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Ithaca Energy oil production ahead of guidance ahead of Stella field start-up

Published: 07:51 14 Nov 2016 GMT

Stella floating production facility
Commissioning of Stella is now at an advanced stage

Ithaca Energy Inc (LON:IAE) has announced third quarter production ahead of guidance, at lower than guided costs too.

The North Sea oil firm, currently focussed on delivering the Stella field development, this morning told investors it had produced an average of 9,585 barrels of oil per day in the three months ended September 30 – versus prior guidance of 9,000 bopd.

It said that operating costs were currently running at US$23 per barrel, compared with guidance for US$25 per barrel and it expects the cost per barrel metric to reduce further once the Stella field is up and running.

Stella is due for ‘first oil’ by the end of this month. The company noted that vessel hook-up was now complete and offshore commissioning was now well advanced. Once ramped up Stella will more than double Ithaca Energy’s net production to between 20,000 to 25,000 barrels per day.

Chief executive Les Thomas, in a statement, said: "The business has continued to perform in line with the strong momentum achieved over recent quarters. 

He added: “Significant progress has been made with the offshore commissioning programme on Stella and we are fast approaching start-up of the field.

“As such, we remain sharply focused on ensuring all the commissioning tasks are fully completed as planned in order to deliver a safe and efficient ramp-up of production from the field."

For the three months, to September 30, Ithaca highlighted cashflow of US$117mln thanks to its lower costs and hedging arrangements.

Earnings for the period amounted to US$12mln, excluding non-cash mark-to-market for future hedging and a non-cash accounting charge following the reduction of UK tax rates.

Having seen its indebtedness peak at US$800mln in the first half of 2015, the company nots that it owed US$598mln at the end of September and it noted that in October a semi-annual review of its reserves-based lending left it with more than US$110mln of funding headroom.

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