The rise does not undo all of the damage wrought by January's news of delays to the company's flagship Greater Stella Area (GSA) project but is nonetheless a welcome fillip for the stock.
The Trell discovery is relatively modest – initial estimates of its size are between 3.1 and 12.5 million barrels of recoverable oil and broker Westhouse Securities puts its per share value at between 1p to 1.5p. The find, located in licence PL102 F/G, is within 10 kilometeres of the Heimdal production hub which should improve development economics.
Ithaca entered into an agreement with operator Total (FP:PA) in December 2013 to acquire a 10% working interest in PL102 F/G and completion of the transaction is currently progressing through regulatory consents. According to the company the deal is consistent with a strategy of gaining access to lower risk exploration opportunities capable of bringing in cash prior to development.
Westhouse, which has a 'buy' rating on the stock and a 200p price target, comments: 'The core of Ithaca’s story remains production and development and we continue to look to timely progress on GSA development and progress on existing producing assets as potential drivers for the stock.'
Modification works to a floating production unit mean first output from GSA is now expected at the end of this year against previous hopes of a mid-year start up. Nevertheless the uplift in production and cashflow is expected to be substantial when the field does come on stream. The table below shows the impact as estimated by Westhouse. (Click table to enlarge).