After a volatile year-and-a-half or so, one filled with acquisitions and potential takeovers, North Sea specialist Ithaca Energy is sitting pretty as it moves into the latter half of 2013.When we last featured the Calgary-headquartered company in March of this year, it had announced a £203 million bid for Valiant Petroleum, which has now been completed.
The UK-focused producer, which is listed on both sides of the Atlantic, was looking to accelerate its North Sea reserves and production growth, and ward off potential suitors itself.Ithaca was under pressure to stimulate its own share price to avoid possible low ball bids from predators and better reflect the value of its asset base, and its capacity to deliver a step change in production over the next couple of years.
It had rebutted some interest from potential buyers in early 2012, a period that saw share prices swing dramatically upwards and downwards.And yet Ithaca is a strong and well balanced company, with a core focus on a mature but trusted producing region, and one that saw output move resolutely upwards last year.Indeed, this year has seen share prices trade within a far smaller range, currently hovering around the 120p mark.In the company’s last results update, for Q1 2013, it said it was well funded was well funded and production was moving firmly in the right direction. The outlook is for more to come.
Ithaca’s total forecast production for the second half of this year is broadly in line with it’s own guidance range of 14,000 barrels of oil equivalent per day (boepd) to 16,000 boepd.Those numbers are supported by various production enhancement activities, particularly at the Don Southwest field.Moreover, oil production accounts for nearly 95 per cent of the group’s production make-up.
It’s a huge leap from the Q1 results, where total average net export production for the quarter stood at 6,475 boepd, which included output from the Cook field interest acquired from Noble Energy Capital Limited. This was only completed only completed on February 5, 2013. Compare this to the first quarter of 2012, where the production tally was 4,299 boepd, underlining sustained and pretty rapid growth.It’s a nice position to be in although there are still challenges ahead.
Ithaca has warned that production during the latter half of the year is likely to be affected by the next phase of planned maintenance shutdowns on some facilities serving its fields. This includes a six-week shutdown of the Causeway Area fields as a result of maintenance activities on the Taqa-operated Cormorant infrastructure that serves the fields.The company is also busy with portfolio management work, reshuffling some of the assets it picked up through the Valiant transactions.
Most recently, it announced a farm-out agreement with a unit of Edison International SpA in the licences containing the Handcross prospect.This means it has now reduced its share of the forecast cost of the Handcross exploration well to just 6 per cent, while retaining a 45 per cent working interest.
Attracting high quality partners to the team is another added bonus.One other recent pairing saw it farm-out to Shell half of the company's 100 per cent interest in UK licence P2048 (covering blocks 29/24, 29/25, 29/29 and 29/30), awarded during the UK 27th Offshore Licensing Round.
This deal will see Shell pay the full cost of obtaining the required 500 square kilometres of 3D seismic data on the licence area.So plenty of work going on in the field, which means lots to look out for, after all, there’s no better way to lift share prices than some positive drilling.And with production bubbling along nicely Ithaca finds itself better protected than it was this time a year ago.
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