Ithaca Energy's (IACAF) CEO Les Thomas on Q4 2015 Results - Earnings Call Transcript

| About: Ithaca Energy (IACAF)

Ithaca Energy Inc. (OTCPK:IACAF) Q4 2015 Earnings Conference Call March 23, 2016 8:00 AM ET

Executives

Les Thomas - CEO

Graham Forbes - CFO

Analysts

Nathan Piper - RBC Capital Markets

Stephane Foucard - First Energy

Les Thomas

Okay, good afternoon to everyone here in the UK side, and good morning to those of you listening in North America. Welcome to the Ithaca Energy 2015 Financial Results Presentation. My name is Les Thomas, the CEO; and with me today are Graham Forbes, our CFO; and Richard Smith, our Chief Commercial Officer.

We will be using the presentation material that's available on our website to run through the key elements of today's results announcement and provide an update on the status of the business and on ongoing activities. Graham and I will be alternating to cover all of the material, and once we have completed the presentation we'll take questions. For the Q&A there is an operator on the line, I think we will start with any questions from the analyst that have been able to join us here in London and then we'll move to any questions from those dialing in via the phone lines.

Do not expect any surprises today as with the last couple of presentations we have a rather simple story to tell. We have got a clear plan and we're in the process of delivering on our thought. Let's move straight to slide number 3. And just consider the highlights of 2015 which is all about delivering on the key priorities so at the beginning of the year. And really despite the very difficult commodity prices environment, it has taken its toll on many of our peers.

In 2015 we delivered $261 million of cash flow from ongoing operations. This was driven by a very consistent performance from our producing assets portfolio and the rigorous cost control as per our operating cost base significantly, indeed somewhat ahead of their expectations that we handled in the beginning of the year. All of those have of course underpinned us from hedging position which remains an important part of our outlook. We have an average of 10,000 barrels a day, $61 a barrel, and placed until the middle of 2017.

Major milestones and stale projects have been delivered over the year and current good progress on the FPF-1 modifications program in Gdansk means that we remain on-track to deliver Stella production in the fourth quarter this year. Those start of the Stella were results of production at the end of 2016 being approximately twice the 12,000 barrels a day that we averaged in 2015, so very important year for us, the big event that we've all been waiting for.

One effect of adding the low cost sale of barrels is that it will drive our unit OpEx from where we are now, which is in the high 20s per barrel, start of 2016 down to the low 20s. And the thing that given the likelihood of our lower for longer commodity price scenario this is very important under terms of resilience of the business in the future. That means that we will enjoy decent net box even without the benefit of hedging. Graham will shortly go into little more detail on the evolution of our net debt positions, so I'll somewhere highlight our important point is that 2015 saw the business commence the deleveraging phase with the period of significant capital investment in Stella coming to conclusion. We're very pleased that already begun this and even ahead of Stella start out with the current net debt down over $135 million or 17% down from the peak that we had in early 2015.

Finally, important to note, we've not just been ignoring the Stella, in addition to Ron Harrier hurricane developments we've acquired 28% interest in the VP operated borrower discovery. Just as a reminder, this borrowing is very similar in both size and composition to Stella and it's only nine kilometers away from the FPF-1 hub, and this is really the start of building out our low cost GSA soft light portfolio. But I see we feel in a very difficult external environment, we've had a successful 2015 and a strong outlook for this year and beyond.

I will hand over to Graham now, and he will cover the '15 results in more detail. Thanks.

Graham Forbes

Thanks, Les. From the full year financials we will continue with the general format we followed in previous presentations kicking off with a review of the key part of BOE metrics of the business followed by summary of our hedging position. We'll then talk through the cash flow and earnings generation for 2015 before turning to how the business is positioned going forward in respect of costs and funding.

