Ithaca Energy (LON: ITH) has said that production has resumed at the Pierce field after a six-month production halt.
The Pierce field went offline in August last year due to issues on the Haewene Brim floating production, storage and offloading (FPSO) vessel, which operates on the field.
According to Ithaca Energy’s first quarterly results, the issue has now been resolved and field production is ramping up.
Aurelia Energy, a holding company of Bluewater Group which owns the FPSO, said Pierce ceased production “due to issues with its mooring lines connections to the buoy”.
In mid-February, one of these was successfully repaired, with another mooring line, which Aurelia said was not critical to the integrity of the mooring system, expected to be fixed later this year.
The project was set to restart production in March after being hit by a six-month outage, which covered the entire first quarter of the year.
The project, operated by majority stakeholder Shell, previously underwent a redevelopment, with work starting six months before the production halt in February 2023.
Results
Ithaca Energy posted up its unaudited financial results for the first quarter of the year, up to 31 March.
The group saw its adjusted EBITDAX fall compared to the same quarter last year down to $339mn from $518.1mn in the first quarter of 2023.
In addition, its statutory net income dropped down to $42.7mn compared to $158.4mn in the equivalent period of 2023.
However, net cash flow from operating activities saw a relatively small decline, coming in at $313.8mn for the first quarter of 2024, compared to $351.4mn seen in the first quarter of 2024.
According to Ithaca Energy, continued strong cost control helped deliver first quarter operating costs of $122mn, equivalent to $22.9 per boe (compared to $20.3 per boe in the first quarter of 2023).
Costs included a producing asset capex of $93mn and Rosebank capex of $43mn, which accounted for ongoing modifications to the floating production, storage and offloading (FPSO) vessel.
On the production side, Ithaca Energy produced 58,700 boe per day across the first quarter, supporting full year pro-forma 2024 production guidance issued 23 April. However this was down compared to its quarter-one 2023 production of 75,257 boe per day.
In quarter one 2024, the production was split 69% to liquids and 31% gas.
In addition to the Pierce field outage, production was affected by weather-related downtime and outages caused by the Ocean Great White rig being off station at the non-operated Schiehallion field. This is expected to impact the timing of production wells later in 2024.
Business combination
Ithaca Energy is also continuing its business combination with Eni UK, with Ithaca taking control of substantially all of Eni UK’s upstream oil and gas assets in April 2024.
The combined group will have an with estimated pro-forma 2024 production of 100,000 – 110,000 boe per day and offer shareholders “material dividend capacity” as a result of the tie up.
In addition, Ithaca said that the groups’ complementary portfolios unlock potential for material long-term organic growth with the capability to increase the combined group’s production to over 150,000 boe per day by the early 2030s.
Based on the merger ratio, Ithaca Energy’s shareholders will own 61.5% and Eni will own 38.5% of the combined entity
Ithaca Energy interim CEO Iain Lewis commented: “Ithaca Energy continues to deliver against its ‘BUY, BUILD and BOOST’ strategy, announcing the transformational business combination with Eni UK in April that positions the company as the largest resource holder in the UKCS with the potential for further material organic and inorganic growth.
“The company’s Q1 performance was in line with our expectations and factored into our full year guidance set towards the end of March, following a number of operational issues across our non-operated joint venture portfolio that have now been resolved.”
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