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Ithaca chief sanguine about prospects of independence

THE chief executive of North Sea-focused Ithaca Energy has said he is sanguine about the outcome of the Scottish independence debate, highlighting the similarity of views in Edinburgh and London about how best to support the oil and gas industry.

FACILITIES: A ship offloads a subsea production manifold for Ithaca's Stella North Drill centre, part of the Greater Stella Area development.
FACILITIES: A ship offloads a subsea production manifold for Ithaca's Stella North Drill centre, part of the Greater Stella Area development.

While Ithaca suffered a 24 per cent fall in first half operating profits following cost increases, Les Thomas said the company did well in delivering a strategy which aims to create long-term value for shareholders by increasing production in the North Sea.

He said Aberdeen-based Ithaca is in the market for more acquisitions after completing the $163 million (£97m) purchase of three assets from Sumitomo in July but would be very choosy about what it buys.

Asked if he had any concerns about how the debate on Scottish independence might play out, Mr Thomas said, speaking in a personal capacity: "Clearly there are issues around what does a yes vote mean, what does a no vote mean, what might happen.

"I think there's lot of uncertainty and for any industry no-one likes uncertainty but I think, having been in this industry a long time, this is a business that operates in the midst of civil wars and all sorts of uncertainty and upheaval all the way around the world. So frankly what we're talking about here, given the stated positions of all parties in terms of what's good for the industry and what governments need to do, I'm fairly sanguine about it."

He added: "If you listen to the industry in general and listen to Edinburgh and listen to London I think there's a great deal of commonality in what's required to maintain the health of the industry."

Mr Thomas was speaking after Aberdeen-based Ithaca revealed that it made an operating profit of $12.7m (£7.6m) in the six months to June compared with $16.6m in the same period last year. The company faced increases in the costs of using production assets like the BP-operated Sullom Voe terminal on Shetland and the Anasuria Floating Production Storage and Offloading vessel operated by Shell.

Mr Thomas said Ithaca picked up an increased share of the costs of operating the assets because other companies put less production through them. Ithaca's unit operating costs increased to $48 per barrel oil equivalent (boe) in the second quarter from $39/boe in the same period last year.

However, Mr Thomas noted the costs of using Sullom Voe and Anasuria should fall as more production is routed through both assets. He said Ithaca's average operating costs should fall significantly following the start of production from the giant Greater Stella Area development, expected in mid 2015.

The results of drilling on Greater Stella in the first half had reduced the risk of the initial annualised production forecast for the Greater Stella Area hub of around 30,000 barrels of oil equivalent per day (boepd). Ithaca's shares would be 16,000 boepd.The company produced an average 10,500 boed in the first half compared with 9,138 boed last time. Revenues increased to $200m from $188m.

Ithaca expects production to average 13,500 to 15,500 boed in 2014 including output from the fields bought from Sumitomo.

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