I would sell all my Ithaca IF I could find a better prospectProblem is I cannot find a better prospect. Some are losing sight of the fact that:
- The first two wells tested at a combined flow rate of 21,250 boepd.
- The four production wells will be all drilled, tested and valved by mid year waiting for the PFP-1. If they max out, the total test flow rate will be ~42,500.
- Cash flow from operation at ~12,000 boepd this year is about $315 million or just short of $1.00 per share.
- Total capex for the year more than covered by the cash flow.
- Cook, Causeway, and Fionn will be enhanced this year just in time for a firing on all cylinders next year so the total production will be very handy to 30,000 boepd when Stella is turned on.
- Balance sheet is very strong with almost $400 million of unused credit available.
Production shut-ins are a way of life in offshore production and the weather has hindered the work on the side track for Fionn and Cook is not expected up until February and is going back down for two months in H2....what can Ithaca do about that?.....Ah....nothing.
The shares are trading at only 2.8 times this years estimated cash flow.
Yes the delay in Stella is disappointing and so is the lower guidance but there are reasons beyond Ithaca's control for most of this.
If you believe that Stella will come on at least 16000 boepd then you half to believe that the production will be approximately 27,000-30,000 boepd. When this announcement is made in early 2015 or late 2014, what do you think the share price will be? $4.00 seems to be the minimum to me. That is worth waiting for.