Yet more deals in the North Sea. On 16th March, UK based Trapoil , agreed to acquire a 15 per cent working interest in the Athena Oil Field from Dyas UK Limited for £34.5 million.
The deal is subject to the approval of DECC and Dyas’ partners , The field is owned by Dyas (with a remaining 32.5%), the operator Ithaca Energy (22.5%) EWE Energie AG (20%) and Lochard Energy Group plc’s wholly owned subsidiary, Zeus Petroleum Limited (10%.).
The Athena field is situated in block 14/18b in the Outer Moray Firth area of the UKCS, lying approximately 18 kilometres west of the Claymore and Scapa fields and the associated production facilities. The field has been evaluated by Sproule Associates to contain 2P reserves (gross) of 24.4 million barrels of oil. The initial rate from the field is anticipated to be approximately 22,000 barrels of oil per day gross (with first production targeted for the second quarter of 2012. Oil produced at Athena will be transported from the BW Athena FPSO by shuttle tankers to the onshore Nigg storage facility, operated by Ithaca Energy. The FPSO vessel is currently due to enter the Souz Canal shortly.
Given that the field contains 24.4 million barrels (2p reserves), the sale of the 15% interest by Dyas (3.66 million barrels), values each barrel at $14.75 given the sale price of $54 million. This is broadly in line with the recent Centrica North sea deal and just below the $20 a barrel that Nautical stumped up for Encore oil. It makes the $3.5 a barrel current valuation for Xcite Energy look on the low side doesn't it?
The TrapOil deal is interesting from Ithaca Energy's point of view and most likely responsible for yesterday's 5% fall. With its 22% interest, Dyas's sale values Ithaca's state in Athena at $72 million (£45 million). However Athena is not Ithaca's only asset.
It is producing around 4500-5000 barrels a day from its existing assets and this wil double to 10,000 barrels a day when Athena comes on stream in May/June. In Q3 2011 its average realised price per barrel was $111 a barrel and Brent Crude has risen since then. It also had $115 million in cash at the end of Q3 2011. Q4 2011 financial results are due at the end of March.
Assuming production of 10,000 barrels per day in 2012 at an average selling price of $110 a barrel, this equates to revenues of $1.1 milliion per day, or $401 million for the year. Assuming 50% earnings ratio based on YTD 2011 ($22 million earnings on $44 million sales), this equates to $200 million earnings next year. With 259 million shares in issue that equates to $0.77 per share or £0.5 per share. At the current 191p, that equates to a forward p/e of 3.82. Looks cheap to me!
Analysts are talking of a takeover deal by Enquest, KNOC and others at around $C3.75, which is £2.39 a share. Even at this price it is only a 5 times earnings multiple which is not expensive. At £1.91, the downside risk of the mulitiple bidders pulling out looks covered given the 10,000 barrels a day production. The upside may be 40% plus.
Another good tree shake on Ithaca Energy which dropped to 184p at one stage this morning before bouncingbefore finishing the day at 193.25p. Plenty of games on Ithaca that's for sure!