So starting on Slide 4, we have the comparison of 2015 with the prior year for the three key elements of production, unit operating costs, and realized hydrocarbon prices. Starting with the chart on the left, you see production increase by 10% to 12,100 barrels of oil equivalent per day. The producing assets portfolio performed well in 2015 with production running slightly above guidance, largely due to good operational appetite plus the assets, and deficient execution of a planned annual maintenance shutdown along downtime to be kept a minimum. Les will provide further color on production going forward once we've gone through the financials.

If I now turn to the second chart, we can see that there was a material reduction in unit OpEx in 2015 and one that beat our expectations. We started off the targeting of reduction to $40 per BOE by the time we reported last quarter's results, we were expecting to be down to $33. As you can see we actually ended 2015 operating cost of $31 per BOE as downward cost pressures continue to persist. We think savings being achieved across the portfolio was an offshore cost of producing oil and the cost of processing and transportation. Personnel costs contracted equipment hire and support costs such as logistics have all seen the P&L reductions, as well as obvious areas of cost savings such as diesel fuel costs.

The third chart on the slide highlights the impact of lower oil prices and importantly, the benefit of our hedging. The chart shows that overall realized hydrocarbon price dropped from a level of almost $96 per barrel of oil equivalent in 2014 to around $52 in 2015. However, with a substantial hedging position we actually achieved an overall realized hydrocarbon price of $85. Now just as a point of last quarter, importantly these numbers do not include the benefit of the one-off $33 million hedging gear accelerated from 2016 into Q1 2015. These numbers just take account of hedges taken out to provide 2015 with hedge protection.

If turn to Slide 5, we can see the strong hedging protection Ithaca has in place for 2016 and 2017. The slide really speaks for itself so I haven't got too much to add but from the chart we can see that in 2016 $11,500 of oil equivalent per day hedged of $60. Now for roughly half the hedging is inspect of gas it nevertheless provides excellent insulation from volatile commodity prices during the year. And as particularly true in the period prior to Stella coming on-stream, when we're producing around 9,000 BOE per day, in 2016 our hedging volumes were 7,000 per day but at a slightly higher price of $62. Our hedges have generated almost $180 million in cash during 2015 and at the event, the remaining hedges still at a market value of a further $127 million to realize going forward.

In addition to commodity price protection, the company also has corporate tax protection in the form of tax allowance tools ensuring that past $1.6 billion of cash flows thrown off by the business do not incur any corporation taxes. For this reason the cash benefits to Ithaca, the UK Government's recent further reduction to an offshore corporation taxes from 50% to 40% will be somewhere light but Ithaca will see an immediate cash benefit of between $3 million and $5 million per year from the effect of abolition of the tooling revenue tax of FPF which has until now been levied at 35% on our Wytch Farm field. It's of course encouraging to see the continued direction of travel of lower taxes in the NP sectors within the UK.

If I now turn to Slide 6, we can summarize the reported 2015 full year financial figures. As usual, we split income statements into cash components of the top and the mainly known cash components were down. As highlighted by Les in his opening remarks, the most striking aspect of the 2015 financial performance is a delivery of $261 million of cash flow from ongoing operations. This represents a 70% increase over 2014 despite it being a year of significant lower oil prices.

Now the basis about cash generation performance is pretty straightforward, productions lose 10%, so prices collapsed from nearly $100 per barrel to $54, a hedge ensured that revenues inclusive of the hedges remained almost constant year-on-year. In contrast to that however, our operating costs as we discussed in Slide 4 showed a dramatic step down despite the higher production. They more than halved from well over $200 million in 2014 to just over $100 million in 2015. The reported numbers are admittedly aided by $21 million of all of this contract provisions which was set up at the end of 2014 for the expected net cost of ceasing production from our older, higher cost Beatrice, Athena & Anglia fields.

But even refracting those costs there has clearly been a dramatic transformation over the past year and the cost base of the company. The overhead to the business have also not been immune from the market conditions. Once we used to effect the G&A cost recovery in the year from the sea of Norway, we see a fall of a thought in the annual cost of $12 million to nearest $8 million.

