CALGARY, AB–(Marketwired – Oct 5, 2015) – Ithaca Energy Inc. (TSX: IAE) (LSE: IAE)
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Ithaca Energy Inc.
Third Quarter 2015 Operations Update
5 October 2015
Ithaca Energy Inc. (TSX: IAE, LSE AIM: IAE) (“Ithaca” or the “Company”) provides an operations update following the end of the third quarter of the year (“Q3-2015” or the “Quarter”). The Company is scheduled to issue its financial results for Q3-2015 on 16 November 2015.
- Average year to date production to the end of Q3-2015 was 12,300 barrels of oil equivalent per day (“boepd”)
- Commissioning operations have commenced on the “FPF-1” floating production facility and sail-away of the vessel remains on track for the end of the first quarter of 2016
- Forecast full year 2015 capital expenditure reduced to $120 million, a reduction of approximately $30 million against previous guidance
- Further reduction in forecast net debt at the end of 2015 to approximately $750 million, down from previous guidance of under $800 million as a result of cost savings across the business
Production & Operations
Average production in Q3-2015 was approximately 12,000 boepd, resulting in average production for the first nine months of the year of 12,300 boepd. Full year guidance is reiterated at 12,000 boepd (95% oil).
The Company’s producing assets continued to perform well over the course of Q3-2015, with solid operational uptime achieved across the main fields. The planned maintenance shutdown activities scheduled for the Quarter have all been completed efficiently, with the duration of the outage on the Cook field less than forecast.
Greater Stella Area Development
Good progress has been made during the Quarter on the execution of the Greater Stella Area (“GSA”) development programme.
As recently reported, the transition from construction activities into commissioning operations continues on the FPF-1 modifications programme. The main construction works are nearing completion and handover of the various topsides processing, utilities and accommodation sub-systems for pre-commissioning is progressing. Initial commissioning operations are underway, with electrical loop checking on the process control and safety systems and equipment package interface testing having commenced. Sail-away of the vessel from the shipyard in Poland remains on track for the end of the first quarter of 2016, with first production from the Stella field anticipated at the end of the second quarter.
The main 2015 subsea infrastructure installation works have now been successfully completed. Installation of the three kilometre oil export pipeline from the FPF-1 riser base to the Single Anchor Loading structures was completed in August and the associated pipeline tie-ins closed out in September. The only remaining subsea activity to be completed this year involves a small amount of pipeline rock-dumping operations, which are scheduled for later this month.
During Q3-2015 the Company benefitted from approximately 9,600 barrels of oil per day hedged, equating to 80% of production in the Quarter, at an average price of $92/bbl. This compares to an average Brent price for the period of $50/bbl.
With the majority of the planned 2015 investment programme now completed, it is anticipated that total expenditure for the full year will be around $120 million, being $30 million lower than previously guided. This saving is primarily driven by reduced GSA subsea infrastructure installation costs, resulting from efficient execution of the various offshore campaigns, as well as the removal of expenditure following the sale of the Norwegian business.
Net debt at 30 September 2015 was $750 million, down from $788 million at the end of the second quarter of 2015. This was lower than anticipated as a result of cost savings being achieved across the business and also the timing of payments for the GSA capital expenditure programme.
It is anticipated that net debt at the end of 2015 will remain broadly unchanged from the level at the end of the Quarter of $750 million, substantially lower than the previous guidance of under $800 million. With the level of oil hedges in place, this position is largely insensitive to prevailing Brent prices. The Company has $950 million of debt funding facilities, comprising $300 million unsecured senior notes and $650 million bank debt facilities.
Q3-2015 Financial Results Conference Call
The Company is scheduled to release its Q3-2015 financial results on 16 November 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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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.