23rd Mar 2016 08:32
LONDON (Alliance News) - North Sea oil producer Ithaca Energy PLC Wednesday said its loss in 2015 was broadly flat from the previous year as profits from asset disposals and lower amounts of impairments managed to offset a huge fall in revenue.
The company reported a pretax loss of USD326.4 million in 2015, slightly narrower than the USD332.5 million loss booked in 2014, as revenue plummeted to USD207.0 million from the USD378.6 million generated the year before.
Offsetting the reduction in revenue was a fall in cost of sales, which kept gross loss for the year broadly flat at USD25.8 million from the USD25.3 million loss in 2014.
Impairments in 2015 of USD400.3 million were lower than the USD441.6 million booked in 2014.
Ithaca booked a USD26.6 million gain from asset disposals in 2015, related to the sale of its non-core business in Norway, compared to the USD3.0 million generated the year before, but that was offset by the company's gain on financial instruments dropping to USD155.3 million from USD175.2 million the year before.
Administrative expenses fell to USD9.9 million from USD13.9 million, but spending on exploration increased to USD30.5 million from USD7.1 million. Finance costs were higher in the year at USD40.3 million from USD32.1 million.
As the rise in finance costs suggests, Ithaca's net debt reached a peak of over USD800.0 million in the middle of the year, but that was pulled back to USD665.0 million by the end of the year. Ithaca said it will continue to reduce debt moving forward, forecasting net debt of around USD635.0 million by the end of the first quarter of 2016.
Capital expenditure in 2015 was 25% below budget at USD117.0 million, and Ithaca said it also made a 44% cut in operating costs to only USD31 per barrel produced compared to the USD55 per barrel last year. Ithaca added that was 22% ahead of its target.
Capital expenditure this year will fall further to USD50.0 million, and those operating costs are expected to fall to USD30 per barrel and then down to USD25 per barrel once its flagship project begins producing in the second half of the year.
Production in 2015 was above the company's guidance at 12,066 barrels of oil equivalent per day after rising from 10,947 barrels of oil per day last year.
This year will be one of significance for Ithaca, as its huge Stella development project in the UK North Sea is expected to begin producing its first hydrocarbons in the third quarter of the year.
Ithaca said its near-term production forecast will "more than double" when the field begins producing, but said production in 2016 excluding the field will fall to 9,000 barrels per day.
The amount Stella will contribute in terms of production this year will depend on when production starts, but Ithaca said the project is expected to run at an initial annualised production rate of around 16,000 barrels of oil equivalent per day net to the company.
Ithaca has 10,000 barrels per day hedged at a price of USD61 per barrel between 2016 and mid-2017, giving the hedge a mark-to-market value of around USD127.0 million at the end of 2015. Brent was trading at above USD41 per barrel on Wednesday morning.
Ithaca shares were up 0.5% to 32.65 pence per share on Wednesday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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