RE:Operations update Ithaca Energy Inc. (TSX: IAE, LSE AIM: IAE) (“Ithaca” or the “Company”) provides an operations update following the end of the second quarter of the year (“Q2-2015” or the “Quarter”). The Company is scheduled to issue its financial results for Q2-2015 on 13 August 2015.
Production & Operations
Average production in Q2-2015 was 12,667 barrels of oil equivalent per day (“boepd”) resulting in average production for the first six months of the year (“H1-2015”) of 12,578 boepd. Full year guidance is reiterated at 12,000 boepd (95% oil), taking into account planned maintenance shutdown activities in the second half of the year.
The Company’s producing assets continued to perform well over the course of Q2-2015, with solid operational uptime achieved across the main fields. The tie-in of the Ythan field development well was completed and brought on production at the end of May 2015 prior to the commencement of the planned maintenance shutdown of the Dons facilities and the Sullom Voe Terminal (“SVT”) in mid-June 2015. The initial performance of the Ythan well has been encouraging. The SVT shutdown has now been completed and production has been re-started.
As previously highlighted, production in the third quarter of the year (“Q3-2015”) will be below the average guidance level for the year as a result of planned maintenance shutdown activities on the host facilities serving a number of the Company’s fields. Most significantly, there will be an approximate two month planned shutdown of the Cook field during Q3-2015 for the execution of life extension works on the Anasuria floating production and offloading facility that serves the field.
Greater Stella Area Development
Continued progress has been made during the Quarter on the execution of the Greater Stella Area development programme.
The development drilling campaign was completed in April 2015 and the majority of the 2015 subsea infrastructure installation activities were also completed during the Quarter. The main remaining subsea activity to be closed out in Q3-2015 is the installation and tie-in of the three kilometre oil export pipeline from the FPF-1 riser base to the Single Anchor Loading structures.
Progress continues on execution of the “FPF-1” floating production facility modifications programme and sail-away of the vessel to the field remains scheduled for late in the first quarter of 2016, resulting in first hydrocarbons in the second quarter of that year. With the bulk of the pipework and electrical and instrumentation cables now installed, the focus of construction activities is on completion of pipework pressure testing, electrical and instrumentation cable glanding and termination and instrumentation device installation. Commissioning preparation is underway.
Financials
Hedging
During Q2-2015 the Company benefitted from 10,187 barrels of oil per day hedged at an average price of $96/bbl, which compares to an average Brent price of $62/bbl.
Net Debt
Net drawn debt at 30 June 2015 was $788 million out of total debt facilities of $950 million.
The level of net drawn debt at the end of the Quarter is lower than the previously indicated expectation for peak net drawn debt in the Quarter of $825-850 million primarily due to a slower than forecast unwinding of the Company’s working capital position which arose from the capital investment activities completed in the first half of the year.
Following the approximately $30 million net cash receipt resulting from the sale of the Company’s Norwegian operations on 8 July 2015 and the forecast cashflows for the remainder of the year, at current Brent prices it is anticipated that net drawn debt at the end of the year will be under $800 million.
Q2-2015 Financial Results Conference Call
The Company is scheduled to release its Q2-2015 financial results on 13 August 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.