Oil producer Ithaca Energy (IAE:AIM) is up 4.4% to 51.7p as it agrees to sell its Norwegian exploration assets for more than most analysts thought they were worth. The $60 million deal with Hungarian operator MOL will see Ithaca net $30 million post the repayment of its Norwegian financing facility and adjustments to working capital.
Ithaca could earn another $30 million over the 2015-17 period contingent on the results of exploration drilling on these licences. The transaction is scheduled to complete in the third quarter and the funds will be used to offset drawdown on its banking facilities. Canadian broker First Energy (Ithaca is dual-listed in Toronto) carried the Norwegian assets at a value of only $18 million.
It reiterates its outperform rating and 90p price target. Analyst Stephane Foucaud comments: 'We like Ithaca at the current levels with valuation being relatively resilient on the Brent forward curve and offering 100%+ upside at US$90/bbl LT.'
Westhouse Securities which rates Ithaca as a 'buy' with an 80p price target also welcomes the news but notes: 'The net cash received will assist in soothing investor concerns about liquidity; however, the key issue for IAE is achieving first oil at Stella, which post the recent update is now expected in Q2 2016.' Ithaca announced in February that its Greater Stella Area development would face further delays.