As I mentioned, the following slide will consider the sustainability of that lower cost structure going forward. But in terms of the non-cash components, I would just like to highlight the tax credit yield $7.7 million and impairment charge which flipped an earnings gain of $86.1 million into a loss of $121 million.

So firstly on the tax, a deferred tax charge was recorded early in 2015 from the reduction in the book value of our tax losses when the UK Government took the first bite of cutting industry tax rates. That time being a reduction in the corporation tax rate from 62% to 50%. And this is offset by a couple of factors which is both being discussed in earlier results presentations namely. The expenditure supplement and in the year which arose tax bills to grow 10% annually if not used. And secondly, Ithaca's share of the tax bills generated by the cost overruns on the FPF-1 which have been paid for the effect [ph].

If I now turn to the impairment charge, although hedging protected our cash flows from the continued fall in oil and gas prices, the company's hedges are not part of impairment calculations and consequently the company has taken a commodity price to book impairment in the year of $202.6 million after-tax.

So let's now switch gear and turn to Slide 7. When we look ahead, I was early in the businesses to the potential of a sustained period of lower oil prices. The key to that resilience is the cost base. We've talked about the operating cost transition from 2014 through to 2015 and the small graph in a bubble shown in the left hand side of the first graph always states the transition in more detail on a quarter-by-quarter basis for 2015.

Going forward however, we expect our current producing assets to have operating costs of $30 per BOE during 2016, that's assuming current savings are retained but no further cost savings to the assets proving the focus continues on reducing the operating cost base further but that's not built into these numbers. Stella's operating cost is a forecast to be substantially lower than the current portfolio between $10 and $12 per BOE in the initial years taking us to our blended forecast company OpEx of $25 per BOE of 2016 until around $20 in 2017 as a result of full year's contributions from Stella. I think we are in an enviable position relative to many of our North Sea produces.

On CapEx, the 2015 spend came in in-line with our Q3 forecast, so $33 million under budget as a result of the efficiencies in installing the Stella subsea infrastructure back in the summer and the disposal of the Norwegian business. As the graph illustrates, we are now in the latter stages of our committed capital program with $50 million spend expected in 2016 with of course the lion shear going towards the hiccup and offshore commission in Stella was at the summer.

Looking further ahead, the company has a flexibility to pursue investment opportunities within the portfolio, and most particularly from the greatest Stella area. The nature and piece of those investments were very much be driven by the cash flows in the business and the hydrocarbon price environment at that time. It should be noted that all material investment decisions are within the control of Ithaca and that we cannot be voted into projects by our partners given a working interest positions in the various assets.

Now let's go to Slide 8 and I will conclude by working out our funding position. The company has substantially reduced debt during 2015 while continuing to invest in Stella field developments. From a net peak debt of over $800 million in the first half of 2015, we ended the year at $665 million. Looking towards the end of Q1, we are on-course to reduce that further to under $635 million well ahead of forecasts. The reduction in debt has been delivered through a couple of decisive actions in addition to the strong operating cash flow performance of the business. Firstly, we ran a very successful sale of known core Norwegian business in early 2015 using the $60 million generated to pay off our Norwegian debt facility and the balancing $30 million to reduce the UK RBL.

During the year we also completed the premium placing of just under 20% of our stock at $1.5 Canadian to dollar [ph] which represented a 49% premium to the stock price over the previous five days losing $66 million. As a result, we can see from the graph that our debt requirements of the land was $665 million, some $130 million less than the $815 million debt availability being made up of $300 million from the bond and $515 million from the RBL. This put Ithaca in a strong position to go forward and deal with any potential headwinds. As well as we have those headwinds for the industry materialized in the form of further falls in oil price in the last six months period. And although we come to the next six months with RBL redetermination with knowledge of reduced price stakes by the banks that soft protection built up in 2015 is expected to ensure we come through this upcoming redetermination in a robust manner.

