North Sea oil firm Ithaca Energy (IAE:AIM) is facing yet more delays to its Greater Stella Area (GSA) development with first crude not expected until the second quarter of 2016.

The stock is down 24.6% to 49.9p as investors lose their patience. In 2011, when the company came up with its development plan, GSA was expected to commence output in the second half of 2013 and until today guidance was for this milestone to be achieved by the middle of 2015.

Today's news reflects the difficultly in getting large projects like this on stream. The culprit is the floating production facility which is currently undergoing modification works in Poland under the aegis of oil services firm Petrofac (PFC). Ithaca puts the incremental cost of the hold up at $10 million.

This relates primarily to project management costs for the overall development, as the modification costs are being shouldered by Petrofac. The company says peak net drawn debt will be materially unchanged at around $850 million, funded from total debt facilities of $1.01 billion ($300 million five year senior unsecured notes, $610 million reserves based lending facility and $100 million corporate facility).

FirstEnergy Capital retiterates its 'outperform' rating and 100p price target, commenting: 'This announcement is likely to trigger concerns among investors about potential debt covenants being breached. We are not overly concerned by this given the Stella project is nearing completion and banks are likely to be accommodating (as they have been with EnQuest (ENQ)).'

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Issue Date: 25 Feb 2015