From Motley Fool UKRepresentative of current market opinion of IAE...
By
Alessandro Pasetti - Wednesday, 18 March, 2015
Tough Times At Ithaca
You don’t have to be a financial guru to understand how bad the situation is with this oil and gas producer. Its balance sheet carries a huge amount of debt, while its shares have plunged 62% in the last month of trading. There’s more to it: its benchmark project in the North Sea is going to cost more than budgeted for, as problems recently emerged with production. Lower oil prices are killing the investment case. Its enterprise value is more than five times the value of its equity, which means that Ithaca’s net debt position is simply unsustainable, and that is clear when you try to figure out how much cash the company may burn with Brent below $50 per barrel. It’s no surprise that capital expenditure was recently cut by 60%. That may not be enough, though. 2015 net capital expenditure is projected at about £100m, the majority of which will fund its Greater Stella Area project, which may – or may not — produce oil by the end of 2015.