SOURCE: Ithaca Energy Inc.

Ithaca Energy Inc.

November 13, 2014 02:00 ET

Ithaca Energy Inc. 2014 Third Quarter Financial Results 13 November 2014

ABERDEEN, SCOTLAND--(Marketwired - Nov 13, 2014) - Ithaca Energy Inc. (TSX: IAE) (LSE: IAE) (AIM: IAE) ("Ithaca" or the "Company") announces its quarterly financial results for the three months ended 30 September 2014 ("Q3-2014" or the "Quarter").

Solid Q3-2014 financial results delivered during the main planned maintenance shutdown quarter of the year

  • $43.9 million1 underlying cashflow from operations

  • $8.0 million profit after tax

Substantial oil hedging in place, providing significant downside price protection through to mid-2016

  • 6,300 barrels of oil per day hedged at an average of $102/bbl (70% swaps / 30% puts) from 1 October 2014 until 30 June 2016

  • The executed hedges through to mid-2016 result in the Company having a Brent breakeven price for the existing producing asset base of under $20/bbl

  • Based on future oil and gas prices at 30 September 2014 (Brent spot price ~$95/bbl), the Company's executed commodity price hedges had a net value of approximately $25 million, increasing to over $60 million with a $10/bbl fall in Brent

Strong fully funded cash position even in lower oil price environment

  • $1,010 million debt facilities in place following completion of a five year $300 million senior unsecured notes offering, with a weighted average cost of debt of under 5%

  • With inclusion of the assets acquired during the Quarter from Sumitomo Corporation (the "Summit Assets"), the Company has full availability of its $610 million reserve based lending facility

  • Net drawn debt of $719 million at the end of Q3-2014 (excluding the Norwegian tax rebate facility)

  • Combining a Brent oil price projection of approximately $90/bbl through to the planned start-up of production from the Stella field in mid-2015 with forecast production and operating costs, it is anticipated that peak net drawn debt will be around $815 million

  • Given the benefit of the Company's existing oil price hedging and sales agreements, a $75/bbl Brent price sensitivity until mid-2015 increases peak net drawn debt by only a further $15 million

Graham Forbes, Chief Financial Officer, commented:
"Given the impact of planned maintenance shutdowns during the quarter, the underlying third quarter numbers represent a solid contribution to the Company's year to date results. In light of the recent fall in oil prices, it is important to note that the Company is in a strong financial position, with all debt covenants satisfied and future revenues substantially underpinned by the significant quantity of oil price hedges that have been executed well in excess of prevailing prices."

Production & Operations
Reflecting the impact of planned summer maintenance shutdowns during the quarter, average pro-forma production in Q3-2014 was approximately 11,600 boepd, 96% oil (including production from the Summit Assets for the entire Quarter). Average consolidated production reflecting the contribution from the Summit Assets from the acquisition completion date of 31 July 2014 was 10,861 boepd.

As previously announced, it is anticipated that full year 2014 pro-forma production will be approximately 12,500 boepd. This equates to consolidated production of approximately 11,200 boepd, reflecting inclusion of production from the Summit Assets from the acquisition completion date.

Further to the previously reported unplanned shut-in of the Causeway Area fields, the oil export pump on the host platform has recently been repaired and operations are on-going to optimise production from the fields. The workover on the "P4" well on the Athena field is nearing completion and it is anticipated that operations to de-mobilise the rig will commence shortly.

Greater Stella Area Development Update
Continued progress has been made during the Quarter on execution of the Greater Stella Area development. The fourth Stella development well was successfully completed, further de-risking the initial annualised production forecast for the field of approximately 30,000 boepd (100%), 16,000 boepd net to Ithaca. Operations are currently on-going on the fifth Stella development well, which is scheduled to be completed in early 2015. Work on this year's subsea infrastructure installation campaign has been successfully completed and preparation is well advanced for finishing the remaining subsea activities in early 2015. Construction activities continue on the main deck of the "FPF-1" floating production facility, with completion of the works and the delivery of first hydrocarbons scheduled for mid-2015.

Q3-2014 Financial Results Conference Call
A conference call and webcast for investors and analysts will be held today at 12:00 GMT (07.00 EST). Listen to the call live via the Company's website ( or alternatively dial-in on the following telephone number and request access to the Ithaca conference call: UK +44 203 059 8125; Canada +1 855 287 9927; US +1 866 796 1569. A short presentation to accompany the results will be available on the website prior to the call.

The unaudited consolidated financial statements of the Company for the three and nine month periods ended 30 September 2014 and the related Management's Discussion and Analysis is available on the Company's website ( and on SEDAR (


1. Underlying cashflow from operations excludes a $12 million charge pertaining to a 2013 Sullom Voe terminal reconciliation charge reported as a contingent liability in the second quarter of 2013 and a downwards non-cash oil stock revaluation of $5.6 million, both of which are included in the financial statement reported cashflow from operations of $26.3 million.

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: IAE) (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, the exploitation of its existing UK producing asset portfolio and a Norwegian exploration and appraisal business targeting the generation of discoveries capable of monetisation prior to development. 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

Not for Distribution to U.S. Newswire Services or for Dissemination in the United States

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 times, well completion times, risks associated with operations, future capital expenditures, continued availability of financing for future capital expenditures, future acquisitions 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 "anticipate", "continue", "estimate", "expect", "may", "will", "project", "plan", "should", "believe", "could", "target" and similar expressions, and the negatives thereof, whether used in connection with operational activities, drilling plans, production forecasts, budgetary figures, potential developments 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.

This press release contains non-International Financial Reporting Standards ("IFRS") industry benchmarks and terms, such as "cashflow from operations" and "net drawn debt". "Cashflow from operations" and "net drawn debt" do not have any standardized meaning and therefore are unlikely to be comparable to similar measures presented by other companies. The Company uses cashflow from operations to help evaluate its performance. As an indicator of the Company's performance, cashflow from operations should not be considered as an alternative to, or more meaningful than, net cash from operating activities as determined in accordance with IFRS. The Company considers cashflow from operations to be a key measure as it demonstrates the Company's underlying ability to generate the cash necessary to fund operations and support activities related to its major assets. Cashflow from operations is determined by adding back changes in non-cash operating working capital to cash from operating activities. The Company uses net drawn debt as a measure to assess its financial position. Net drawn debt includes amounts outstanding under the Company's debt facilities and senior notes, less cash and cash equivalents. Net drawn debt noted above excludes any amounts outstanding under the Norwegian tax rebate facility.

Additional information on these and other factors that could affect Ithaca's operations and financial results are included in the Company's Management's Discussion and Analysis for the quarter ended September 30, 2014, and the Company's Annual Information Form for the year ended December 31, 2013 and in reports which are on file with the Canadian securities regulatory authorities and may be accessed through the SEDAR website (

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