RBL Redetermination_Jan 20 RBC Report "2016 should be a seminal year for Ithaca with the long awaited
start-up of the Stella field (now Q3/16). Once onstream, Stella would more
than double production, add reserves into the RBL and provide cash flow
to accelerate deleveraging. Near term, investors remain focused on the
March RBL redetermination. We expect funding headroom to be reduced;
however, it should have limited practical impact". Reduced Headroom but Limited Impact: Through March, Ithaca will
complete the twice yearly redetermination of its reserves based loan
(RBL). The initial $575m facility was reduced by around 10% in the
October redetermination to $515m. A similar reduction through Q1/16
to around $450m reduces headroom below $100m but has, in our
view, limited practical impact on Ithaca given modest 2016 capex with
deleveraging set to accelerate with Stella first hydrocarbons Q3/16.
Longer term the company can (on a recovery of the oil price to around
$50-55/bbl in 2017-18) in principle repay the drawn RBL. However
the more likely outcome will be a refinancing benefiting from greater
inclusion of reserves from Stella and Vorlich (with associated tariffs).
Fun times indeed....obviously, we know the risks involved...if you don't by now, you should not be invested in Ithaca.
I think the March RBL redermination will be ok, but all bets are off if we see the same situation come the fall/September redermination. Things will get Harrier (Pardon the pun) if things aren't "different" in the PoO by then. But, they may still get by if they are creative...maybe, maybe not?
If Stella can come online with no more hitches in Q3, and the PoO rises to reasonable/debt servicing levels, then there may be a chance
Run for the hills if the PoO doesn't "recover" beyond $50-$60 early 2017. Are there ways out beyond that?....yes, but IMO, it won't be pretty.
I will continue to hold until such a time that I see no further reason. At moment, It's wait and see....no need panic at this time. As a long, I'll re-evaluate again come FPF-1 sailaway in Q2....
Let the games begin, and beware the hedge funds