Ithaca Energy Satisfied with First Quarter Financial Results

Ithaca Energy Inc. published its financial results for the three months ended March 31 2014.

Financial Results

– Cashflow from operations of $43.7 million (Q1 2013: $34.8 million), resulting in cashflow per share of $0.13 (Q1 2013: $0.13);
– Profit after tax increased by approximately 370% in Q1 2014 to $16.4 million (Q1 2013: $3.5 million), equating to earnings per share of $0.05 (Q1 2013: $0.01);
– Q1-2014 average realised oil price of $108/bbl (Q1 2013: $106/bbl);
– Net drawn debt of $478.2 million at 31 March 2014 (December 31, 2013: $348.5 million), excluding the Company’s Norwegian tax rebate facility. Additionally, $45 million was advanced under the $70 million Shell oil sales agreement;
– UK tax allowances pool of $1,174 million at 31 March 2014. Norwegian tax receivable of $77.8 million;
– Approximately 3.0 million barrels of oil production hedged over the next 2 years at a weighted average price of around $100/bbl (approximately 70% swaps / 30% puts);
– Secured floor price of £0.58/therm (~$10/MMbtu) for approximately 200 million therms (20 billion cubic feet) of gas sales over gas years 2015 and 2016.

Production & Operations

Average production in Q1-2014 was 9,222 barrels of oil equivalent per day (“boepd”), 95% oil, in line with forecast performance given shutdowns on the Cook and Beatrice fields during the quarter. Average production in April 2014 was approximately 11,200 boepd stepping up to more than 14,000 boepd to date in May.

The increasing production trend is being driven by execution of the 2014 production enhancement programme, which is progressing well. The Fionn sidetrack has recently been completed and production from the field has recommenced. The host platform works required to enable the start-up of electrical submersible pumps (“ESPs”) on the Causeway and Fionn fields are substantially complete. Drilling of the planned infill well on the Don Southwest field commenced in late April 2014, with the well expected to be brought online in the third quarter of the year.

Total 2014 production guidance remains unchanged in the range of 11,000 to 13,000 boepd, approximately 95% oil. The anticipated schedule of 2014 production enhancement projects means that volumes are forecast to be weighted towards the second half of the year.

The Company was awarded the “Don NE” licence (40%, non-operated) that lies adjacent to its existing Dons field position by the Department of Energy and Climate Change during the quarter. Submission of a “Phase I” Field Development Plan is planned for later this year to enable an early production well to be drilled on the licence from the existing Don Southwest facilities potentially as early as the end of 2014.

Greater Stella Area Development Update

As previously announced on 9 May 2014, Petrofac is forecasting that the FPF-1 floating production facility will be ready for sail-away from the Remontowa yard in Poland to the Stella field in spring 2015. This schedule is anticipated to result in first hydrocarbons from the GSA hub in mid-2015. Ithaca is working with Petrofac to expedite the remaining construction and commissioning works on the FPF-1.

Graham Forbes, Chief Financial Officer, commented:

“Earnings of $16 million represent satisfactory financial results for the first quarter, with the Company on-track to deliver the anticipated step-up in operating cashflows over the coming months as the various 2014 production enhancement projects are completed.”

Press Release, May 13, 2014