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Ithaca have done the right thing buying my ENI’s UK assets. Better that than paying 70% all in tax burden in the UK. The more stablished players are protected with earnings abroad. So best re invest the money.
They are good people one of the best i have worked with over the last 2-3 years.
If or shall i say when Labour get in that tax rate increases to 80%.
Know wonder all investment goes abroad. All our gas majors are home grown so get hammered also.
Tescos made 3.1 bn profit but screwing the farmers and suppliers is ok in the UK governments eyes.
In some ways it has been like this for years with north sea oil. I have to get to the US t get paid correctly £65k in UK vs $225k US.
Anyways i digress. Ithaca is goi my to regroup in 2024 with lots of drilling 2025 onwards. This is a slow burn a great long term dribble of money to invest.
Dividends in the future also. So do not get disheartened.
@Tamovv - Yesterday's market reaction exposed the harsh truth - we operate in a traders' arena rather than an investors' domain. The herd mentality fixated myopically on the near-term 3% sale, disregarding the seismic 120% production surge projected for 2030. However, my mantra remains unwavering: "Don't argue with the market, exploit it" :)
To me, the crowning jewel of yesterday's presentation was the chart on p.17 (https://ithacaenergy-files.fra1.cdn.digitaloceanspaces.com/Documents/Business-Combination/2024.04.23_Combination-Of-Ithaca-Energy-And-Eni%E2%80%99s-UK-Oil-And-Gas-Assets.pdf). Observe how the combined entity's 2P reserves dwarf Ithaca's current 2C contingent resources, a disparity so vast, it alone is sufficient for me to be in favour of this deal. The synergies Mr. Lewis emphasized in his answer at the end, coupled with the prospects of an elevated credit standing and augmented short-term divis, are the bonus.
Can´t wrap my head around todays SP (non) action. Thought the recent drop was caused by weak Q1 production, which is negligible now given the accreditive production for old non-diluted shareholders. Fears about a dividend cut aren´t valid any longer too. So the recent SP drop has been solely caused by political statements / expectations around laber in my opinion, otherwise we should have seen some reversion today.
Q&A session was rather lame today, not many additional useful information in my opinion.
Anyways, I still like the ENI move. My model shows tax loss consumption by the end of 2028 now. Until then the ENI assets contribute to CFFO after tax (also on a 61,5% basis for non-diluted shareholders). Dividends for old shareholders approx. 1,4 bUSD at current commodity prices by end of 2028 at current commodity prices (without any windfall tax 75 to 78% worseing effect of course), which is close to current market cap... Still feels crazy undervalued to me, but maybe I am totally wrong and things around O & G in the UK will indeed turn absolutely terrible under labour and Cambo finally gets cancelled etc.
In any case ITH is a highly political stock and big bet on the industries future. However, the ENI deal de-risked the political exposure for old-shareholders in my opinion given additional optionality, so really don´t understand why there wasn´t any move today. The delek sale of 3% can´t be that disturbing or am I wrong?
Agreed a good deal. The market overreacted previously to the fall in the production forecast and anticipation of a reduction in the dividend.
Well even considering the enlarged shares in issue the impact on the dividend payouts is really negligible now considering the enlarged group will be able to develop it's assets with ease, reduce costs and produce significant amounts of cash for significant further acquisitions. The SP is excellent value for those who look beyond the next dividend payment. Disappointing reaction this morning but anyone with eyes should see there's value to be had here.
Tamovv - “…… might be caught on the too optimistic side again, but this reads between the lines as UK politicians are not complete idiots ……”
🤣🤣🤣
However, it is an election year so anything said by either party should be taken with a generous pinch of salt ……
Well...to be honest, it is actually MUCH MORE than I have been waiting for (expected).
Especially the special dividend announcement in massive news in my opinion.
As I have presented on this board, I was expecting a 2024 dividend of around 180 mUSD given the very weak reported January/February production (and of course all other known headwinds on ITHS dividend capacity).
At a first sight the ENI UK transaction looked fair to be, but not as good as the HBR/Wintershall for example. Now it looks like they are either completely "overpaying" shareholders from debt. capacity (but I doubt ENI is in for the short term slaughter of debt. capacity), or the short term 2024/2025 synergies of the proposed transaction are significant.
I am very pleased to see the new production guidance, taking ENI UK contributions starting from H1 into account. The standalone Ithaca part seems unchanged, thus I see it as reconfirmation that Jan/Feb actual prodution already was included in the initial guidance mentioned presented for the standalone basis.
(up to) 500m dividend for 2024/2025 ("real dividend" payed in two regular tranches, not as the initial 400m "cheat" stretched over 3 tranches) means up to 307,5 mUSD for old shareholders like us on a non-diluted basis. Thats obviously much more than I expected (20,6% forward dividend yield based on yesterdays closing market cap).
Corporate governance is about to improve significantly with Eni directors to be nominated to join. Shareholder structure to be more balanced. The only short term drag on the SP could be Delek forced to sell 3% to the public, but this should be more than overcompensated by the special dividend outlook.
Interesting to see them having mentioning Norway several times during the last Q&A sessions. Now they show Norwegian Var Energi (ENI subsidiary) as a full powerpoint slide success story of Eni. I might be caught on the too optimistic side again, but this reads between the lines as UK politicians are not complete idiots and that there is something useful in the making for UK O&G in general.
