Ithaca Energy and Petrofac have taken significant share price hits after revealing start-up production delays for a key North Sea oil asset.
The firms, along with Dutch-based Dyas, are joint-venture partners in the Greater Stella Area (GSA) development in the Graben area of the Central North Sea.
In market updates yesterday, operator Ithaca and Petrofac confirmed that first oil production from the field which has a proven and probable reserve of 30 million barrels of oil equivalent will not begin until next summer at the earliest due to delays with the fit-out of the field’s floating production platform.
Petrofac, which has a 20% stake in the Greater Stella licences, told investors yesterday that topsides work would now not be completed as scheduled.
The announcement, and a warning that profits from its Integrated Energy Services (IES) division would be at the lower end of previous guidance of circa £223m, sent Petrofac shares plummeting into double-digit negative territory.
“The heavy lift operations to install the pre-assembled units and key equipment on the main deck of the FPF-1 floating production facility were commenced in January and will continue through to (the) end of May,” the firm said in its interim report.
“With marine work at an advanced stage of completion, the primary focus of the ongoing works is the topsides processing plant.
“We no longer expect to be able to sail-away the FPF-1 ahead of the winter weather window without completing significant work offshore.
“We therefore plan to sail-away the FPF-1 in spring 2015, with first production on the Greater Stella Area development now expected in mid-2015.”
Petrofac chief executive Ayman Asfari said a restructure of the IES division was under way.
“We are working hard to deliver improvements in operational performance on the existing portfolio and are refocusing our IES business development plans.”
The price of Ithaca stock was also down almost 10% in morning trading as the company said it expected the delay would cost it between $5m and $10m.
Ithaca said it was working with Petrofac which was awarded the modification contract for FPF-1 in October 2011 and which sub-contracted it out to the Remontowa shipyard in Gdansk, Poland to “expedite” the remaining works.
Chief executive Les Thomas said: “While good progress has been made with drilling of the third Stella development well and the subsea infrastructure installation works, the delay in the FPF-1 sail-away schedule, and consequently the impact on the timing of Stella first oil, is clearly disappointing.
“We are working with Petrofac to expedite completion of the vessel modification and commissioning works and deliver start-up of the GSA hub as quickly as possible.”
Shares in Ithaca closed down 11% at 135p, while Petrofac stock ended the session 15.2% lower at 1,177p.