Ithaca Energy hopes to ramp up production from its flagship North Sea development later this year as it prepares to be taken over by Israel’s Delek Group.
Gas compression and oil rates from the Stella field, in the Central Graben area, are currently restricted due to scheduled maintenance work and gas flaring limitations.
The firm revealed the lower than anticipated activity levels during a call to update investors on first quarter results.
Chief executive Les Thomas said gas compression is offline at the moment while some repairs are carried out on the FPF-1 floating production unit’s seawater lift pumps.
And he said oil rates at the field, 175 miles east of Aberdeen, remain “restricted” to minimise flaring until gas processing systems are fully available.
But production across the Greater Stella Area is excepted to ramp up later this year.
It comes as Israeli energy giant Delek prepares to buy up the remaining shares in the company and delist Icatha’s shares from the junior AIM wing of the London Stock Exchange.
Thomas said oil production commenced from the Stella in mid-February and the field has been producing through the shuttle tanker system since then.
The first tanker load of oil was successfully unloaded in Rotterdam on April 19.
Meanwhile two out of three planned gas compression trains are almost complete, with the final one to be marked and commissioned.
Thomas added: “So far, the commissioning of the gas compression systems has gone well. One of the two gas compression chains has been fully commissioned and began exporting gas into the Central Area Transmission System on April 20.
“The second gas compression chain is almost ready.
“This requires only the third stage to be marked and commissioned.
“Oil rates remain restricted at the moment to control the amount of gas flaring.
“Gas compression is shutdown at the moment while some repairs are carried out on the FPF-1 vessel’s seawater lift pumps.
“This work is expected to be done later this week and gas export will be able to recommence.
“Once gas compression is up we can begin to rapidly increase overall production rates, with full capacity being possible once the second gas compression chain is up and running.”
The update came on the back of what were described as “solid” first quarter results.
First quarter revenue was down to $47.9million, compared to $76.7million in the same period in 2016.
Opex fell by nearly $3million with unit costs forecast to further reduce as production on Stella ramps up.
General and administrative costs remained almost level at $1.6milliuon.
The overall profit before taxation in the first three months of 2017 amounted to $4.2million, compared to a loss of $16.5million in the same period last year.
An additional tax credit of $6.5million brought total earnings to $10.7million.
Chief financial officer Graham Forbes said: “Both revenue and opex are down compared to the comparative period.
“Overhead costs remain stable and tightly controlled.
“All told we generated health cash flows from operations of $30.6million.”
Average production in 2017 is forecast to be in the range of 18,000 to 19,000 boepd (80% oil).
Ithaca said this refelcts the schedule for the step-up in Stella production rates and the other previously noted planned maintenance shutdowns scheduled for the asset portfolio during the year.
The company’s planned capital expenditure programme for 2017 is forecast to total approximately $70million.
Of this, approximately $8million was spent in the first quarter.
The majority of the 2017 expenditure relates to the Greater Stella Area (GSA), primarily being Harrier development activities plus completion of the GSA oil export pipeline investment programme and Vorlich field development planning activities.
Harrier start-up is expected in the second half of 2018, having been spudded last month.
In February, Ithaca announced that it had entered into a definitive support agreement with Delek Group for a cash takeover bid.
In April, the conditions of the offer were satisfied, with the offer being accepted by holders of 241,293,465 of the issued and outstanding common shares of the company.
Delek currently owns 94.2% of the issued and outstanding shares of the company. It has since of notified Ithaca of its intention to carry out a compulsory acquisition of all the remaining issued and outstanding common shares of Ithaca.
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