Ithaca Energy Inc. (TSX: IAE, LSE AIM: IAE) ("Ithaca" or the "Company") provides an operations update following the end of the second quarter of the year ("Q2-2015" or the "Quarter"). The Company is scheduled to issue its financial results for Q2-2015 on 13 August 2015.
Production & Operations
Average production in Q2-2015 was 12,667 barrels of oil equivalent per day ("boepd") resulting in average production for the first six months of the year ("H1-2015") of 12,578 boepd. Full year guidance is reiterated at 12,000 boepd (95% oil), taking into account planned maintenance shutdown activities in the second half of the year.
The Company's producing assets continued to perform well over the course of Q2-2015, with solid operational uptime achieved across the main fields. The tie-in of the Ythan field development well was completed and brought on production at the end of May 2015 prior to the commencement of the planned maintenance shutdown of the Dons facilities and the Sullom Voe Terminal ("SVT") in mid-June 2015. The initial performance of the Ythan well has been encouraging. The SVT shutdown has now been completed and production has been re-started.
As previously highlighted, production in the third quarter of the year ("Q3-2015") will be below the average guidance level for the year as a result of planned maintenance shutdown activities on the host facilities serving a number of the Company's fields. Most significantly, there will be an approximate two month planned shutdown of the Cook field during Q3-2015 for the execution of life extension works on the Anasuria floating production and offloading facility that serves the field.
Greater Stella Area Development
Continued progress has been made during the Quarter on the execution of the Greater Stella Area development programme.
The development drilling campaign was completed in April 2015 and the majority of the 2015 subsea infrastructure installation activities were also completed during the Quarter. The main remaining subsea activity to be closed out in Q3-2015 is the installation and tie-in of the three kilometre oil export pipeline from the FPF-1 riser base to the Single Anchor Loading structures.
Progress continues on execution of the "FPF-1" floating production facility modifications programme and sail-away of the vessel to the field remains scheduled for late in the first quarter of 2016, resulting in first hydrocarbons in the second quarter of that year. With the bulk of the pipework and electrical and instrumentation cables now installed, the focus of construction activities is on completion of pipework pressure testing, electrical and instrumentation cable glanding and termination and instrumentation device installation. Commissioning preparation is underway.
Financials
Hedging
During Q2-2015 the Company benefitted from 10,187 barrels of oil per day hedged at an average price of $96/bbl, which compares to an average Brent price of $62/bbl.
Net Debt
Net drawn debt at 30 June 2015 was $788 million out of total debt facilities of $950 million.
The level of net drawn debt at the end of the Quarter is lower than the previously indicated expectation for peak net drawn debt in the Quarter of $825-850 million primarily due to a slower than forecast unwinding of the Company's working capital position which arose from the capital investment activities completed in the first half of the year.
Following the approximately $30 million net cash receipt resulting from the sale of the Company's Norwegian operations on 8 July 2015 and the forecast cashflows for the remainder of the year, at current Brent prices it is anticipated that net drawn debt at the end of the year will be under $800 million.
Q2-2015 Financial Results Conference Call
The Company is scheduled to release its Q2-2015 financial results on 13 August 2015. A conference call and webcast for investors and analysts will be held on the same day at 12.00 BST (07.00 EST), with a playback facility being made available on the Company's website later that day. Dial-in details for the call will be included in the press release that accompanies the financial results documentation.
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Enquiries:
Ithaca Energy
Les Thomas [email protected] +44 (0)1224 650 261
Graham Forbes [email protected] +44 (0)1224 652 151
FTI Consulting
Edward Westropp [email protected] +44 (0)203 727 1521
Tom Hufton [email protected] +44 (0)203 727 1625
Cenkos Securities
Neil McDonald [email protected] +44 (0)207 397 8900
Nick Tulloch [email protected] +44 (0)131 220 6939
RBC Capital Markets
Jeremy Low [email protected] +44 (0)207 653 4000
Matthew Coakes [email protected] +44 (0)207 653 4000
Notes
In accordance with AIM Guidelines, John Horsburgh, BSc (Hons) Geophysics (Edinburgh), MSc Petroleum Geology (Aberdeen) and Subsurface Manager at Ithaca is the qualified person that has reviewed the technical information contained in this press release. Mr Horsburgh has over 15 years operating experience in the upstream oil and gas industry.
References herein to barrels of oil equivalent ("boe") are derived by converting gas to oil in the ratio of six thousand cubic feet ("Mcf") of gas to one barrel ("bbl") of oil. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf: 1 bbl is based on an energy conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6 Mcf: 1 bbl, utilising a conversion ratio at 6 Mcf: 1 bbl may be misleading as an indication of value.
About Ithaca Energy
Ithaca Energy Inc. (TSX: IAE, LSE AIM: IAE) is a North Sea oil and gas operator focused on the delivery of lower risk growth through the appraisal and development of UK undeveloped discoveries and the exploitation of its existing UK producing asset portfolio. Ithaca's strategy is centred on generating sustainable long term shareholder value by building a highly profitable 25kboe/d North Sea oil and gas company. For further information please consult the Company's website www.ithacaenergy.com.
Forward-looking statements
Some of the statements and information in this press release are forward-looking. Forward-looking statements and forward-looking information (collectively, "forward-looking statements") are based on the Company's internal expectations, estimates, projections, assumptions and beliefs as at the date of such statements or information, including, among other things, assumptions with respect to production, drilling, construction and maintenance times, well completion times, risks associated with operations, future capital expenditures, continued availability of financing for future capital expenditures, future acquisitions and dispositions and cash flow. The reader is cautioned that assumptions used in the preparation of such information may prove to be incorrect. When used in this press release, the words and phrases like "anticipate", "continue", "estimate", "expect", "may", "will", "project", "plan", "should", "believe", "could", "target", "in the process of" and similar expressions, and the negatives thereof, whether used in connection with operational activities, sail-away of the FPF-1 vessel, Stella first hydrocarbons, drilling plans, production forecasts, budgetary figures, anticipated net drawn debt, planned maintenance shutdowns, anticipated timing for the release of financial results for the Quarter, potential developments including the timing and anticipated benefits of acquisitions and dispositions or otherwise, are intended to identify forward-looking statements. Such statements are not promises or guarantees, and are subject to known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. The Company believes that the expectations reflected in those forward-looking statements are reasonable but no assurance can be given that these expectations, or the assumptions underlying these expectations, will prove to be correct and such forward-looking statements included in this press release should not be unduly relied upon. These forward-looking statements speak only as of the date of this press release. Ithaca 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.
This press release contains a non-International Financial Reporting Standards ("IFRS") industry term, "net drawn debt". This term does not have any standardised meaning within IFRS and therefore is unlikely to be comparable to similar measures presented by other companies. The Company uses net drawn debt as a measure to assess its financial position. Net drawn debt includes amounts outstanding under the Company's debt facilities and senior notes, less cash and cash equivalents. Net drawn debt noted above excludes any amounts outstanding under the Norwegian tax rebate facility, which were repaid upon the sale of the Company's Norwegian operations.
Additional information on these and other factors that could affect Ithaca's operations and financial results are included in the Company's Management's Discussion and Analysis for the quarter ended March 31, 2015, and the Company's Annual Information Form for the year ended December 31, 2014 and in reports which are on file with the Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com).