And just for the voice of given the wide industry concerns, we have not come close to preaching any RBL covenants during the year and we do not ensilage we will breach any covenants in 2016, nor require any waive-offs from the banks for that to be the case. Of course the very nature of our all RBLs is that availability is determined in a six-monthly cycle, hence there is always uncertainty until the outcome is agreed. However, the steps already taken on the path of deleveraging before Stella even comes on-stream, we're a very supportive banking group we've got a different place to some of our peers.

With that, I'll hand you back to Les.

Les Thomas

Okay. Let me say about our asset portfolio, and their associated 2P reserves base. As you know, this is moving now to Slide number 9. As you know, over the last several years we've been consistently growing our 2P reserves base resulting in 70 million barrels at the end of 2014. This year as you may expect with the prevalent commodity price outlook, we've undertaken a degree of portfolio restructuring.

Firstly, as we spoke about last year, we've removed the higher cost marginal producing fields from the asset base that was Beatrice, Athena and Anglia. Secondly we've now relinquished a non-core, non-producing licenses with some marginal development economics that were in the portfolio and those are Evelyn/Belinda and Scotty Cresset [ph]. These take approximately 10 million barrels of our 70 million starting point. On the Slide shows further movements reflecting 2015 production, some revisions due to price effects and the additional of borrowing ending at $57 million barrels of oil equivalent.

I think the most important point for me to emphasize is that that 57 million barrel 2P reserve bases are high quality, low CapEx, low OpEx, low decommission liability, reserve base that can deliver good net box even in a lower price environment. And it's really important to say that especially we take a prudent look at the forward outlook on prices. We only invest in the highest quality project, so that's what we need to have on our books as there is no point in having poor things on the books. So we can go forward with this best reserve base I think in very good state.

If we turn now to Slide number 10, I think the key point, it's very obvious one I suppose is to say the production outlook is good. Our 2016 guidance for the current producing asset was 9,000 barrels a day, production in the first quarter to-date has been in line with the full year guidance. Obviously, the big event is bringing Stella online and 16,000 a day in net to Ithaca. We've been waiting for that for some time and now we're obviously very close. The day of Stella startup will be a direct function of the Stella day of the vessel from Gdansk. And as you know, we have a six week window around that depending on final performance in the yard.

So there is no change for that our guidance. We still expect sail away sometime between the middle of May and late June with that production following approximately three months. Thereafter a really big step-up on the graph of course is 2017 which will reflect a full year's contribution from Stella. It will also be impacted by the timing of any further investments and good opportunities that we have -- the Don's and Pierce. Longer term, of course the production profile is really going to be driven by the phasing of GSA Satellite developments.

Graham talked about the financial side of how we will face those CapEx investments. We will march and optimize those to suit the availability of capacity on the FPF-1 vessel. And that means we can expect to have a flatter, more balanced capital investment profile going forward given the bank GSA essential infrastructure investment has already been made and it's simply the satellite high end costs we will commit to.

Just as a remainder, what is -- I know you've probably heard this before but I think it is significant enough just to emphasize what Stella means to us. 16,000 barrels a day to our net production in the first twelve months, reflecting our gross production level of 30,000 barrels a day, a reminder that we've tested over 53,000 barrels a day during a drilling campaign and that's ready to hand the show we think to become Don.

As Graham mentioned, the startup has a strong positive impact on the blended unit offering cost of the business, OpEx forecast of $10 to $12 a barrel. And this is a highly attractive is doing most volumes but also the fact that we own all the infrastructure that we've put in place, there is no lease payments there that's taking time.

As you will be well aware, we've set GSA up to be our production hub, that means 30 million barrels of 2P reserves will be already on, it will be monetized, and it also provides the opportunity to expand our footprint through satellite field development. Now the barrel FPF that's just the start, we're really not in a position to talk about what would follow the national negotiation is ongoing but we see a very positive outlook now. I think you've seen the schematic many times, which is Slide number 12, as you know the last remaining piece of the picture is to enable startup is the vessel. There is no change in the guidance in terms of startup as the favorite remains on-track and expect production during the third quarter of this year.

