TIDMITH TIDMTTM
RNS Number : 1883U
Ithaca Energy PLC
22 November 2023
Press release
22 November 2023
ITHACA ENERGY PLC
("Ithaca Energy", the "Company" or the "Group")
Third Quarter Update and Results for the Nine Months to 30
September 2023
Continued delivery against BUY, BUILD and BOOST strategy,
achieving milestone FID at Rosebank;
FY 2023 production guidance and $400m dividend reaffirmed;
improved opex guidance
Ithaca Energy, a leading UK independent exploration and
production company, today announced its unaudited financial results
for the nine months ended 30 September 2023.
Financial key performance indicators (KPIs)
YTD YTD
9M 2023 9M 2022
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Adjusted EBITDAX(1) ($m) 1,367.5 1,438.4
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Statutory net income ($m) 238.5 1,392.2
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Adjusted net income (1) ($m) 332.1 391.2
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Net cash flow from operating activities ($m) 1,021.2 1,467.9
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Available liquidity (1) ($m) 912.6 399.4
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Unit operating expenditure(1) ($/boe) 21.1 19.3
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Adjusted net debt (1) ($m) 677.4 1,143.6
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Adjusted net debt/adjusted EBITDAX (1) 0.37x 0.61x
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Other KPIs
Total production (boe/d) 71,048 68,246
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Tier 1 process safety events 1 0
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Serious injury and fatality frequency 0 0
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(1) Non-GAAP measure
Q3 2023 Strategic Highlights
BUY
-- Completed acquisition of remaining 40% stake in Fotla and
announced acquisition of remaining 30% stake in Cambo (subject to
completion), both at limited near-term cost, providing Ithaca
Energy with full control over pre-Final Investment Decision (FID)
work and timing
-- Actively engaging with potential farm-in partners to enable
the future progression of Cambo and Fotla towards FID, subject to
regulatory and licensing approval processes (including the 31 March
2024 Cambo licence milestone) and market conditions
BUILD
-- FID taken to progress Phase I of the Rosebank development,
the UK's largest undeveloped discovery
o All major contracts awarded, including the integrated subsea
engineering, procurement, construction and installation (iEPCI(TM))
contract, the drilling rig contract and bareboat charter for the
Petrojarl Knarr FPSO
-- Pre-FID work continues across the Group's high-value
greenfield and brownfield development portfolio including:
- Captain Electrification FEED study matured to support FID
- Marigold Unitisation and Unit Operating Agreement executed
with work progressing towards submission of the Field Development
Plan in 2024
-- Exploration discovery at the K2 prospect and decision to proceed with further appraisal
-- Appraisal drilling ongoing at Leverett (Ithaca Energy working interest 12%)
BOOST
-- Captain Enhanced Oil Recovery (EOR) Phase II project now 80%
complete, supporting first Phase II polymer injection into the
subsea wells in H1 2024, with the following activities completed in
the quarter:
- Drilling: Completed drilling operations of all three Area E
polymer injection wells and the commencement of drilling operations
in Area D
- Subsea: Completed laying and trenching operations of all flowlines and umbilicals
- Facilities: Turnaround successfully completed including
facilities upgrades in support of EOR II project
-- Infill drilling ongoing at Alba supporting production in the late life phase of the field
Q3 2023 Operational Update
Year-to-date production of 71.0 thousand barrels of oil
equivalent per day (kboe/d), supporting reaffirmed full year 2023
production guidance of 68-74 kboe/d
-- Q3 production of 61.7 kboe/d reflects previously guided
planned turnaround activity across the Group's operated and
non-operated base during the quarter
-- Return to full production expected in Q4 following completion
of planned turnaround activities
-- Q3 production split 66% liquids and 34% gas
-- Non-operated assets performing in line with expectations in
the quarter with the exception of Pierce, where operational issues
related to the vessel mooring system have temporarily shut down
production from the field
- Operator Bluewater Energy Services is working to resolve
issues with the mooring system. Rectification timeline highly
dependent on weather but expected in H1 2024
YTD 9M 2023 Financial Highlights
-- YTD adjusted EBITDAX of $1,367.5 million (YTD 2022: $1,438.4 million)
-- YTD adjusted net income of $332.1 million (YTD 2022: $391.2 million)
-- YTD net cash flow from operating activities of $1,021.2 million (YTD 2022: $1,467.9 million)
-- YTD realised oil prices of $86/bbl before hedging and $84/bbl
after hedging (YTD 2022: $104/bbl before hedging and $91/bbl after
hedging) and gas prices of 99p/therm before hedging and 153p/therm
after hedging (YTD 2022: 213p/therm before hedging and 155p/therm
after hedging)
-- Continued strong cost control, delivering YTD operating costs
of $409 million ($21.1/boe (YTD 2022: $19.3/boe)) and YTD producing
asset capex of $293 million
-- Balance sheet remains strong with further deleveraging in the period
o Adjusted net debt of $677.4 million at 30 September 2023 (31
December 2022: $971.2 million; 30 September 2022: $1,143.6
million)
