TIDMIAE
RNS Number : 9434T
Ithaca Energy Inc
12 January 2017
Not for Distribution to U.S. Newswire Services or for
Dissemination in the United States
Ithaca Energy Inc.
Operations Update & 2017 Outlook
12 January 2017
Ithaca Energy Inc. (TSX: IAE, LSE AIM: IAE) ("Ithaca" or the
"Company") provides an operations update and guidance on the
outlook for the year ahead.
Highlights
-- 2016 average production totalled approximately 9,300 boepd -
exceeding full year guidance of 9,000 boepd
-- Forecast first hydrocarbons from the Stella field scheduled
for February 2017, with the electrical junction box inspection and
remediation work programme nearing completion
-- 2017 production anticipated to be in the range of 19,000 to
22,000 boepd, reflecting the updated Stella start-up schedule
-- Harrier field development programme launched - development
drilling to be completed in 2017, with start-up of production
expected in the second half of 2018
-- Forecast 2017 unit operating expenditure of approximately
$18/boe, down nearly 30% on 2016 due to the positive impact of low
cost Stella volumes on the production portfolio
-- Forecast 2017 capital investment programme of $70 million,
primarily centred on Greater Stella Area ("GSA") activities,
including development drilling on the Harrier field
-- Downside commodity price protection extended into 2018 -
average volume of 7,600 boepd hedged to mid-2018 at an average
floor price of $50/boe
-- Net debt at 31 December 2016 reduced to $598 million, down $67 million from the start of 2016
Les Thomas, Chief Executive Officer, commented:
"The painstaking electrical inspection programme on the FPF-1 is
nearing completion and the vessel will shortly be ready for
start-up of the Stella field. While this will have taken longer
than planned, the transformational step it delivers for the
business remains undiminished. The Company moves into 2017 in good
health, with increasing cashflow, continued deleveraging and the
launch of the low cost Harrier satellite development."
Further Information
2016 Production
The producing asset portfolio has performed well over the last
twelve months, with production running ahead of guidance largely as
a result of solid performance from the Cook field, for which the
Company took over operatorship in March 2016. Average production
during the year was approximately 9,300 boepd (92% oil).
2017 Production Outlook
Average production in 2017 is anticipated to be in the range of
19,000 to 22,000 boepd (approximately 75% oil). This range reflects
the updated Stella start-up schedule, the programme of planned
maintenance shutdowns during the year and sensitivities associated
with the performance of those operational programmes.
Greater Stella Area Development
The Company's 2017 operational programme is dominated by
start-up of the Stella field and the commencement of Harrier field
development activities.
Stella Start-up Schedule
Preparation for start-up of the Stella field is well advanced,
with only completion of the previously announced fault remediation
works on the FPF-1 electrical junction boxes outstanding prior to
the delivery of first hydrocarbons. The inspection and repair
programme has been progressing well, with the work now in the
latter stages of completion, although challenging offshore weather
conditions have impacted the pace of activities on the vessel at
times. Conclusion of the work is now expected to push the
commencement of Stella production into February 2017.
Harrier Development
In line with the Company's strategy for building out the GSA
production hub, investment in the Harrier field development
programme will commence during 2017. The development involves
drilling of a multilateral well into the two reservoir formations
on the field, with the well tied back via a 7.5 kilometre pipe to
an existing slot on the Stella main drill centre manifold for
onward export and processing of production on the FPF-1.
The GSA joint venture has contracted with Ensco Offshore UK
Limited for the provision of a heavy duty jack-up drilling rig,
which is expected to arrive on location in the second quarter of
this year. The drilling programme is forecast to be completed in
the second half of 2017 and the subsea infrastructure installation
activities in summer 2018, resulting in the anticipated start-up of
Harrier production in the second half of 2018.
The net capital expenditure associated with execution of the
development over 2017-18 is approximately $75 million, equating to
a development cost of significantly less than $10/boe(1) . This
represents a cost reduction of approximately fifty percent from
that originally forecast. The substantial reduction in capital
expenditure is driven by both detailed well engineering design work
that has enabled the move away from drilling two individual wells
to one multi-lateral and securing attractive contracting terms
across the supply chain.
Financials
Hedging
During the fourth quarter of 2016 the Company extended its
commodity hedging position by a further 2.9 million barrels of 2017
and 2018 oil production. Taking into account these additional
volumes, the Company now has 7,600 boepd (85% oil) hedged at an
average floor price of $50/boe for the 18 months to 30 June 2018.
Full commodity price upside exposure has been retained on 60% of
the volumes hedged and upside exposure to $60/boe has been retained
on a further 25% of the hedged volumes.
Operating Expenditure
Forecast 2017 unit operating expenditure is anticipated to be
approximately $18/boe. This is nearly 30% lower than the unit cost
guidance for 2016 and reflects the benefit of production start-up
from the Stella field.
Capital Expenditure
Net 2017 capital expenditure is forecast to total approximately
$70 million. The majority of this expenditure relates to the GSA,
primarily being Harrier development activities plus completion of
the GSA oil export pipeline investment programme and Vorlich field
development planning activities. The forecast expenditure is also
inclusive of any additional Stella start-up costs, which are
expected to be minimal.
Net Debt
The Company continued to delever the business ahead of first
hydrocarbons from the Stella field during 2016, with net debt of
$598 million at 31 December 2016; down $67 million since the start
of the year and over $200 million since its peak in the first half
of 2015.
