Ithaca Energy Inc. (TSX: IAE, LSE AIM: IAE) provides an operations update following the end of the second quarter of the year, 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 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.
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 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.
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