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Following Part 1 introduction to Ithaca Energy (LSE:IAE) i have been swamped with questions. As known hedge funds and are buying up the last sellers. Clearing as i write on Friday it seems a bottom is forming after a third day around 40p and eight trading days since the dramatic fall . So get ready for the bounce next week.
Ithaca Energy (LSE:IAE) as you know is a safe leveraged play on the oil price which looks to be returning to the £1.80 plus levels in nine months when the Stella is online in 2016 and oil turns to $70 a barrel. A detailed fundermental introduction look can be read througth on part one http://www.advfn.com/newspaper/Chrisoil/33064/ithaca-energy-north-sea-leveraged-bagger-play-on-the-oil-price-buy
The main point i wanted to highlight in this article was some number crunching and conclusions from broker notes, Moody debt note and personal thoughts.
Firstly I have been going through broker numbers on Ithaca Energy 2016 £407m turnover Pre tax profit £158m 2015 £395m turnover Pre tax profit £85. These numbers are forecasts which maybe be lower, however gives you an interesting view based on the companies market cap of just £130m
If we move onto the Jan 2015 update RNS highlighted a 60% reduction in capex forcasted for 2015 and that was mainly for Stella going into production in 2015. Interesting point to be made could the new nine months or less delay save an extra $100m ? massive saving so Ithaca can use funds for M&A production add ons or debt reduction, more news on this front should come out 31st March.
Also believe positive news on reserves regarding the last M&A 2014 acquisition clearly mentioning upgrade potential in 2014 RNS and remember the small stake in poor Athena risked only 2p asset, is profitable with IAE hedges at $102 a barrel.
Moody in Canada slightly reduced bond rating B2 to B3 which in my view is better than expected considering the delayed news. Hence the falls in Canada and UK on Friday however i want to highlight the important eliments which states “Ithaca liquidity position has tightened, it should be adequate to fund capital spending and bring stella field online” and “Ithaca should be able to meet peak funding requirements on the Stella development under its $610m reserve based loan facility. We believe the company is likely to negotiate an extension of the facility at the next re determination in April 2015”. I would add the bond does not need to be refinaced till 2017.
On the technical side cast iron bottom seems to be close enough. The trouble with charting i found is you never get your entry point because human factors are willing to overshoot your buy orders. After 8 trading days post RNS the companies share price is trying to bottom out. Expect Stella apprasial drill results of Ekofisk to blow shorts out of the ground at anytime and N.Sea budget news come 18th March.
I would point to (LSE:ENQ) Enquest past operations update in January as a trading example of a strong technical bounce the same will happen here sooner than most think.
You can listen to more information about (LSE:IAE) Ithaca Energy by listening into my thoughts with ADVFN Justin Waite Show Thursday 5th March 2015 on my blog http://www.chrisoil.blogspot.co.uk
It your interested in advfn they have excellent data on Ithaca Energy, North Sea Oil Companies and level 2 well worth registering below.
Until the next time more ramblings from the castle can be seen @chrisoil
http://www.chrisoil.blogspot.co.uk
