Ithaca sticks with full year production target despite delays

7th Apr 2011 17:07

North Sea oil and gas explorer Ithaca Energy said combined sales for the first quarter of 2011 totalled 314,340 barrels of oil equivalent (boe), net to Ithaca.Average net sales were 3,493 boe per day, some 20% below the net average daily target for first quarter due, as the company has previously explained, to mechanical failures experienced on two of its wells.Drilling of one of the affected wells, the J03 well, has now recommenced while on the other well, the Alpha A28 workover well, operations to re-run the A28 completion have progressed, and the final stage of re-commissioning the well is underway.The average realised price for oil sales in January and February was $107.40 per barrel (prior to hedging and any uplift at point of sale). Deliveries of oil for March are currently being priced.In order to benefit from the recent rise in oil price, Ithaca purchased a 'Put Option' with a floor price of $105 per barrel for 804,500 barrels of oil for the period March to December 2011. The 'Put Option' delivers a minimum price on the specified volume of oil and leaves the company to benefit from any oil price upside above $105 per barrel.The average realised price for gas production from the Anglia and Topaz fields was 44.85 pence per therm or $7.56 per thousand standard cubic feet (mcf).Ithaca's management expects net sales will increase in the second quarter and is still banking on net average production during 2011 falling somewhere between 5,500 to 6,000 boe per day, net to Ithaca, though this is subject to a a successful J03 well and Athena start up in November 2011.---jh