Shares in Ithaca Energy have staged a strong recovery since they were marked down in June as a result of well blockage at the company's Athena field. We thought it was overdone at the time, and now investors who kept faith in North Sea-focused Ithaca will feel vindicated following an upsurge in half-year earnings. Moreover, with broker Cenkos expecting full-year EPS of 22¢ (14¢ in 2011), doubling to 45¢ in 2013, the shares are still only priced on five times 2013 earnings estimates.
Ithaca had a particularly strong second quarter, with daily net production up by 49 per cent to 4,132 barrels of oil equivalent, primarily due to the start of production from the Athena field and the inclusion of the Cook and Broom assets. Half-year operating profits of $17.8m (£11.3m) were up by 68 per cent on 2011, although the outcome would have been even better but for an overall reduction in gas sales. Ithaca managed to largely offset a 6 per cent decrease in realised oil prices during the second quarter through a hedging gain.
The step-up in production fed through into a 67 per cent increase in half-year cash flow to $55m, while net cash was up by $16.3m from a year ago to $112m. Ithaca also replaced its existing debt arrangements with a $400m facility with BNP Paribas.
| ITHACA ENERGY (IAE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 132p | MARKET VALUE: | £342m | |
| TOUCH: | 131-133p | 12-MONTH HIGH: | 212p | Low: 86p |
| DIVIDEND YIELD: | nil | PE RATIO: | 7 | |
| NET ASSET VALUE: | 213¢ | NET CASH: | $112m* | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (p) |
|---|---|---|---|---|
| 2010** | 47.8 | 10.1 | 3.0 | nil |
| 2011 | 76.3 | 35.5 | 20.0 | nil |
| % change | +60 | +250 | +567 | - |
£1=$1.57 *Excluding restricted cash of $20m **Restated | ||||
