Ithaca Energy Inc.(IAE) listed on the UK AIM and Canadian TSX markets, is an independent oil & gas company with exploration, development and production assets in the UK sector of the North Sea. On February 19th, the company announced that the Galaxy II heavy duty jack-up rig had spudded and commenced drilling at the Stella appraisal well location in block 30/6. Results from this well should be available by June.
Major additions to reserves were reported at the end of 2009 though additional geological and geophysical study work conducted during the second half of 2009 in the Central North Sea:
i) The evaluation of Stella (Ekofisk) and Harrier discoveries has added significant additional 2P reserves.
ii) Block 29/10b was awarded to Ithaca (now 100% equity interest) in the 25th UKCS Licensing Round. The block contains the Hurricane discovery which has been attributed Probable reserves.
iii) 2P Gross reserves for Stella (Andrew) have not changed pending the appraisal well result. Combined 2P reserves for the GSA now amount to 25.52 mmboe representing ~70% of the total 2P reserves for the Company.
Other reserve changes have been made throughout the portfolio and are summarised below:
i) In March 2009 the Company announced the successful drilling of the Carna prospect and Proved reserves for this discovery have been ascribed to Ithaca.
ii) The Jacky field was brought on line in April 2009 and has performed well above expectation. Previous assessed Proved reserves (December 31 2008 adjusted for Dyas transaction) for Jacky before first production were 0.68 mmboe net. Ithaca net production for 2009 was 0.97 mmboe; the latest assessment confirms 1.37 mmboe of remaining Proved reserves net to Ithaca.
iii) Ithaca acquired the Beatrice field in November 2008 and has achieved steady daily production increases over the last 12 months. Further work designed to access additional reserves is planned for 2010 and this has been taken into account by Sproule. Previous assessed Proved reserves (December 31 2008 adjusted for Dyas transaction) for Beatrice were 0.84 mmboe net.
iv) production for 2009 was 0.33 mmboe; the latest assessment confirms 1.65 mmboe of remaining Proved reserves net to Ithaca.
Wellington West Capital Markets, has said that Ithaca can be expected to generate $100-million in cash flow during 2010 from the North sea and is capable of increasing net production to 16,000 barrels of oil a day by 2013 from 4,700 barrels this year. The company has the benefit of an experienced management team who have considerable expertise in the North sea, and a strong balance sheet being debt free.
Ithaca is currently trading at 116-120p up 7% for the day, with a 52 week range of 24p-117p. Brokers are expecting pre-tax profits of £28 million this year, putting the company on a p/e of 8 for 2010. Position initiated at 114p on Monday.