I'll move swiftly on to Slide 13, just to give you a little more color or flavor on the progress of the modifications program. The story there is everything is progressing very well, much of the onshore commercial program is actually complete now, and operational readiness preparation is ongoing significantly. All the three main power generators on the vessel have been load tested, synchronized, load shedding test done, synchronize with emergency generators, it's been a huge effort and all of that is in good shape.

In addition, the utility systems on the vessel are operational and commission activities are largely centered on the control room and the control and safety system testing the required. We also have our program of marine works to finish to achieve certification required for sail away and that progressing well also. Really the next milestones will be to move the vessel from the key side berth in Gdansk out in the river into Baltic, into deeper water to do the final deep water trials prior to certification for tour to the field.

Moving to Slide 14, just to give you a sense of how complete we are. First, this slide shows a picture of the top debt of the FPF-1 taken from halfway up the flare boom at the front of the vessel, there were also some unfair photographs showing -- let me take you through some of this details. For those of you on the floor you have to use a bit more of your imagination as I point a few things on the screen here in London. Firstly, just to get your eye -- we're talking about this and there is a lot of visit to Gdansk, everyone there talks about farer than asked, the important starboard but I think just for the benefit of the people in the room here I'll just talk about left and right in front of that if you don't mind, though forgive me for that.

And just to get your eye and -- on the left hand side of the picture, towards the front of the vessel as towards the flair boom, you can see two gas compression train, so the big things you can see there really are the exhaust pipes on the gas compressors, that 200% trains there. Moving over to the right hand side of the picture, there is obviously one of the major -- there is two major trains on the vessel, one is electric, one is diesel, we've got redundancy there. They've all been commissioned and tested so they are working mode. The right hand side of the picture there, the front of the vessel really is where production comes onboard through the risers, oil separation is a hard applied, you see a lot of pipe there.

If removed to the back of the photograph, where you'll see the far off -- just in front of that is the communications tower. And the accommodation lies to the left of the helipad, after the vessel there is a small instant photographed there showing the lifeboats are at the back of the accommodation. And just moving round, after the vessel to the left, the three main power generation units lie -- they run for the starboard across the way, there are three units, that's the main power generation. So everything is in very good shape, as I say the construction is essentially fetish, there is some marine wars going on dying on the front. But really the work on the top sides essentially complete end to the commercial face over.

We're very pleased, I think the performance of petrify over the last few months has been much improved. I think the deal that we put in place from the incentive related to CVD [ph] has had the desire to fate and they're watching very closely with our team that's in the hour right now to get things done as soon as possible. So we're feeling it's in very good shape and looking forward to see it working for real.

I can move now to the last slide, Slide 15, and just summarize. We've restructured the portfolio and to one that's got growing lower cost production base. We're delivering significant cash flow from operations currently. That's about repeatedly step up here in few months, and the higher advanced state of completion of FPF-1 is driving that, we'll see a big step change in production and cash flow from the business in Q3. We're already reducing debt and again that's going to accelerate once Stella starts.

So looking forward, the hub provides a strong platform for future growth and value. Exploitation of lower cost satellite development was very much our agenda. Looking forward, there is more to come in that area. I hope that you would expect, and we can certainly assure you that even in a proven external environment we will continue to have very disciplined and improvement management. So to summarize, finally, I'll say the company is well positioned to succeed. Even with the extended volatility in the commodity price environment that perhaps we're seeing at the moment.

So I'll stop there and we'll open up for questions. I think we'll open the floor initially in the room here and then we'll get to the phone lines in a moment. So Nathan?

Question-and-Answer Session

Operator

[Operator Instructions]

Nathan Piper

I'm Nathan Piper from RBC Capital Markets. Thanks for the presentation. Two questions for me around production please. First of all, on Stella, can you give us an idea in the shape of the ramp up. So its 16,000 barrels a day on a twelve month EBIT on the first couple of quarters what would that look like? Once you answer that one first and then I'll come back with the second one.

