Ithaca modifies Petrofac contract to speed up progress

Source: Ithaca Energy

The modified agreement provides enhanced incentivisation for the timely delivery of the vessel, which remains on track for sail-away from the shipyard in Poland at the end of the first quarter of 2016.

Ithaca Energy Inc. (TSX: IAE, LSE AIM: IAE) ("Ithaca" or the "Company") announces that the Greater Stella Area co-venturers have entered into an agreement with Petrofac in respect of the "FPF -1" floating production facility. 

The agreement provides enhanced incentivisation for the timely delivery of the vessel, which remains on track for sail-away from the shipyard in Poland at the end of the first quarter of 2016. The agreement also provides important contract cost clarity, thereby ensuring efficient execution of the remaining FPF-1 modification works.

Highlights

  • All costs of modifying the FPF-1 above the contract cost cap will continue to be fully paid by Petrofac as incurred
  • Ithaca will pay Petrofac $13.7 million in respect of final payment on variations to the contract, with payment deferred until three and a half years after first production from the Stella field
  • A further payment to Petrofac of up to $34 million will be made by Ithaca dependent on the timing of sail-away of the FPF-1. The maximum payment can be achieved for delivering sail-away of the vessel from the shipyard prior to the end of March 2016, with this incentive payment eroding on a daily basis to zero by 31 July 2016.  This payment will also be deferred until three and a half years after first production from the Stella field
  • Commissioning operations have commenced on the FPF-1. Sail-away of the vessel remains on track for the end of the first quarter of 2016, with first production from the Stella field anticipated at the end of the second quarter

"Delivery of first hydrocarbons from the Greater Stella Area is the next key operational priority of the Company. This agreement introduces a significant additional incentive for Petrofac to provide timely delivery of the FPF-1, without affecting the liquidity position of the Company," said Les Thomas, CEO.

Additional Information

The FPF-1 modifications programme is being completed by Petrofac in the Remontowa shipyard in Gdansk, Poland. The transition from construction activities and into commissioning operations continues on the vessel. The main construction works are nearing completion and handover of the various topsides processing, utilities and accommodation sub-systems for pre-commissioning is progressing. Initial commissioning operations are underway, with electrical loop checking on the process control and safety systems and equipment package interface testing having commenced.

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