Monday 16 May 2016

Ithaca Energy Inc. (TSX: IAE, LSE AIM: IAE) (“Ithaca” or the “Company”) announces its results for the three months ended 31 March 2016 (“Q1-2016” or the “Quarter”).

Resilient cashflow generation during the Quarter

Average production of ~9,000 boepd – in line with guidance

$44 million cashflow from operations, driven by reduced operating costs and hedging gains (cashflow per share $0.11)

Material reduction in operating costs to $25/boe, 17% below 2016 forecast of $30/boe prior to Stella start-up

Earnings of $18 million (earnings per share $0.04)

Continued deleveraging during the Quarter and strong liquidity position

Substantial deleveraging - net debt reduced from a peak of over $800 million in the first half of 2015 to $630 million at end Q1-2016

Over $100 million of funding headroom maintained following the RBL redetermination in April 2016, with total debt availability in excess of $730 million

Significant commodity price protection – 8,800 boepd hedged from end Q1-2016 until mid-2017 at an average price of $61/boe, with a mark-to-market value of $94 million at end Q1-2016

Material near-term step-change in production and cashflow from the Greater Stella Area (“GSA”)

On track for first production from the Stella field in September 2016, with FPF-1 sail-away in June, in line with previous guidance

Production set to more than double to 20-25,000 boepd

Company unit operating costs set to reduce to $20/boe

Les Thomas, Chief Executive Officer, commented: “Ithaca has maintained the strong momentum generated in 2015 throughout the first quarter, with Stella progressing on track, further downward pressure on operating costs and reaffirmation of our financial strength. We have a solid foundation to take us forward beyond the start-up of Stella, enabling execution of a balanced and flexible future investment programme that can be tailored for the commodity price environment while meeting our priority of reducing debt.”

Greater Stella Area Development Update

The FPF-1 modifications programme, which is being undertaken by Petrofac in the Remontowa shipyard in Poland, is on track for first production from the Stella field in September 2016, with FPF-1 sail-away in June, in line with the previous guidance window. Commissioning operations on the vessel are well advanced and close out of the marine work to ensure the vessel satisfies the required sail-away certification standards is progressing to plan. Completion of the modifications programme is the critical path item for start-up of production from the Stella field, with the five well development drilling programme and subsea infrastructure installation campaign associated with start-up of the Stella field having both been successfully completed in 2015.

Handover of the various processing, utilities and accommodation systems on the vessel from the modifications to the operations teams is on-going. The next key milestone will be the completion of deep water trials immediately prior to commencing the tow to the field. This involves the FPF-1 being moved to a location off the coast of Gdansk in order to undertake the necessary marine system commissioning trials that cannot be done in the shallow waters of the shipyard.

It is anticipated that the period from sail-away to first hydrocarbons will be approximately three months. Following towing of the FPF-1 to the field, the vessel will be moored on location using twelve pre-installed anchor chains. The dynamic risers and umbilicals that connect the subsea infrastructure to the vessel will then be installed. Thereafter, commissioning of the various processing and utility systems that can only be undertaken on location with hydrocarbons from the field will be completed.

The 336 by 59 metre FPSO is designed to hold more than one million barrels of condensate in its hull and will accommodate a workforce of up to 200 people.

At December 2015, the Ichthys LNG Project celebrated 81 per cent completion and is on schedule for first production during the third quarter of 2017.

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