11 Jul 2016 07:00
Not for Distribution to U.S. Newswire Services or for Dissemination in the United States
This Announcement Contains Inside Information
Ithaca Energy Inc.
Second Quarter 2016 Operations Update
11 July 2016
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 ("Q2-2016" or the "Quarter"), including an update on the status of the "FPF-1" floating production facility modifications programme being undertaken by Petrofac in the Remontowa shipyard in Poland. The Company is scheduled to issue its financial results for the first six months of the year ("H1-2016") on 15 August 2016.
Les Thomas, Chief Executive Officer, commented:
"The FPF-1 works are now being finalised, with preparation and performance of the inclination test being the only work required prior to the vessel exiting the yard. We are delighted with the quality and completeness of the vessel, having achieved our key objective of completing the onshore scope in the yard and avoided costly carry over of unfinished work offshore. Our existing production business is performing well, with volumes running ahead of guidance and continued deleveraging being delivered ahead of Stella start-up."
Greater Stella Area Development
The FPF-1 modifications are essentially complete and the vessel will be ready to leave the yard upon completion of approximately two weeks of work that is required to prepare for and perform the planned vessel inclination test and loading of supplies for the transit from the yard. Importantly, the onshore modifications scope has been completed in the yard without the need to carry onshore scope offshore. The FPF-1 is expected to leave the yard later this month and will complete the final marine system trials offshore Gdansk prior to being towed to the field. The anticipated period from sail-away to first hydrocarbons is approximately three months.
Further updates will be provided once the FPF-1 has left the yard and when it commences the tow to the field.
Production & Operations
The producing asset portfolio has performed well over H1-2016, with production running ahead of guidance. Average production during the Quarter was approximately 9,800 boepd, resulting in average production in H1-2016 of 9,400 boepd.
The remedial works on the Pierce field subsea gas injection flowline were completed as planned at the end of the Quarter and unrestricted production rates have been restored.
Full year base production guidance, excluding any contribution from start-up of the Stella field during 2016, remains unchanged at 9,000 boepd. The additional production contribution resulting from the start-up of Stella during the year will depend on the exact timing of first hydrocarbons from the field. Prompt ramp up of production is anticipated following first hydrocarbons, leading to an expected initial annualised production rate of approximately 16,000 boepd net to Ithaca.
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.
Financials
Hedging
The Company's future commodity hedged position remains unchanged from that announced at the previous quarter's financial results. During Q2-2016 approximately 11,000 boepd (52% oil) of commodity hedges were realised. Approximately 9,400 boepd (48% oil) is hedged in the remaining six months of 2016 at an average price of $58/boe. In the first half of 2017 approximately 7,000 boepd (50% oil) is hedged at an average price of $60/boe.
Net Debt
Net debt at 30 June 2016 was $606 million, down from $630 million at the end of the first quarter of the year.
Following completion of the semi-annual RBL redetermination process in April 2016 the Company has in place total available debt facilities of $730 million, providing in excess of $120 million of funding headroom ahead of planned first hydrocarbons from the Stella field. This funding capacity comprises $300 million unsecured senior notes and $430 million bank debt facilities.
H1-2016 Financial Results Conference Call
The Company is scheduled to release its H1-2016 financial results on 15 August 2016. A conference call and webcast for investors and analysts will be held on the same day at 12.00 BST (07.00 EDT). Listen to the call live via the Company's website (www.ithacaenergy.com) or alternatively dial-in on one of the following telephone numbers and request access to the Ithaca Energy conference call: UK +44 203 059 8125; Canada +1 855 287 9927; US +1 866 796 1569.
Glossary
boepd Barrels of oil equivalent per day
RBL Reserves Based Lending facility
- ENDS -
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
Tom Hufton tom.hufton@fticonsulting.com +44 (0)203 727 1625
Cenkos Securities
Neil McDonald nmcdonald@cenkos.com +44 (0)207 397 1953
Nick Tulloch ntulloch@cenkos.com +44 (0)131 220 9772
Beth McKiernan bmckiernan@cenkos.com +44 (0)131 220 9778
RBC Capital Markets
Daniel Conti daniel.conti@rbccm.com +44 (0)207 653 4000
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.
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.
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, well completion times, 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", "in the process of", "on track" ,"set to" and similar expressions, and the negatives thereof, whether used in connection with operational activities, timing of sail-away of the FPF-1 vessel, including remaining FPF-1 work activities prior to sail-away, remaining work activities prior to the FPF-1 being towed to the field, Stella first hydrocarbons, production forecasts, anticipated ramp-up of production following Stella first hydrocarbons, timing of future FPF-1 updates, duration and timing of planned maintenance shutdowns, timing of H1-2016 financial results release, 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.
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 31 March 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).