus- ex. com July 09

be ready to jump as soon as the markets open up, because everybody else will. You can't be left behind. Being small and nimble gives us an edge; we have low overheads and are very quick to make decisions." Add to that the company's vast store of technical knowledge and Ithaca has a winning hand, Woods says. One thing that is really helping push matters forward is a more realistic attitude on the part of the service sector, which could command very high margins during the boom times but has more slowly come to recognise that it is in everybody's interest to keep busy. " We are seeing much more collaboration for the service sector right now, and I think that is what will push projects like Athena forward," he says. It will perhaps become less prohibitive to get a well drilled or to hire an FPSO, and as a result the UK might see more, not less activity in the North Sea and continue to enjoy licence and tax revenues for a little longer than it might have expected. - Editorial research by Jason Martin Ithaca Energy July 09 www. bus- ex. com 69 Jacky is totally viable at today's oil prices, would have been a gold mine at the $ 144 per barrel level that prevailed last year, but looked less appealing at the $ 44 per barrel that oil had dropped to at the beginning of 2009. That's always been the way in this industry, of course, but never so much as today. However, with a broadening portfolio and prices rising again, Woods thinks the business will be sustainable. " Athena, for example, did not make economic sense earlier this year, but it's close, and if prices continue to rise it will come onstream. Hopefully, in the next three to five years we'll all have a larger portfolio in the UK North Sea, and at some point in the future as we see the opportunity, we will probably go overseas as well." Ithaca's growth strategy was aggressive when credit finance was available but has to be more cautious now because it has to be self- funded, he admits. " The trick is to make sure we're not too far down in the queue when the equity and debt markets do open again. But you have to