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Ithaca Energy Inc. Announces Third Quarter 2015 Financial Results

CALGARY, AB--(Marketwired - Nov 16, 2015) - Ithaca Energy Inc. (TSX: IAE) (LSE: IAE)

Not for Distribution to U.S. Newswire Services or for Dissemination in the United States

Ithaca Energy Inc.

Third Quarter 2015 Financial Results

16 November 2015

Ithaca Energy Inc. (TSX: IAE; LSE: IAE) ("Ithaca" or the "Company") announces its quarterly financial results for the three months ended 30 September 2015 ("Q3-2015" or the "Quarter") and for the nine months ended 30 September 2015 ("YTD-2015").

Financial Highlights

Solid cashflow generation in the first nine months of the year

  • Average production of 12,355 barrels of oil equivalent per day ("boepd"), in line with guidance (YTD-2014: 10,640 boepd)
  • $217 million cashflow from on-going operations1 ($57 million in Q3-2015), including oil price hedging gains (YTD-2014: $128 million)
  • Adjusted earnings of $98 million, excluding a non-cash accounting tax charge of $41 million resulting from a reduction in UK tax rates (YTD-2014: $25 million)
  • Cashflow per share $0.66 (YTD-2014: $0.39) and adjusted earnings per share $0.30 (YTD-2014: $0.08)

Business resilient to lower oil price environment

  • Full year 2015 production guidance remains unchanged at 12,000 boepd (95% oil)
  • Significant commodity price hedging in place - average of 5,900 barrels of oil per day ("bopd") at $64/bbl until June 2017 and approximately 5,000 boepd of gas at 63 pence per therm (~$9.70/MMbtu) until June 2017
  • YTD-2015 unit operating expenditure of approximately $33/boe, a reduction of over 40% compared to 2014, and forecast to fall further to around $25/boe following Stella start-up
  • Forecast 2015 capital expenditure reduced to $120 million - reflecting $30 million of savings associated with lower Greater Stella Area ("GSA") subsea infrastructure installation costs and removal of Norwegian expenditure
  • Solid cash netbacks - underpinned by tax allowances pool of over $1.5 billion at 30 September 2015

Deleveraging process commenced

  • Net debt reduced from peak of over $800 million in the first half of 2015 to under $690 million at 31 October 2015 - position expected to be broadly unchanged at year-end 2015
  • Deleveraging reflects the benefit of strong operating cashflow generation, lower capital expenditures, the cash received from the sale of the non-core Norwegian business and the recent $66 million premium equity placing
  • Semi-annual redetermination of reserves based lending facilities successfully completed - maintaining over $125 million of funding headroom ahead of Stella start-up

Les Thomas, Chief Executive Officer, commented:

"We are very pleased to report a strong set of results thanks to consistent production levels, strong hedging gains and rigorous cost control, all of which has contributed to commencing deleveraging of the business ahead of the step-change that comes with Stella start-up. In parallel, solid progress continues to be made on the Stella development, with commissioning operations advancing on the critical path FPF-1 modifications programme."

Production & Operations
Average production in the nine months to 30 September 2015 was 12,355 boepd (94% oil), a 16% increase on the same period in 2014.

The Company's producing assets have been performing well over the course of the year, with solid operational uptime achieved across the main fields. The planned shutdown maintenance activities scheduled for Q3-2015 were efficiently executed, resulting in slightly higher than anticipated production during the Quarter.

Full year 2015 production guidance remains unchanged at 12,000 boepd (95% oil).

As part of the Company's previously announced activities to high grade the producing portfolio and remove high cost, marginal assets, the planned cessation of production from the Anglia gas field occurred during the Quarter. Production operations continue on the Athena oil field, where a number of initiatives have had a significant impact on reducing the breakeven oil price, although it is still anticipated that production from the field is likely to cease prior to the end of this year. The net daily production capacity of the two fields is approximately 1,000 boepd.

Greater Stella Area Development Update
The primary focus of the on-going GSA development activities remains on completion of the FPF-1 modifications programme that is being undertaken by Petrofac, in the Remotowa shipyard in Poland. Sail-away of the FPF-1 from Poland is planned for the end of the first quarter of 2016, with first production from the Stella field anticipated at the end of the second quarter.

