North Sea oil specialist Ithaca Energy's (IAE) shares slipped nearly 4 per cent on the day these broadly in-line half-year figures appeared. Production averaged 14,300 barrels of oil-equivalent per day (boepd) in the second quarter, after including a 2,500-boepd contribution from the newly acquired Sumitomo assets. Full-year production guidance remained unchanged, too, at 13,500-15,500 boepd, although annual maintenance work scheduled for this quarter will leave Ithaca needing a strong fourth-quarter performance.
Unfortunately, reported profits were hit by $7m (£4m) non-cash hedging losses, decommissioning costs and a lower-than-expected tax credit. But cash flow from operations remained robust in the first half at $102m, compared with $100m a year earlier. Moreover, the all-important Greater Stella Area (GSA) development project - which should double Ithaca's hydrocarbon production - remains on track for first oil in mid-2015. Drilling operations on the fourth Stella development well started in July, while a fifth well, targeting a chalk reservoir that sits beneath the principal reservoir, will be drilled in the fourth quarter.
Broker Investec Securities expects adjusted full-year pre-tax profit of $60m, rising to $143m in 2015 and $324m in 2016, reflecting a full year's contribution from GSA. That would give EPS of 15.9¢, 15.7¢ and 35.6¢, respectively.
ITHACA ENERGY (IAE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 131p | MARKET VALUE: | £430m | |
| TOUCH: | 131-133p | 12-MONTH HIGH: | 165p | LOW: 105p |
| DIVIDEND YIELD: | nil | PE RATIO: | 7 | |
| NET ASSET VALUE: | 268¢ | NET DEBT: | 64% | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2013 | 188 | 73 | 20 | nil |
| 2014 | 200 | -2.5 | 5 | nil |
| % change | +6 | - | -75 | - |
£1=$1.69 | ||||
