Ithaca Energy (IAE) booked a $24.5m (£16.6m) net earnings loss for the full year, against a profit of $145m in 2013. That's because the North Sea driller took a $173m post-tax impairment to reflect reduced expectations for the oil price. Yet the market ignored these accounting details, cheering the shares up 8 per cent after the company reported rising production and improved hedging terms.
Ithaca's market value has taken a battering from the fall in Brent crude and delays to a modification programme on its FPF-1 floating production facility. The delays have pushed back first oil from the Greater Stella offshore hub - which will transform Ithaca's production profile - to the second quarter of next year.
But shareholders shouldn't ignore the operational progress achieved in 2014. Ithaca acquired interests in three producing fields from Sumitomo Corp, which helped bump up average production by 5 per cent to 10,947 barrels of oil equivalent per day (boepd). And output has picked up appreciably in the first quarter, leaving Ithaca well-placed to hit its target rate of 12,000 boepd for 2015.
The driller is better-placed than most to cope with the slump in crude prices. For a start, it has hedged 8,500 boepd at $91 a barrel through to June 2016, with another 4,000 boepd covered at $69 a barrel till June 2017. Meanwhile, underlying operating costs fell to under $40 a barrel in the first quarter, and are expected to dip below $30 once Greater Stella kicks in.
| ITHACA ENERGY (IAE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 35p | MARKET VALUE: | £114m | |
| TOUCH: | 34-35p | 12-MONTH HIGH: | 159p | LOW: 26p |
| DIVIDEND YIELD: | nil | PE RATIO: | nil | |
| NET ASSET VALUE: | 256¢ | NET DEBT: | 91% | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 132 | 38.0 | 27.0 | nil |
| 2011 | 129 | 37.1 | 14.0 | nil |
| 2012 | 170 | 29.2 | 36.0 | nil |
| 2013 | 414 | 40.2 | 48.0 | nil |
| 2014 | 379 | -332 | -7.0 | nil |
| % change | -6 | - | - | - |
Ex-div: - Payment: - £1=$1.48 | ||||
