Ithaca Energy posted a $17 million profit after tax in the first quarter of 2016, following a loss of $26 million during the same period last year, and announced that it was maintaining its capital expenditure (CAPEX) of $50 million.
The energy firm achieved its results despite its revenues falling to $33 million in the quarter, from $70 million in the corresponding quarter last year. Ithaca’s operating costs dropped to $20 million in 1Q, marking an $8 million reduction from 2015’s operating costs.
The majority of the company’s 2016 CAPEX will go towards the company’s activities in the Greater Stellar Area, located in the central North Sea on the UK continental shelf, including operations required to prepare the Vorlich Field Development Plan for approval. Beyond 2016, Ithaca forecasts an average underlying capital expenditure of between $10-25 million per annum on its producing asset portfolio.
In addition to this, the company “has a diverse set of further investment opportunities within its existing portfolio and the flexibility to tailor its capital program to the economic outlook at the time,” according to its 1Q results statement. It is anticipated that the average annual capital expenditure required to develop these opportunities will be between $25 -75 million.
Ithaca’s average production in 1Q was marginally below FirstEnergy’s forecasts at 9,000 barrels of oil equivalent per day, reflecting the cessation of production from the Athena and Anglia fields and reduced production, due to planned maintenance activities, on the Pierce field. First production from the Stella field is on-track for September 2016, with a five well development drilling program and a subsea infrastructure instalation campaign having both been successfully completed in 2015. Following production start-up from Stella, Ithaca anticipates that its production would more than double to between 20,000 and 25,000 boepd.
“Ithaca has maintained the strong momentum generated in 2015 throughout the first quarter, with Stella progressing on track, further downward pressure on operating costs and reaffirmation of our financial strength,” said Ithaca’s CEO Les Thomas in a company statement.
“We have a solid foundation to take us forward beyond the start-up of Stella, enabling execution of a balanced and flexible future investment programme that can be tailored for the commodity price environment while meeting our priority of reducing debt,” he added.
FirstEnergy stated that the market reaction to Ithaca’s latest financial results was “positive” and “very encouraging”.
“With the best balance sheet among the financially leveraged international names we cover, we continue liking Ithaca,” the company said in a brief research note sent to Rigzone.
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