Ithaca Energy reported a sharp increase in cash flows and reduction in net debt at the half-year stage ahead of the start of production at its Stella field, which management forecast would lead to a step-change in production and hence cash flows.
On a hedged basis, during the period under review sales fell 44% to reach $126.8m.
That came as average production declined from 12,600 barrels of oil equivalent per day to 9,400, with the average realised price falling from $60 per barrel to $40.
Nevertheless, the company had guided towards 9,000boepd in output for the period.
Cash-flow generation tumbled 49% as a result to $81.6m and earnings were more than halved, declining 55% to $6.2m on an after-tax basis.
Significantly, management forecast the start-up of production at Stella at three months following sail away of its newly refurbished FPF-1 platform, which took place on 5 August.
The Greater Stella Area was located in the heart of the Central Graben Area of the North Sea, on the UK continental shelf.
Unit operating costs dropped in a sustained manner in the first half, with Ithaca lowering its full-year guidance to $25 per barrel of oil equivalent. A further drop to below $20/boe was expected with the start-up of production at Stella.
When Stella came on-line, production would more than double to between 20,000 to 25,000boepd, the company said.
Net debt was brought down from a peak of over $800m in the first half of 2015 to $606m as of 30 June.
Management pegged the amount of funding headroom at over $120m, with total debt availability in excess of $730m.
"Ithaca has posted its first-half results for what has proven to be a very active period for the company. Cash flow generation has been strong and net debt continues to reduce. The FPF-1 facility is en route and installation activities are due to start in the short term," FinnCap analyst Dougie Youngson said in a research note sent to clients on the same day as the results.
As of 15:56 BST shares
in AIM-listed Ithaca were 1.55% up trading at 65.50p, not far below their 52-week high of 74.75p.