North Sea oil firm Ithaca Energy will cut its 2020 capital expenditure in half to £97 million in response to the crude price drop and Covid-19 outbreak.
To prevent the spread of Covid-19, Ithaca has gone to “minimum manning” on its platforms, where the focus is on maintaining production and carrying out critical maintenance work.
The move has freed up cabin space for social distancing and isolating suspected virus sufferers.
No Covid-19-related incidents have occurred on its installations, the Aberdeen-headquartered company said today.
But Ithaca will have to stop or delay several projects, including an infill drilling campaign at the Alba field in the central North Sea and the nearby Fotla exploration well.
The firm, owned by Israeli’s Delek Group, will also have to scale back activities on its Jacky field decommissioning programme and Hurricane development.
A final investment decision on phase two of the enhanced oil recovery project on Ithaca’s Captain field was supposed to be made in the first half of this year. It is unclear whether that will be possible now.
Ithaca did say offshore construction activities on the BP-operated Vorlich project were being “hindered” by restrictions brought in to cope with the virus.
All efforts are being made to minimise any delay to the field start-up schedule of mid-2020, the firm said.
Ithaca has a 34% stake in Vorlich, which is being tied back to the FPF-1 vessel in its Greater Stella Area.
Chief executive Les Thomas said Ithaca had to speed up efforts to cut costs and investment following the “abrupt emergence of a more challenging microeconomic environment”.
“This will allow us to proactively manage our financial profile in the face of a potentially ‘lower for longer’ commodity price outlook,” Mr Thomas added.
Ithaca, which bough Chevron’s central North Sea portfolio last year, said its hedging position meant it would generate more than £360m of free cash flow this year, even if Brent drops to $1 per barrel.
Meanwhile, Ithaca has acquired a North Sea licence containing the Yeoman discovery and the southern part of Hibiscus Petroleum’s Marigold discovery from Total E&P UK.
The licence adds resources of more than 15m barrels of oil equivalent to Ithaca’s portfolio.
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