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OilVoice Magazine JULY 2012
Stella/Harrier field DECC approval On April 12th 2012, Ithaca announced that the company had received Field Development Plan approval for the Stella and Harrier Fields (located in the Central North Sea) from the UK DECC (Department of Energy and Climate Change). A contract for use of the Ensco 100 heavy duty jack-up rig on the development drilling campaign to commence in H2 2012 was executed in November 2011. Debt facility The Company announced a threefold increase in its debt facility in May 2012 to $400 million plus US$30 million cost overrun tranche. The facility is available to fund the Company's ongoing development activities and future acquisitions, and takes away a lot of the financing uncertainty for development of their fields that presently hampers valuations of other companies like Bowleven and Xcite Energy. What makes Ithaca interesting to us? 1. Stable North sea production and exploration assets. 2. Over 50 million barrels P2 reserves over broad portfolio of assets. 3. Strong financial position. It is Fully funded and has no debt, sitting with @ £70m in cash at present. 4. Cash flow from operations is set to increase from approximately US$150 million in 2012 to approximately US$575 million in 2014 (assuming $100 a barrel). 5. $400 million debt facility to buy new assets and pay for development of existing fields. 6. Current market capitalization only £300 million. 7. Forward price/earnings of less than 3. 8. Good news flow - ramp up in Athena production, Hurricane appraisal well, potential acquisitions. At the current price (at time of writing - 115p), the company's EV:2P (Enterprise Value:Proven & Probable reserves) equates to £4.40 per barrel against a Brent Crude price of over $100 (@ £70 per barrel at current FX rates). Corporate takeover/absorption deals in Ithaca's area of exploration have been struck in the £7-10 per barrel price range in recent years and so illustrates the present undervaluation in the share price. We also believe that the weakness in the share price has been exacerbated by the press@oilvoice.com | +44 208 123 2237