RE:RE:RE:RE:RE:RE:RE:RE:FPF-1 value"Why would petrofac have agreed to do the additional work that it is often assumed they agreed to, perhaps after the initial flow tests they realised that there was enough throughput from Stella/Harrier to fill their boots."
Doug, Having followed this project for many years and obtained clarification from Ithaca on certain statements, this is my understanding of how the scope of the project developed. Petrofac who owned the FPF-1 at the time agreed to modify it for the Stella field. Petrofac as the experts decided that the top works should be replaced by new kit - this is what was referred to as the 'modifications'. A fixed lump sum payment from Ithaca and Dyas was agreed. However, the scope of the works required was poorly defined. This lead to delays and for Petrofac the sense they had bitten off more than they could chew. This was compounded by the fall in the price of oil. Remember Petrofac's payment is a 20% share in Stella/Harrier production and a 20% interest in Hurricane. A year or two back posters late to the story believed that modifications were an upgrade to the processing capacity. This was never the case, as Ithaca confirmed to me in an email, but the rumour was never put down. I believe because the scope was poorly defined and Ithaca were a party to this, they agreed last year to an additional payment - deferred- for 'additional work' as well as the incentive payment. (Refer to last autumn's news release.) Upon first hydrocarbons from the Stella field Petrofac have 'earned' a 20% interest in Stella/Hurricane production and the ownership of the FPF-1 passes to Ithaca and Dyas. Keith - I guess your point is that this value has not yet been recorded in Ithaca's balance sheet. Apologies if that is not what you mean. It would be nice if that was the case but in accounting terms I believe the asset is already recorded. As to future field development Petrofac have a 20% interest in Hurricane which means they contribute to development costs and perhaps to the use of the FPT-1 (I'm unclear on this point). Beyond that Petrofac have zero interest in Vorlich or the Twister project. When the Stella hub development ceases Petrofac have an option to buy back the FPF-1. I guess Ithaca and Dyas are responsible for the decommissioning of the sub surface infrastructure.
Londoner7