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Finally the seller has cleared from (LSE:IAE) Ithaca Energy as i mentioned on my Chris Oil Blog Friday afternoon after 31% of the companies shares have changed hands since the February RNS. Clearly both fundermentally and charting wise point back to 65p in a V shape recovery. With a strong oil price at the end of 2015 and into 2016 with Stella Online 2Q the charts point back to £1.95
If we take a look at short term news within the next two weeks, positive low risk Stella Ekofish results are due at any time which will have a good baring on reserves.
With the main 31st March results highlighting possible reserve upgrades based on M&A Sumitomo Corporation in 2014 not updated yet into the official numbers due with the results and the giant cost savings ontop of the 60% expenditure cut mentioned in January 2015 RNS.
With forcasts of £407m revenue and £158m profit coming online in Q2 2016 combined the existing production on low all in cost average of $36 a barrel now and post Stella $35 all in costs based on todays pre results data. Ithaca is the low risk bargain of the century at these levels. Combine this with positive news regarding finance comments particulary after recent (LSE:TLW) Tullow Oil RNS over bank reserve based lending. Note Ithaca lending refinance due mid 2017 not now.
(LSE:ENQ) Enquest RNS also confirmed this week Ythan will be online mid year 2015 bringing increased production to Ithaca and positive news from Don production 1Q 2015.
Rumours are already circulating that Ithaca Energy is a takeover target due to the sharp fall in share price at anytime let alone 2H. Premier Oil (LSE:PMO) has already mentioned it is seeking to buy North Sea Oil production assets in the second half . I recall Nautical was taken over for a 100% premium to its share price and that company was not even in production, with Stella forcast to more than double its production net in 2016 skys the limit.
One must also add the new Budget change to the North Sea adding £1.3 billion tax relief which will encourage M&A and better bank lending reviewing production companies based in the North Sea. Westhouse Securities comment risked valuation of Ithaca production and development rose by 15% based on the tax cuts together with benefit from government investment in seismic.
I would add most now believe oil is in the bottoming process and by the second half of the year will be higher. However by that time you will buy Ithaca back at the old levels, remember when you thought getting shares at £1.06 was a bargain ? I am indeed fortunate that there was a seller for me to personally average buy in the bottom ranges. These shares will not be so easy to get in volume at a cheap price anymore.
Expect the last of the shorters will panic out Monday morning however i really think they might have taken EK Cawkwell or Paul Mumford of Cavendish Asset Management comments seriously. Which i mentioned in my previous articles click Chrisoil author. Private investors do seem to like buying at the top and selling at the bottom. As a city investor i buy at the bottom and sell at the top.
People also ask me about the Falklands i am still bullish on Zebedee well, however my question is why the heck bet on a gamble for 100% return when you can make at least 500% or more low risk by 2016 ? In other words Ithaca is a low risk high return hedge. You know FOGL needs money ie issue for the fifth well do not say i did not warn you !
Anyway its not to late to get on board (LSE:IAE) Ithaca Energy but would act fast the very cheap tickets have already gone ! You can listen to me calling the the bottom live on ADVFN Justin Waite Show Thursday 19th March 2015.
If your interested in advfn they have excellent data and level 2 on North Sea companies like Ithaca Energy well worth registering below.
Until the next time more ramblings from the castle can bee seen @chrisoil
http://www.chrisoil.blogspot.co.uk