At this stage in the modifications programme the critical path to achieving sail-away of the FPF-1 is the completion of commissioning operations, which commenced during the Quarter. Full completion of these operations while the vessel is located in the yard is key to avoiding an extended period of more complicated offshore commissioning activities and delay to the start-up of production.

Continued progress is being made on close out of pre-commissioning activities on the vessel, enabling the various topsides processing, utilities and accommodation sub-systems to be fed into the main commissioning programme. Commissioning of the electrical switchboards that distribute power around the vessel is nearing completion and electrical loop testing on the process control and safety systems is progressing well. Internal vessel inspection activities are advancing, along with commissioning of the various utilities systems. Preparation is also underway for the start-up and commissioning of the power generators in the coming weeks, which represents a key milestone in the on-going work programme.

Following the completion of various offshore campaigns during the Quarter, all the subsea infrastructure that is required to be installed prior to the arrival of the FPF-1 on location is now in place. This represents completion of a further key development milestone, building upon the successful conclusion of the five well Stella development drilling campaign in April 2015.

Net Debt
As anticipated the Company commenced deleveraging the business in the second half of 2015, reflecting the benefit of strong operating cashflow generation, lower capital expenditures and the cash received from sale of the non-core Norwegian business. Net debt was reduced from a peak of over $800 million in the first half of 2015 to $751 million at the end of Q3-2015, further reducing to under $690 million at 31 October 2015 following the recently completed equity investment in the Company. It is anticipated that net debt at the end of this year will remain broadly unchanged from the current level.

Q3-2015 Financial Results Conference Call
A conference call and webcast for investors and analysts will be held today at 12.00 BST (07.00 EST). Listen to the call live via the Company's website ( or alternatively dial-in on one of the following telephone numbers and request access to the Ithaca Energy conference call: UK +44 203 059 8125; Canada +1 855 287 9927; US +1 866 796 1569. A short presentation to accompany the results will be available on the Company's website prior to the call.

1. Cashflow from on-going operations of $217 million less $21 million of non-recurring net outflows from discontinuing fields (Beatrice, Athena & Anglia), provided for as onerous contracts in 2014, equates to overall cashflow from operations of $196 million

The unaudited consolidated financial statements of the Company for the three and nine month periods ended 30 September 2015 and the related Management Discussion and Analysis are available on the Company's website ( and on SEDAR ( All values in this release and the Company's financial disclosures are in US dollars, unless otherwise stated.


Ithaca Energy    
Les Thomas +44 (0)1224 650 261
Graham Forbes +44 (0)1224 652 151
Richard Smith +44 (0)1224 652 172
FTI Consulting    
Edward Westropp +44 (0)207 269 7230
Tom Hufton +44 (0)203 727 1625
Cenkos Securities    
Neil McDonald +44 (0)207 397 8900
Nick Tulloch +44 (0)131 220 6939
RBC Capital Markets    
Daniel Conti +44 (0)207 653 4000
Matthew Coakes +44 (0)207 653 4000

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: 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

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 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 "forecasts", "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, the sail-away of the FPF-1 vessel, Stella first hydrocarbons, operating costs, drilling plans, production forecasts, maintenance schedules, budgetary figures, capital expenditures, anticipated future net debt, 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 non-International Financial Reporting Standards ("IFRS") industry benchmarks and terms, such as "cashflow from operations", "cashflow per share" and "net debt". These terms do not have any standardised meanings within IFRS and therefore are unlikely to be comparable to similar measures presented by other companies. The Company uses cashflow from operations to help evaluate its performance. As an indicator of the Company's performance, cashflow from operations should not be considered as an alternative to, or more meaningful than, net cash from operating activities as determined in accordance with IFRS. The Company considers cashflow from operations to be a key measure as it demonstrates the Company's underlying ability to generate the cash necessary to fund operations and support activities related to its major assets. Cashflow from operations is determined by adding back changes in non-cash operating working capital to cash from operating activities. The Company uses net debt as a measure to assess its financial position. Net 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.

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 30 September 2015 and the Company's Annual Information Form for the year ended 31 December 2014 and in reports which are on file with the Canadian securities regulatory authorities and may be accessed through the SEDAR website (

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Source: Marketwired (Canada) (November 16, 2015 - 2:00 AM EST)

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