NORTH Sea-focused Ithaca Energy has said it generated $100 million (£63m) cash from its operations in the first quarter indicating oil and gas firms can still make plenty of money in the area amid the downturn in the sector.
The Aberdeen-based firm noted that around $60m of cash related to gains it made on what appear to have been astute sales of oil on the futures market. These helped Ithaca minimise the impact of the sharp fall in the price of Brent crude since June .
The company said it has oil hedging contracts in place under which it can sell an average of 6,800 barrels of oil per day at $74 per barrel until June 2017
Ithaca said these will allow it to make money on its production if the oil price fell to just $10 per barrel.
Brent crude fetched $67/bbl yesterday compared with $115/bbl in June.
Ithaca wrote $440m off the value of its UK oil and gas fields last year to reflect the plunge in oil prices.
However, Ithaca's production appears to be profitable at current prices even without the benefit of hedging.
Production costs averaged under $35 per barrel oil equivalent in the first quarter. The company produced 12,489 boe daily in the quarter, in line with guidance.
It expects to start production from the giant Stella field east of Aberdeen in the second quarter of 2016, following delays in work on the production vessel that will be used on the field. Production was originally due to start late in 2014.
Ithaca said tax cuts introduced by the last UK Government in the March Budget were positive. However, these triggered a non cash accounting charge of $41.5m in the first quarter in respect of changes in the value of future tax assets.
Ithaca made $15.4m profit before the charge.
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