No investment advice (I am much more invested in ITH as I should be and thus heavilie biased), but I see the SP flying today.
Https://www.reuters.com/business/energy/ithaca-energy-buy-enis-uk-assets-about-940-mln-2024-04-23/
As expected, The ENI news we’ve been waiting for …..
The period of exclusivity ends next week.
Will it happen? I think it will be a game changer for the company.
Fingers crossed.
Tamovv
Thank you very much
Hi Asartara,
Sorry, have just been very busy recently. The reason for not having posted for a while is clearly not related to the recent SP drop on top of the dividend deduction and potential frustration.
Well, February production of course didn´t come up to markets expectations. I think the recent drop was caused by a mix of Stifel downgrade, weak 02/24 production and technical sells given this small stock with only 10% freefloat.
As posted on the M&A announcement day, for me the ENI UK transaction seems fairly priced to slightly expensive, but managements explanations for that were reasonable (having a strategic option to make use of the tax losses if investment climate further worsens after the upcoming election). So clearly not that bad/dilutive for current shareholder to solely justify stock price movement.
Commodity prices rallied, other players like HBR benefitted, but in 2024 ITH with lower production profile, higher proportion of undeveloped assets and some lower oil hedges already in place, doesn´t benefit to the same extent (but I am sure they will put some great additional hedges in place as they´ve shown in the past).
I personally sold some harbour to overweight ITH given share prices below 1,20 GBP, but thats no recommendation.
ITH heavilie relies on the UK O&G climate to stay investable, HBR only has one big risk that the Wintershall transaction will not go through (i.e. vetos from certain governments like Germany - which I hope as a German HBR investor will not happen!). So comparing HBRs 2,94 GBP today against ITH 1,20 GBP I decided to overweight ITH given 40-50% potential I see against 20-30% for HBR over 12-18 months. Haven´t looked into Serica yet, so no comment on that one.
For ITHs FC 2024 I agree to what Londoner or Tornado already commented on 02/24 production, it was known to ITHs management when they presented FY2024 production guidance.
However, in my model, I lowered my rather optimistic production estimate of 63 kboe/d (was betting on Captain EOR 2 to contribute to output earlier than guided) to midpoint guidance again (58,5 kboe/d). That causes CFFO to drop to 600 mUSD, equaling 180 mUSD dividend at 30%.
As Londoner already mentioned, 2023 CFFO was negatively impacted by negative working capital movement. Maybe these were even "engineered" by management to have this effect to reverse and support 2024 (their reported 2023 CFFO was exactly sufficient to cover the 400m USD dividend by applying the 30% rule).
So as you can see it´s too early for our models to be accurate enough to aim for precise numbers. Thats why I decided to leave out own interpretation for now and just work with management guidance, trusting in their capabilities and achievement rate in the past.
I would be surprised to be see a 2024 dividend below 180 mUSD, which equals 11,5% yield. Any positive development around discussions with the UK goverment, Cambo, earlier Captain EOR-2 ramp-up etc. should all offer tremend
Tammov
Londoner
Tornado
You have all gone a bit quiet
Do any of you have any thoughts on the recent large fall in share price?
Is it a buying opportunity?
And what do you think about these reduced forecasts?
Do you agree with them?
Do you still expect dividends of $200 million for 2024 and $300 million for 2025?
And which oil company do you prefer as an investment?
Ithaca, Serica, or Harbour?
Https://finance.yahoo.com/news/ithaca-energy-plc-lon-ith-051051241.html
Oil prices slowly moving northwards. $100 dollar oil is very possible within the next couple of months.
Thats what i have been thinking since deal announced and lower profits
Probably because its gone ex dvidend and the dividend for 2024.25 might be at risk
45 pounds loss sold at 128 plus mind you a lot more if sold tday .This drop dose not make sense to me
@ Asartara : Stifel reduced ITH's target price from 157 to 140 pence. Curious how one single analyst recommendation can have such an immediate impact.
Share price is now in oversold territory, looking at the 1 day chart.
We're now at the support level from 12 Feb, 2024.
I've bought more, this morning.
1 day chart:
https://ibb.co/h7MN1pf
Anyone know why there was such a large fall in the share price today?
And how do people here see the valuation of ITH when compared to other UK oil companies such as HBR and SQZ ?
I am interested in oil companies with good dividends and ITH/HBR/SQZ all seem to have good dividends at present
The obvious question though is will their dividends be maintained or increased in the future or will they be reduced
So do people here see ITH as better value than HBR or SQZ ?
I have also looked at BP and Shell but their dividends are less than half the dividends of ITH/HBR/SQZ
Why are the dividends of BP and Shell much less than ITH/HBR/SQZ ?
I am also interested in Var Energy as the valuation looks quite inexpensive
https://moderninvesting.substack.com/p/var-energi-norways-dividend-monster
Reserves: https://www.ithacaenergy.com/operations/reserves
Full CPR: https://ithacaenergy-files.fra1.cdn.digitaloceanspaces.com/NSAI-Ithaca-YE23-CPR-2024-03-15.pdf
2P reserves value at 10% discount rate = $4.35B
2C contingent resources value at 10% discount rate = $3.05B
And yet Ithaca is traded at less than its tax asset. What a bargain!