SOURCE: Ithaca Energy Inc

August 13, 2015 02:00 ET

Ithaca Energy Inc. Announces 2015 Half Year Financial Results

CALGARY, AB--(Marketwired - Aug 13, 2015) - Ithaca Energy Inc. (TSX: IAE) (LSE: IAE)

TSX: IAE; LSE: IAE

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

Ithaca Energy Inc.

2015 Half Year Financial Results

13 August 2015

Ithaca Energy Inc. (TSX: IAE; LSE: IAE) ("Ithaca" or the "Company") announces its quarterly financial results for the three months ended 30 June 2015 ("Q2-2015") and half yearly results for the six months ended 30 June 2015 ("H1-2015").

Financial Highlights

Solid H1-2015 cashflow generation

  • Average production of 12,578 barrels of oil equivalent per day ("boepd"), in line with guidance (H1-2014: 10,528 boepd)
  • $160 million cashflow from on-going operations1 ($60 million in Q2-2015), including oil price hedging gains (H1-2014: $102 million)
  • Adjusted earnings of $55 million, excluding a non-cash accounting tax charge of $41 million resulting from a reduction in UK tax rates in Q1-2015 (H1-2014: $17 million)
  • Cashflow per share $0.43 (H1-2014: $0.31) and adjusted earnings per share $0.17 (H1-2014: $0.05)

Business resilient to low oil price environment

  • Full year 2015 production guidance remains unchanged at 12,000 boepd (95% oil)
  • Two years of oil hedging in place - average of 6,400 barrels of oil per day ("bopd") at $70/bbl until June 2017
  • Operating costs reduced by approximately 29% to $35/boe compared to 2014 and forecast to fall further to around $25/boe following Stella start-up
  • Brent breakeven price of under $10/bbl through to Stella start-up with benefit of hedges
  • Tax allowances pool of over $1.5 billion at 30 June 2015
  • Net debt at 30 June 2015 of $788 million - $950 million of debt funding facilities in place
  • Forecast peak net debt requirement prior to Stella start-up reduced to under $800 million from previous guidance of $825-850 million - largely insensitive to Brent given hedging

Les Thomas, Chief Executive Officer, commented:
"Despite a challenging oil price environment, the Company delivered strong cashflow from operations in the first half of the year, driven by solid production performance, reduced operating costs and substantial hedging gains. At the same time the Stella development progressed in line with the planned schedule, with the Technip 2015 subsea campaign materially complete and Petrofac continuing to advance the FPF-1 modifications programme."

Production & Operations
Average production in H1-2015 was 12,578 boepd (93% oil), a 19% increase on the same period in 2014. The Company's producing assets performed well over H1-2015, with solid operational uptime achieved across the main fields.

Full year 2015 production guidance remains at 12,000 boepd (95% oil), taking into account planned maintenance shutdown activities in the second half of the year.

As previously highlighted, production in the third quarter of the year ("Q3-2015") will be below the average guidance level for the year as a result of planned maintenance shutdown activities on the host facilities serving a number of the Company's fields. The majority of the planned shutdowns have now been completed, with the main outstanding one being close out of the two month shutdown of the host facility that serves the Cook field in September 2015.

Greater Stella Area Development Update
The primary focus of the on-going GSA development activities remains on completion of the FPF-1 modifications programme being undertaken by Petrofac, which continues to advance towards the planned vessel sail-away from the Remontowa yard in Poland in late Q1-2016.

Operations on the FPF-1 are currently centred on closing out the main construction phase activities and transitioning into the start-up of commissioning operations. Pipework pressure testing on the topsides processing and utility systems is well advanced and electrical cable termination activities are nearing conclusion, close out of which will facilitate the commencement of the main commissioning phase. Pre-commissioning activities are on-going. The temporary generators required for commissioning are ready on-site, hot oil flushing of package lube oil pipework has commenced and site acceptance testing of the integrated control and safety system equipment is in progress.

The five well Stella development drilling campaign was successfully concluded in April 2015 and the subsea infrastructure installation campaign is materially complete. Installation of the oil export pipeline from the FPF-1 riser base to the Single Anchor Loading structures has recently been completed, with Technip scheduled to return in October 2015 to perform the final pipeline tie-ins that will conclude the 2015 subsea work programme.

Net Debt
Net debt at 30 June 2015 was $788 million out of total debt funding facilities of $950 million. This was lower than the previously indicated expectation for peak net debt of $825-850 million in the second quarter of the year primarily as a consequence of the slower than forecast unwinding of the working capital position associated with investment activities in H1-2015.

Following the approximately $30 million net cash receipt from the sale of the Norwegian business in early July 2015 and forecast operating cashflows for the remainder of the year, the peak net debt requirement prior to Stella start-up is reduced to under $800 million. Given the level of oil hedges in place, this position is largely insensitive to prevailing Brent prices. 

H1-2015 Financial Results Conference Call
A conference call and webcast for investors and analysts will be held today at 12.00 BST (07.00 EST). Listen to the call live via the Company's website (www.ithacaenergy.com) or alternatively dial-in on one of the following telephone numbers and request access to the Ithaca Energy 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 Company's website prior to the call.

Notes
1. Cashflow from on-going operations of $160 million less $20 million of net outflows from discontinuing fields (Beatrice, Athena & Anglia), provided for as onerous contracts in 2014, equates to overall cashflow from operations of $140 million

The unaudited consolidated financial statements of the Company for the three and six month periods ended 30 June 2015 and the related Management Discussion and Analysis are available on the Company's website (www.ithacaenergy.com) and on SEDAR (www.sedar.com). All values in this release and the Company's financial disclosures are in US dollars, unless otherwise stated.

- ENDS -

Enquiries:

Ithaca Energy        
Les Thomas   lthomas@ithacaenergy.com   +44 (0)1224 650 261
Graham Forbes   gforbes@ithacaenergy.com   +44 (0)1224 652 151
Richard Smith   rsmith@ithacaenergy.com   +44 (0)1224 652 172
         
FTI Consulting        
Edward Westropp   edward.westropp@fticonsulting.com   +44 (0)207 269 7230
Tom Hufton   tom.hufton@fticonsulting.com   +44 (0)203 727 1625
         
Cenkos Securities        
Neil McDonald   nmcdonald@cenkos.com   +44 (0)207 397 8900
Nick Tulloch   ntulloch@cenkos.com   +44 (0)131 220 6939
         
RBC Capital Markets        
Daniel Conti   daniel.conti@rbccm.com   +44 (0)207 653 4000
Matthew Coakes   matthew.coakes@rbccm.com   +44 (0)207 653 4000

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) 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 and the exploitation of its existing UK producing asset portfolio. 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 www.ithacaenergy.com.

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 dispositions 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 and phrases like "forecasts", "anticipate", "continue", "estimate", "expect", "may", "will", "project", "plan", "should", "believe", "could", "target", "in the process of" and similar expressions, and the negatives thereof, whether used in connection with operational activities, Stella first hydrocarbons, operating costs, drilling plans, production forecasts, maintenance schedules, budgetary figures, anticipated peak debt, potential developments including the timing and anticipated benefits of acquisitions and dispositions 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", "cashflow per share" and "net debt". These terms do not have any standardised meanings within IFRS 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 debt as a measure to assess its financial position. Net 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 June 30, 2015, and the Company's Annual Information Form for the year ended December 31, 2014 and in reports which are on file with the Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com).

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