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Ithaca Energy (LSE:IAE) early watch list BUY in my view regarding a safe leveraged play on the Oil price which looks to be returning to be £1.80 plus when Greater Stella is online 2016 and oil turns to min $70 level price.
This article is ONLY an introduction i will do an in depth researched review article at a later stage next month. However these are the main points on why i am excited about earning more than 350% profit at time of writing.
The bargain price entry has been caused by Petrofac delaying the floating production facility until the end of first quarter 2016. Meaning an additional 16,000bopd will be added in nine months time. I would add as Finncap note March 2nd state “a low risk timetable has now been put in place to prevent further slippage” so expect the platform much sooner in my view. Frankly i can wait with an expected 12,000 bopd already being produced with strong hedging in place of 6,3000 bopd at $102 until mid 2016, making this company a clear safe leveraged bagger play.
One notes breakeven is $20 a barrel and $52 non hedged both in profit at the current time including all in costs of debt. This will reduce to $35 when Stella is online. With less than 1.25 pe at the time of writing i wonder how long the bargain sale will last. Even EK Simon Cawkell has now gone long because he believes junior north sea oil producers have been sold down to bust prices which is unlikely . So i guess even he cannot find any trouble in the small print regarding the debt lending breaching covenants.
Another point to highlight is the Bond price for Ithaca trading around 81c safe, yet Enquest is trading in the forties high risk, clearly the share price is not reflective and shows outstanding value for Ithaca.
The RBL review will happen in April and i already know there will be no trouble on this front. Regarding refinance the partial debt is not until 2017. The stella delay only adds $10m. Another interesting point is no tax payable until 2018 due mainly to the takeover of Valiant helps reduce the debt level going forwards.
Near term Stella Ekofisk drill results will be known combined with North Sea positive tax benefits on the 18th March Budget, i would act fast. The full year results are on 31st March however like Enquest (LSE:ENQ) expect the negatives well known low oil prices of 2H 2014 to have been played out and a few cost cutting surprises. There maybe even a sniff of more small add on producing assets or flogging off say 10% interest in Trell discovery adding cash. Talking about takeover at this price 40p region (LSE:PMO) Premier Oil has already stated its looking for further North Sea producing assets in 2H so Ithaca share price will soon reflect this aspect.
In addition Ythan field is expected to be online from mid 2015 having gained DECC approval for the Field development Plan increasing production slightly on 2014.
Lastly we all know oil will increase at the end of the year and into spring 2016 above $70 so (LSE:IAE) Ithaca is the best safe leveraged play in the market for 350% profit i can see. However act fast 65p will return in seconds with shorts closing after more than 5 trading days of significant falls, now the companies share price has bottomed out. Long term hold for me and great addition to the Falklands play.
If your interested in advfn they have excellent data on North Sea oil companies and level 2 well worth registering below.
You can listen to more information about (LSE:IAE) Ithaca Energy by listening into to my thoughts with ADVFN Justin Waite Show Thursday 5th March 2015 or on my blog http://www.chrisoil.blogspot.co.uk
Until the next time more ramblings from the castle can be seen @chrisoil
http://www.chrisoil.blogspot.co.uk
