Ithaca Energy cuts costs in preparation for Stella start-up as Premier sells Norwegian oil assets for $120m

Ithaca Energy Stella North Drill Centre Manifold installation operation
Ithaca Energy Stella North Drill Centre Manifold installation operation

Aberdeen-based oil explorer Ithaca Energy has reported steady third-quarter results as it continues to cut costs and reduce gearing to pay for further investment in its Greater Stella field start-up.

In the nine months to 30 Sept 2015, Ithaca generated cash-flow of $217 million from ongoing operations, with adjusted earnings of $98 million.

Significantly, it has reduced the costs of producing a barrel of oil to $33 – a drop of more than 40% compared to 2014. And it is forecasting that this cost will fall further – to around $25 – following Stella start-up.

Moreover, Ithaca’s investment for the full 12-month period has been reduced to $120 million, reflecting $30 million of savings associated with lower Greater Stella Area subsea infrastructure installation costs and removal of Norwegian expenditure following the sale of non-core assets.

Les Thomas, Chief Executive, commented: “Consistent production levels, strong hedging gains and rigorous cost control has contributed to commencing deleveraging of the business ahead of the step-change that comes with Stella start-up.”

Meanwhile, fellow North Sea explorer Premier Oil has sold all its Norwegian assets to Det Norske Oljeselskap for $120 million in cash. The proceeds will be used to pay down debt

Tony Durrant, Chief Executive of Edinburgh-registered Premier Oil, commented: “Our team in Norway has done an excellent job in bringing the Vette project close to a sanction decision in a low oil price environment. The transaction will realise immediate value from the project as part of our strategy of active management of our portfolio.”

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