Ithaca Energy Inc.: 2017 Financial Results
Thursday 29 March 2018
Ithaca Energy Inc. announced its financial results for the twelve months ended 31 December 2017, together with the results of its independent year-end reserves assessment.
Solid cashflow generation, with improving cash netbacks driven by lower unit operating expenditures
- Average production of 13,909 barrels of oil equivalent per day (“boepd”) – a 49% increase on the prior year as a result of the start-up of production from the Stella field
- Unit operating expenditure reduced to $19/boe, a $4/boe or 17% reduction on 2016
- 2017 cashflow from operations of $146 million, equating to $29/boe
- Underlying earnings of $17 million after adjusting for one-off impairments ($24 million post-tax) and non-cash mark-to-market revaluation of hedges ($19.3 million post tax)
Increasing production and cashflow generation forecast to deliver accelerated deleveraging in 2018
- Average 2018 production forecast to be approximately 15,000 boepd, reflecting the divestment of the Wytch Farm field, the anticipated start-up of the Harrier field in mid-2018 and planned maintenance shutdowns being undertaken during the year
- Production in the first quarter of 2018 is forecast to be approximately 18,000 boepd, reflecting strong operational uptime performance across the portfolio
- Proved and probable reserves as of 31 December 2017 of 72 million barrels of oil equivalent, as independently evaluated by Sproule International Limited (“Sproule”)
- Net debt of $605 million at 31 December 2017 – forecast to reduce to approximately $560 million at 31 March 2018 including the anticipated proceeds of the Wytch Farm divestment
- Refinancing of the Company’s debt facilities anticipated during 2018
Greater Stella Area (“GSA”) “hub and spoke” strategy progressing to plan
- GSA production hub fully operational – switch from tanker loading to oil pipeline export completed and strong “FPF-1” operational uptime performance being achieved
- Maximising value of GSA infrastructure through execution of satellite field development strategy – Harrier start-up anticipated mid-2018 and Vorlich development sanctioned for start-up in 2020
Strong outlook – platform for continued North Sea growth established
- Ithaca represents a core component of Delek Group’s strategy to grow its international E&P business - strong shareholder with ambition to expand its North Sea business using the established platform and expertise of Ithaca
- Corporate strategy remains unchanged following the takeover - focus on the delivery of lower risk production and development-led growth and further expansion of the asset portfolio while maintaining a robust low-cost capital structure
Year-End Reserves
Total proved and probable (“2P”) reserves as at 31 December 2017 have been independently estimated by Sproule, a qualified reserves evaluator, as 72 million barrels of oil equivalent (“MMboe”) with an associated post-tax net present value discounted at 10% of $1,370 million.
It is noted that the 2P reserves include approximately 4.2 MMboe associated with the Wytch Farm field and associated licences as the divestment had not completed as of the effective date of the reserves evaluation (the transaction is anticipated to complete by the end of March 2018).