Glossary
boe Barrels of oil equivalent
boepd Barrels of oil equivalent per day
-S -
Enquiries:
Ithaca Energy
Les Thomas lthomas@ithacaenergy.com +44 (0)1224 650 261
Graham Forbes gforbes@ithacaenergy.com +44 (0)1224 652 151
Richard Smith rsmith@ithacaenergy.com +44 (0)1224 652 172
FTI Consulting
Edward Westropp edward.westropp@fticonsulting.com +44 (0)203 727 1521
Kim Camilleri kim.camilleri@fticonsulting.com +44 (0)203 727
1349
Cenkos Securities
Neil McDonald nmcdonald@cenkos.com +44 (0)207 397 8900
Beth McKiernan bmckiernan@cenkos.com +44 (0)131 220 9778
Nick Tulloch ntulloch@cenkos.com +44 (0)131 220 6939
RBC Capital Markets
Matthew Coakes matthew.coakes@rbccm.com +44 (0)207 653 4000
Notes
In accordance with AIM Guidelines, John Horsburgh, BSc (Hons)
Geophysics (Edinburgh), MSc Petroleum Geology (Aberdeen) and
Subsurface Manager at Ithaca is the qualified person that has
reviewed the technical information contained in this press release.
Mr Horsburgh has over 15 years operating experience in the upstream
oil and gas industry.
1. The estimated development cost per barrel is based on Harrier
reserves information contained in the independent reserves
assessment performed by Sproule International Limited, effective as
of 31 December 2015, and prepared in accordance with the Canadian
Oil and Gas Evaluation Handbook maintained by the Society of
Petroleum Engineers (Calgary Chapter), as amended from time to
time.
References herein to barrels of oil equivalent ("boe") are
derived by converting gas to oil in the ratio of six thousand cubic
feet ("Mcf") of gas to one barrel ("bbl") of oil. Boe may be
misleading, particularly if used in isolation. A boe conversion
ratio of 6 Mcf: 1 bbl is based on an energy conversion method
primarily applicable at the burner tip and does not represent a
value equivalency at the wellhead. Given the value ratio based on
the current price of crude oil as compared to natural gas is
significantly different from the energy equivalency of 6 Mcf: 1
bbl, utilising a conversion ratio at 6 Mcf: 1 bbl may be misleading
as an indication of value.
All references to dollars ($) in this press release refer to the
United States dollar (USD).
About Ithaca Energy
Ithaca Energy Inc. (TSX: IAE, LSE AIM: IAE) is a North Sea oil
and gas operator focused on the delivery of lower risk growth
through the appraisal and development of UK undeveloped discoveries
and the exploitation of its existing UK producing asset portfolio.
Ithaca's strategy is centred on generating sustainable long term
shareholder value by building a highly profitable 25kboe/d North
Sea oil and gas company. For further information please consult the
Company's website www.ithacaenergy.com.
Forward-looking Statements
Some of the statements and information in this press release are
forward-looking. Forward-looking statements and forward-looking
information (collectively, "forward-looking statements") are based
on the Company's internal expectations, estimates, projections,
assumptions and beliefs as at the date of such statements or
information, including, among other things, assumptions with
respect to production, drilling, construction and maintenance
times, inspection and remediation times, well completion times,
development schedules, risks associated with operations, future
capital expenditures, continued availability of financing for
future capital expenditures, future acquisitions and dispositions
and cash flow. The reader is cautioned that assumptions used in the
preparation of such information may prove to be incorrect. When
used in this press release, the words and phrases like
"anticipate", "continue", "estimate", "expect", "may", "will",
"project", "plan", "should", "believe", "could", "target",
"forecast" and similar expressions, and the negatives thereof,
whether used in connection with operational activities, including
remaining FPF-1 work activities prior to Stella first hydrocarbons
and the timing thereof, the timing of Stella start-up and first
hydrocarbons, production forecasts, duration and timing of planned
maintenance shutdowns, Harrier development activities and the
timing thereof, the timing of Harrier start-up, anticipated capital
expenditures and activities associated therewith, anticipated
operating expenditures, estimated development costs, or otherwise,
are intended to identify forward-looking statements. Such
statements are not promises or guarantees, and are subject to known
and unknown risks, uncertainties and other factors that may cause
actual results or events to differ materially from those
anticipated in such forward-looking statements. The Company
believes that the expectations reflected in those forward-looking
statements are reasonable but no assurance can be given that these
expectations, or the assumptions underlying these expectations,
will prove to be correct and such forward-looking statements
included in this press release should not be unduly relied upon.
These forward-looking statements speak only as of the date of this
press release. Ithaca Energy Inc. expressly disclaims any
obligation or undertaking to release publicly any updates or
revisions to any forward-looking statement contained herein to
reflect any change in its expectations with regard thereto or any
change in events, conditions or circumstances on which any
forward-looking statement is based except as required by applicable
securities laws. Any "financial outlook" contained in this press
release, as such term is defined by applicable securities laws, is
provided for the purpose of providing information about
management's current expectations and plans relating to the future.
Readers are cautioned that reliance on such information may not be
appropriate for other purposes.
Additional information on these and other factors that could
affect Ithaca's operations and financial results are included in
the Company's Management Discussion and Analysis for the quarter
ended 30 September 2016 and the Company's Annual Information Form
for the year ended 31 December 2015 and in reports which are on
file with the Canadian securities regulatory authorities and may be
accessed through the SEDAR website (www.sedar.com).
This information is provided by RNS
The company news service from the London Stock Exchange
END
UPDEAKFFFEPXEFF
(END) Dow Jones Newswires
January 12, 2017 02:00 ET (07:00 GMT)
Ithaca Energy (LSE:IAE)
Historical Stock Chart
From Apr 2024 to May 2024
Ithaca Energy (LSE:IAE)
Historical Stock Chart
From May 2023 to May 2024