BRITISH oil explorer Ithaca Energy agreed a plan to develop a key North Sea oil field, in a move which will double its yearly production by 2013.
Ithaca agreed a deal with FTSE 100 oil services firm Petrofac for it to provide a floating production unit to use to develop the explorer’s Stella field, in return for Petrofac acquiring a 20 percent interest in three oil fields including Stella.
Chief executive Iain McKendrick said the development of an Ithaca-controlled production system will act as a springboard for the company’s future growth.
“There’s plenty of opportunity for us to start adding more to the portfolio in terms of undeveloped discoveries,” he told Reuters on Thursday.
“At the moment when you look at the balance sheet and our projected cash, with debt capacity, we’ve got still over $100 million of spare capacity for acquisitions.”
A 12 percentage point tax hike on UK oil producers earlier this year led to howls of protest from the industry and predictions of a big drop in investment, but recent deals including a 4.5 billion pound project announced earlier this month suggest the region remains buoyant.
Ithaca’s London shares — the company is also listed in Canada — gained 7.6 percent to 128 pence at 1048 GMT.
“The announced development plan will maximise liquids production in the earlier phase to maximise revenue,” said Cenkos Securities analysts in a note, calling Ithaca’s news “hugely positive”.
Ithaca also announced plans to up its stake in Stella, agreeing to buy an extra 18 percent stake by acquiring its former partner in the licence in a deal worth up to $35 million.
Following the deal, Ithaca will own a 55 percent stake in the Stella field.
Ithaca is fully funded to bring the Stella development into operation, said McKendrick, putting the company’s cost of doing so at between $425 million and $460 million.
Part of the funds for development will come from revenue due to be generated from the company’s other key project– the Athena oil field, also in the North Sea.
It is on schedule to start pumping oil in December, said McKendrick.
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