Ithaca Energy tucked away into SIPP for medium term

Yesterday's news on the early appraisal of the North Sea Stella field indicating that its reserves are much higher than anticipated was good news for Ithaca Energy (IAE). Last week it announced its first profit of $7.9 million on revenues of $111 million, after a loss of $30.4 million (£19.7 million) in 2009. The results were driven by a 50% share of 7,083 barrels of oil per day production from the Beatrice and Jacky fields in the North Sea. Earnings estimates for 2010 are $0.36 per share and $58.7 million. At the current share price of £1.62 ($2.44) this puts Ithaca on a forward p/e of 6.8.

The company has no debt and $30 million of cash. It plans to develop its Athena field and acquire other North Sea assets in what it considers to be a buyer’s market for undeveloped discoveries. The Stella field will come on stream in 2012 with reserves up to 20 million barrels and it is possible that further upgrades of the field's reservoir will be forthcoming.

Although I do not anticipate too much further share price appreciation in the short term after the 10% rise yesterday, I have bought Ithaca in my SIPP (Self Invested personal pension) since the next couple of years should see earnings move up sharply. Though Ithaca can be volatile as it is traded on both the Toronto Stock Exchange and AIM in the U.K. from a fundamentals and momentum point of view this company ticks the boxes.