Ithaca Energy

Source: Energy Digital

Date :05/12/2007 17:22:05

Ithaca Energy is looking ahead to new projects and to exceeding its growth value. CFO Brad Gunn talks through its five-year plan to ExecUK

Written by Rebecca Waters and produced by Alex Smith

When asked about Ithaca Energy’s Inc.’s current strategy, CFO Brad Gunn says: “We are a little bit abstract but it’s along the lines of we want to do things.”

That might sound vague, but it seems to be working; the business is enjoying profitable growth, raising almost CAD$300 million since it was formed by oil industry veterans, Mr. Donald B. Copeland, Mr. Gerald L. Roe, and Mr. Neill A. Carson, 3½ years ago.

UK based Ithaca is essentially an oil and gas company, specialising in the exploration, development and opportunities of oil and gas reserves in the untapped UK continental shelf in the North Sea. “We see a ton of opportunity here,” Gunn says and this, he continues, is the area in which Ithaca intends to stay, with no plans to enter new markets.

With twelve years prior management experience, Brad himself joined Canadian-owned Ithaca in 2004 after “I got bored.” After selling his company, Freerealtime.com, a Web-based provider of real-time stock market information services and analytic tools to individual investors and online brokerages in 2001, Gunn decided to take a couple of years off to have a career break before joining Ithaca as CFO.

Sustainable growth

Starting off with nothing, and ‘offering their apartments and flats’ for the first year, the TSX and AIM listed Ithaca has thus grown into a global organisation of 22 people, employing three people at its office in London and 19 in Aberdeen, Scotland, with a further office in Calgary, Canada.

As Gunn explains, the company has more than enough room for growth with a portfolio of 35 prospects that they are getting ready to drill, on top of three existing development projects. However, the projects themselves are only part of the long-term growth and sustainability of Ithaca, he continues.

It is also a concern that the business works together and maintains relationships with its key people; shareholders, stakeholder groups and employees – one of the points stressed in its ‘mission statement.’

“We’re trying not to be a cold-hearted business, it’s not all about making money, it’s about doing things right for ourselves, our shareholders, our employees, stakeholders and really to do right by the environment, manage our environmental policies, strictly do things as clean as we can,” Gunn stresses. “We make sure we keep people happy,” he says.

“We believe that it is essential to keep everybody informed.” For instance, he continues, it drills in some environmentally sensitive areas which it needs to get permission to drill. “It is in our interest to liaise with the stakeholders in that area. “We are acutely aware that we should put safety of our people and the stewardship of the environment first.”

Managing experience

Even with twelve years experience in finance, the oil and gas market is still new to Gunn, compared to the rest of the senior management team - which although small in capacity, has combined management experience of over 100 years.

Ithaca believes that it is these combined abilities that are key to the business. Creativity and innovation in its employees is not only welcomed but encouraged. As Gunn explains, “what we try to do is take on the cream of the crop,” recognising that in order to achieve its consistent profitability, experience is necessary.

The same value is applied to its outsourcing. Even though it outsources its main operational drilling work, Ithaca takes the same quality approach. It strives to develop a work environment in which values and relationships are respected. “If you’re an owner of a company, you look after it more,” says Gunn, who is a one percent shareholder in the business. “As an owner I think that’s quite important.”

Portfolio production

Ithaca’s strategy is to acquire existing production or discoveries by purchase, farm-in or acquiring new licenses. As Gunn describes, “We need to have a trunk balance sheet in order to do that.” It certainly has fulfilled this, raising almost CAD$250 million in the last year, CAD$100 million of which has only recently been announced.

With interests ranging from 20 percent to 100 percent in 30 blocks or partial blocks under 16 licenses - covering 535,682 acres- and more than 35 exploration prospects, Ithaca has built a diversified portfolio spanning the three development projects.

Through its subsidiary, Ithaca UK, Ithaca has acquired interests in the Athena discovery in the Outer Moray Firth, which contains two undeveloped oil wells, Barbara, a gas and condensate discovery in the Central North Sea and Beatrice Alpha in the Inner Moray Firth. These have been acquired through participation in the UK’s recent Seaward licensing rounds and acquisitions which, Gunn explains, they intend to continue to expand upon, with a business plan to last up to five years.

Much of this is accountable to its positive and pro-active attitude. “When we formed the company we wanted to bring a ‘can-do’ attitude to the business over here and that has been the brand since day one.” What Ithaca wants to do, Gunn describes, is ultimately shorten the exploration cycle. “Instead of taking eight years to get through, we want to do it in four,” he says.