Ithaca Sees Production Doubling in 2016 on Stella Start-Up

UK North Sea-focused independent oil and gas firm Ithaca Energy Inc. said Tuesday that it expects its production to more than double to 25,000 barrels of oil equivalent per day during 2016.

In an operations update released to the London Stock Exchange, Ithaca said that average production amounted to approximately 12,100 boepd in 2015 – slightly ahead of guidance of 12,000 boepd. But in 2016, the firm expects to add 16,000 boepd thanks to the start-up of production in the Greater Stella Area (expected in 3Q 2016) on top of base production that is forecast to be 9,000 boepd.

Development activities in the Greater Stella Area are dependent upon the completion of the FPF-1 (Floating Production Facility 1) modifications program that is currently being undertaken by Petrofac in the Remotowa shipyard in Poland. Planned sail-away of the FPF-1 from Poland was scheduled for the end of the first quarter of this year but is now expected to be delayed by six-to-12 weeks due to slippage in completion of certain commissioning milestones and the requirement for some marine system rework in order to ensure the vessel meets the required sail-away certification standards, Ithaca said.

In its update, Ithaca also highlighted the strengthening of its Greater Stella Area position with the acquisition of a strategic non-operated interest in the Vorlich discovery from Total E&P UK. The Vorlich discovery is located approximately six miles from the Greater Stella Area hub and has estimated gross proven and probable reserves of between 20 and 30 million barrels of oil equivalent.

Meanwhile, the firm expects its capital spending to amount to approximately $50 million in 2016 – representing a reduction of 40-percent on 2015's capital expenditures.

Commenting in the operations update, Ithaca CEO Les Thomas said:

"With many positive actions taken over the last year Ithaca enters 2016 in a position to continue generating positive cashflow from operations, even at current low commodity prices, and to deliver transformational first production from the Stella development.
"We remain confident that good returns can be made in the North Sea, with a rigorous cost and risk conscious approach to selective investment in high quality assets. We believe that today's difficult environment actually provides an opportunity for the company as a focused player in the sector, as demonstrated by the acquisition of our interest in Vorlich."

In a brief research note, analysts at investment bank FirstEnergy commented: "The acquisition of Vorlich is good news in our view, as it maximizes the value of the Stella infrastructure."


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