Les Thomas

Well, perhaps it's going to be a little more evasive on that. And if you like Nathan, what I would say about that is that the five wells that we have are ready to float. The sequence, once we've commissioned our systems offshore, the sequence will be to bring one well on, we're probably going to choose the lowest gas/oil ratio well initially. That will march with -- an agreement we'll have with the regulator on how much gas we can clear in that initial period before we get a first gas compression up and running. So it's all about getting the first well on, getting the liquid systems working, put liquids to the tanker. And use that period from a flaring gas to get our first gas compressions commissioned. So if you know the time that will take, that's normally days or weeks to get that off and running and humming properly, and it's at that point that we can really just switch on additional oil.

So we would see -- actually given where we are with our well program, there is no drilling, there is no clean-up of wells, to be done switching them on, we would see a relatively rapid ramp up in production.

Nathan Piper

So full production by the end of the year?

Les Thomas

Absolutely.

Nathan Piper

Okay. Second question, you've mentioned perhaps, and none of them made on the first time. You talked about reduction outside of Stella within your existing portfolio, so if you could compare to that. I wonder if you give a bit of color on the scale of those production enhancements, both in terms of how much spending that would need and what production that would add?

Les Thomas

Okay. I think it really depends on the asset, whether it's just a couple of examples. We do have this year very modest investment it appears on from well where we've developed additional production which appears. And we think the nature of reservoirs such as they are liable to be some more of that next year. So it's relatively modest. I think generally we're expanding something like keeps it ready here but I think there are may be three, four or five in that range on any well work, and that's the kind of thing we could see which could be very profitable if we did that to our peers. So that's one end of the scale. I think when we look at the dons, slightly different picture there. I think you know the ISIN development, the first well has been very successful, it's come on a higher rate decline or not where it has been lower than expected of some detail. And so that gives us encouragement in that block which is adjacent to the potential form a well over there. I think it's reasonable to think that we will take up very close look at commodity prices before we would commit to another well.

And as Graham said, we don't -- we control our counsel investment right across the portfolio to be voted in. So I mean the other -- what I would mention is, we've done a lot of work on the potential to materially add reserves by drilling a well trajection well. We were in the planning process really at the moment on that. Again, we would only commit to that once we are confident on the cost of a execution that we have risked managed the cost. And we were confident that we could make returns very quickly on a payback. So there is a range of opportunities there.

Nathan Piper

For scale though, are you talking about it in total around about $20 million in investment for round about 2,000 or 3,000 barrels a day of additional production not going to scale? I just want to get a sense of what all those things add up.

Les Thomas

It would depend on how much of what we did. The lower end is probably less money that you mentioned or about that production level. And at the higher it's probably significantly more money because of drilling of new well. But let's say we're not -- it's not something that we're rushing towards, we don't feel we need to do that when you can see we're going to have a pretty massive inclusion in our production and our cash flow in 2017 anyway, that's going to meet the real requirements of the business which is to get deliver quick.

Nathan Piper

That's clear. Thank you.

Les Thomas

Thanks, Nathan.

Operator

[Operator Instructions]

Les Thomas

You wait for the microphone here so that everyone on the line can hear you.

Stephane Foucard

Thank you, its Stephane Foucard from First Energy. I have two questions, the first one is on the ISIN. As you said, if you guys talk about, the fact that going forward that would be dividing the pool [ph]. And I was wondering whether you could quantify those reserve upside and whether they were already build up in the year end 2015 figure, the upside at ISIN? And the second question is what's the latest on the all explored solution for Stella which currently would be usually be standing curve. Thank you.

