Ithaca Energy’s average production during the second quarter of this year was approximately 9,800 barrels of oil equivalent per day, which is higher than the company’s 2016 production guidance of 9,000 boepd.
Average production over the first half of 2016 was 9,400 boepd. Following Ithaca’s latest output results, the firm’s full year base production guidance, excluding any contribution from start-up of the central North Sea Stella field during 2016, remained 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, said Ithaca in a company statement. A “prompt ramp up of production” is anticipated following first hydrocarbons, according to Ithaca, which will lead to an expected initial annualized production rate of approximately 16,000 boepd net to the company.
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 will impact production from the company’s Northern North Sea fields now scheduled to take place in October.
Providing an update on the FPF-1 floating production facility modifications program being undertaken by Petrofac in the Remontowa shipyard in Poland, which is part of the initial phase of bringing Stella online, Ithaca revealed that operations are essentially complete. Ithaca stated in a company release that 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.
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 Stella field. The anticipated period from sail-away to first hydrocarbons is approximately three months.
Ithaca’s net debt on June 30 was $606 million, down from $630 million at the end of the first quarter of the year. Following the completion of the semi-annual RBL redetermination process in April 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.
“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,” said Les Thomas, Chief Executive Officer of Ithaca, in a company statement.
“Our existing production business is performing well, with volumes running ahead of guidance and continued deleveraging being delivered ahead of Stella start-up.”
FirstEnergy revealed that market reaction to Ithaca’s latest operations update was “neutral”, although the oil and gas advisory firm revealed that production was slightly ahead of its forecasts and net debt was lower than expected.
Even though the sail away date of the FPF-1 vessel now looks to be a few weeks behind previous indications “with probably knock-on effect to the end of September first oil,” FirstEnergy stated that “with improving financials and Stella start-up in about three months, this is a story we continue liking”.
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