Ithaca Energy (LON:IAE) told investors it has incentivised contractor Petrofac (LON:PFC) for a timely completion of the floating production facility (FPF) for the Stella project.
The North Sea-focused oil field developer says the ‘sail away’ from a shipyard in Poland is on track of the end of the first quarter of 2016.
An enhanced agreement with Petrofac gives important contract cost clarity, Ithaca said, and it added that the arrangements ensure efficient execution of remaining modification work.
Modifying costs above a contract cost cap will continue to be paid fully by Petrofac, it said.
Ithaca has, meanwhile, agreed to pay US$13.7mln in respect of final payment on variations though that payment is deferred until three years after Stella’s first production.
A further US$34mln will be paid to Petrofac by Ithaca dependent upon the timing of the FPF sail away - with the maximum paid if it is before the end of March – and according to Ithaca the incentive “erodes” on a daily basis until reaching zero by July 31 2016.
This payment will also be deferred until the three year anniversary of Stella’s first production.
Les Thomas, Ithaca’s chief executive, said: "Delivery of first hydrocarbons from the Greater Stella Area is the next key operational priority of the company.
“This agreement introduces a significant additional incentive for Petrofac to provide timely delivery of the FPF-1, without affecting the liquidity position of the company."