o Group leverage position of 0.37x adjusted net debt to adjusted
EBITDAX (30 September 2022: 0.61x)
-- Second interim 2023 dividend of $133 million paid in
September 2023, taking the total year-to-date dividend payment to
$266 million
-- Significant build on hedging book during the quarter, with
10.3 million barrels of oil equivalent (68% oil) hedged from Q4
2023 into 2025 at an average price floor of $77/bbl for oil and
140p/therm for gas at 30 September 2023, with attractive winter
collar ceilings of approx. $88/bbl for oil and over 300p/therm for
gas for the six month period to 31 March 2024
-- Building on the PROTECT arm of our Capital Allocation Policy,
Foreign Exchange hedges of $200 million placed at an average rate
of $1.23: GBP1 (of which $150 million was placed following
period-end)
FY 2023 Management Guidance
-- Management reaffirms previously provided guidance ranges for full year 2023 (FY 2023):
- Production guidance of 68-74 kboe/d; and
- Producing asset capital cost guidance of $390- $435 million
-- Management lowers operating cost guidance range for FY 2023
from $560-$610 million to $525-$575 million reflecting lower
forecasted operating costs as result of strict cost control,
improved FX rates and a reduction in planned activity
-- Targeted total dividend of $400 million reaffirmed for
financial year 2023, with remaining $134 million payment payable
following the end of the 2023 financial year
-- Following the Rosebank FID, management estimates that the
Group's capital expenditure on the project in FY 2023 will be in
the range of $90-$110 million (YTD 2023: $64 million)
Executive Chairman, Gilad Myerson , commented: "I am delighted
that we have once again reported a quarter of strong strategic
progress and continued financial delivery. The decision to progress
with Phase I of the Rosebank development alongside Equinor
represents a significant milestone for Ithaca as we continue to
deliver against our BUY, BUILD and BOOST strategy. We continue to
constructively engage with UK government to help shape future
energy policy to create a supportive environment for further
investment in the UK North Sea and welcome the recent announcement
on annual North Sea licensing rounds."
Chief Executive Officer, Alan Bruce , commented: "We continue to
focus on maximising value from our portfolio, with targeted
investment in high quality assets such as Captain and Rosebank. We
are pleased to reaffirm today our previously stated production,
capex and dividend guidance for Full Year 2023, while our strong
cost control has allowed us to lower our opex guidance. Ithaca is
in a strong financial position and our long-life assets provide the
basis for consistent execution of our value proposition - growing
free cash flow, reducing emissions intensity and returning capital
to shareholders."
Webcast and Conference call
Ithaca Energy will host a virtual presentation and Q&A
session for investors and analysts at 09:00 (GMT) today, 22
November 2023, and a further presentation and Q&A session for
Bond Holders only, which will be held at 14:00 (GMT) today, 22
November 2023. Details of both sessions are accessible via our
website.
Investors and Analysts - Webcast link
https://www.investis-live.com/ithaca-energy/654a5da9464d140d008d31a0/mfdo
Investors and Analysts - Conference call
Operator Assisted Dial-In: United Kingdom (Local): +44 20 3936
2999 United Kingdom (Toll-Free): +44 800 358 1035 Global Dial-In
Numbers Access Code: 143591
Bond Holders - Webcast link
https://www.investis-live.com/ithaca-energy/654a5f3f464d140d008d9e15/lwjn
Bond Holders - Conference call
Operator Assisted Dial-In: United Kingdom (Local): +44 20 3936
2999 United Kingdom (Toll-Free): +44 800 358 1035 Global Dial-In
Numbers Access Code: 507833
Enquiries
Ithaca Energy
Kathryn Reid - Head of Investor Relations, kathryn.reid@ithacaenergy.com
Corporate Affairs & Communications
FTI Consulting (PR Advisers to Ithaca
Energy) +44 (0)203 727 1000
Ben Brewerton / Nick Hennis / Rosie Corbett ithaca@fticonsulting.com
About Ithaca Energy plc
Ithaca Energy is a leading UK independent exploration and
production company focused on the UK North Sea with a strong track
record of material value creation. In recent years, the Company has
been focused on growing its portfolio of assets through both
organic investment programmes and acquisitions and has seen a
period of significant M&A driven growth centred upon two
transformational acquisitions in recent years. Today, Ithaca Energy
is one of the largest independent oil and gas companies in the
United Kingdom Continental Shelf (the "UKCS"), ranking second by
resources.
With stakes in six of the ten largest fields in the UKCS and two
of UKCS's largest pre-development fields, and with energy security
currently being a key focus of the UK Government, the Group
believes it can utilise its significant reserves and operational
capabilities to play a key role in delivering security of domestic
energy supply from the UKCS.
Ithaca Energy serves today's needs for domestic energy through
operating sustainably. The Group achieves this by harnessing Ithaca
Energy's deep operational expertise and innovative minds to
collectively challenge the norm, continually seeking better ways to
meet evolving demands.
Ithaca Energy's commitment to delivering attractive and
sustainable returns is supported by a well-defined
emissions-reduction strategy with a target of achieving net zero by
2040.
Ithaca Energy plc was admitted to trading on the London Stock
Exchange (LON: ITH) on 14 November 2022.
-ENDS-
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