Les Thomas

Okay, two interesting question there. First one, ISIN, I think there is really two things that play there Stephane, there is a potential given the understanding of maybe a changed geologic position which could mean that we get more reserves for the money we're spending or have spent from the existing well, that's one part of all it. I think related to that also is, our expectation of where we we're going in terms of future CapEx to develop the rest of the reserves in that block. I think it's fair to say, CapEx estimation will be less, it will be easier because of a better geological situation, it will be easier to develop the same reserve volume. So I think its best just to leave it at that for now, I think our teams are working with teams there on what might be the best thing to do. But obviously, production performance on that well is, was also pleased with. So I have more to come there but we're going to have to monitor that well over the rest of the year before we think about the next debt.

Second question is probably more interesting, it's the oil export solutions for Stella. Obviously, all along our intent has been to put an electric explorer pipeline solution. With tanker loading for now, that was the only thing that could be done in order to keep the change under our control and not be lost with others, our infrastructure owners. I think it's fair to say that that tanker loading scheme has always been viewed as a temporary arrangement, it's still the case. I think there are some very interesting developments right now, both in terms of existing pipeline and infrastructure owners desire to have us tied in. And also supply chain desire to get the work that was involved in installing the pipeline. We're working on that issue in a lot of detail right now. I don't think we're ready to see what the solution is but we're working very hard and all I would say is that, that is an integral part of ensuring that the GSA hub is a low cost hub of the future and will enhance the value of the stock by developments to come.

So I think it's -- I kind of watched this space, they find we're working it but we're working the quietly with all the parties that we need to be working it with and when we're ready to talk about it.

Stephane Foucard

Any idea of when you would provide this ability? Is it later this year or the next quarter?

Les Thomas

Well, it's probably later this year, that could be a month from there it could be, but it will be later this year. I'm sorry to be so cagey about some key discussions ongoing. James?

Unidentified Analyst

Just a couple of questions for me, first on CapEx 2017, you've given us some idea from production for 2017, can you give us idea to put the CapEx which could be less than $50 million this year?

Les Thomas

I'm going to hand that over to the guardian of our expenditure. Graham?

Graham Forbes

Yes, I guess I'll probably dealt the same as I got approached for probably the last question. I mean we're really just now in the position to commit what our 2017 CapEx, and I hope that's fairly understandable in the sense that we will -- as I mentioned in my slides there, we will wait to see what the cash flow position of the company is. And we'll look to see what the future hydrocarbons are looking like at that time to determine what sort of investment we'll put forward. But I think it's -- it's also fair to say that the large capital investment type years that we've seen to put Stella in place they are not going to repeated going forward.

Unidentified Analyst

Could you offer anything like maintenance CapEx levels just for maintaining the current production base for Stella?

Graham Forbes

Yes, I mean we've always sort of said that in terms of maintenance production you're looking at $20 million to $25 million, something of the order. Clearly in terms of Stella, the next day piece of this is Havia [ph], and we're working very hard to get that capital expenditure cost down in a moment. And to some extent we're pushing out open door as you would expect to stay with like weights and everything is going in our favor. So that's all being worked at the limit.

Unidentified Analyst

Okay. And then just a question on the non-crisis you relinquished last year. You slightly walked away from, is that going to be sanctioned by anyway? Can you just explain why it doesn't mix your investment criteria in self right without someone else?

Graham Forbes

I think the biggest factor there is clearly cross-sale infrastructure. If there was velocity we would be doing that across our part.

Unidentified Analyst

And you couldn't come to any arrangement other than barely a phenomenal thing?

Graham Forbes

Yes, we were quite happy to do that and that remains the key.

Unidentified Analyst

All right, thank you.

Les Thomas

Thank you. And anyone else here in the room? Okay, I think perhaps since the operator has people on the line with questions, perhaps we can move to that now.

Operator

We have no question registered on the phone line.

Les Thomas

I guess everyone is bored or we think we did a marvelous job, I'll prefer to think the last just for the moment. But if that is the case, I think we're done. Thank you very much everyone.

Operator

If you missed any part of this call, or would like to hear it again, a recording will be ready shortly. Thank you for joining today's call.

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