- Potential for sizeable production increase
- Distribution plans already in place
Ithaca Energy is contemplating a return to the London Stock Exchange five years after it was acquired by Delek Group (IS:DLEKG) for $646mn (£572mn).
Ithaca Energy, originally formed in 2004 and a former constituent of London's junior market, remains one of the most prominent producers in the UK Continental Shelf (UKCS), with stakes in six of the top ten largest fields. Revenues surged after it acquired Chevron’s (US:CVX) assets in the North Sea in late 2019, but it was subsequently forced to take a hefty impairment after oil and gas prices tanked in response to the pandemic lockdowns.
In the first six months of 2022, it recorded average daily production of oil and gas on a net working interest basis of 66,700 barrels of oil equivalent per day (boepd). Management estimates a range of 76,000-81,000 boepd over the second half of the year.
And there is certainly scope for increased production as its portfolio includes Cambo and Rosebank, two of the largest undeveloped discoveries in the UKCS. Around 35 per cent of Ithaca’s current production is natural gas and it would be reasonable to assume that one of the few areas of recent government policy that won’t be subject to a U-turn will be the promise of increased government support to secure the UK’s energy supplies.
Israel-based Delek has yet to provide details of a timetable or the scale of the public offering, but group chief executive, Idan Wallace, said that Ithaca would trade “as an independent company with its own capital allocation policy and the potential to generate substantial value for all its shareholders”.
On that point, Ithaca has a “firm expectation” of paying a dividend of $400mn (£353mn) next year “with an ambition of an annual dividend of $420mn in 2024”. It is targeting annualised dividends of 15-30 per cent of post-tax net cash from operating activities through the cycle. Interim profits after tax came in at $1.56bn.
Doubtless, bosses at the London Stock Exchange will be hoping Ithaca’s public offering will prefigure further admissions from energy companies keen to exploit renewed government support for the UKCS.
