LONDON (Alliance News) - Ithaca Energy Inc on Monday said production in the first half of the year was over 4.0% higher than the company's guidance range, but it could be facing another delay at its Stella field development after revealing the production vessel being built in Poland for Stella has still not left the yard.
Production in the first half of 2016 averaged 9,400 barrels of oil equivalent per day, comfortably ahead of the 9,000 barrel per day guidance figure provided by the company, but still 25% lower than a year ago when production averaged 12,578 barrels per day.
Notably, production in the first quarter of 2016 was in line with guidance but the second quarter experienced a material lift, averaging 9,800 barrels of oil equivalent per day. Remedial works were being carried out on the Pierce field in the first quarter and that was completed to allow unrestricted production rates in the second.
Full-year guidance remains at 9,000 barrels of oil equivalent per day.
"Production in the third quarter of the year is expected to remain broadly in line with full year guidance, with the two week planned Brent System maintenance shutdown that impacts production from the company's Northern North Sea fields now scheduled to take place in October 2016," said Ithaca.
Ithaca suggested there has been another delay to the development at the Stella field in the North Sea which is set to significantly increase production later this year. The delays have been down to the floating production, storage and offloading vessel being built for the project by fellow London-listed Petrofac Ltd.
The vessel encountered problems during the commissioning phase in January, and Ithaca said last month that the delayed vessel would leave the shipyard in Poland either in late June or "early in July" - but on Monday said the vessel would leave the yard "later this month".
Ithaca said the modifications being made to the vessel by Petrofac are "essentially complete", allowing the vessel to leave the yard in "approximately two weeks".
Originally, the field was supposed to be producing from 2014.
Last month, Ithaca guided production from Stella would start in "late September". Although Ithaca did not update this goal, production will not start from the field until around three months after the vessel has left the yard, suggesting production may be pushed back into October.
Ithaca said, however, that production from Stella will be ramped-up once operations are launched, will which will lead to an initial annualised production rate of 16,000 barrels of oil equivalent being produced net to Ithaca.
The company said its hedging position remains unchanged, with 11,000 barrels per day of hedges being realised in the first half of the year. Around 9,400 barrels per day are hedged for the second half of the year at an average price of USD58 per barrel.
In the first half of 2017, 7,000 barrels per day are hedged at USD60.
Ithaca said net debt at the end of the first half was USD606.0 million, down from USD630.0 million at the end of the first quarter.
Ithaca had its reserve-based lending facility reviewed as expected in April, and the company now has total debt facilities worth USD730.0 million, which it said provides USD120.0 million of funding headroom ahead of first production from the Stella field.
That funding is comprised of USD300.0 million worth of unsecured senior notes and USD430.0 million worth of bank facilities.
Ithaca shares were down 1.7% to 65.76 pence per share on Monday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
Copyright 2016 Alliance News Limited. All Rights Reserved.
Petrofac (PFC)