We would love to hear your thoughts about our site and services, please take our survey here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
Timing doesn´t look that good anymore this time ;)
Strange...is todays movement based on the RNS stepdown of independent director? Doesn´t seem "too concerning" to me.
Asartara,
Many thanks for your follow-up. I have spent some time on my model during the long weekend and will issue an more extensive post later on.
Just to answer to your question below:
170 mUSD is my 2024 dividend forecast given the low production guidance (probably lower than people expected here, correct me if I´m wrong Tornado/londoner)
from 2025 production will increase again as per official management guidance (2025/26 positively impacted by Captain EOR II, 2026/ latest 2027 from Rosebank start of production)
Especially 2025 could benefit from a) increased production & b) lower 2024 EPL payable in 2025 (because of two reasons, lower production higher opex thus lower tax and Rosebank investment spent to additionaly shield against EPL) so 1 bUSD CFFO (after tax) and 300 mUSD 2025 dividend accordingly is not an unrealistic target in my opinion.
For more details I am glad to provide some insights on the work I´ve done as per separate post later today/tomorrow.
All these assumptions are related to standalone Ithaca prior deal, potential effects from ENI uk not considered yet.
Tamovv
You said that you expect the dividend to be reduced from $400m to $170m next year for a 9% forecast yield
But then you said that you expect the dividend to be reduced from $400m to $300m next year for a 16% forecast yield
So is $300m the correct forecast?
And why have you increased the forecast dividend from $170m to $300m?
And do you expect this $300m dividend to be maintained in future years?
Or do you expect it to be increased or reduced in future years?
Thanks
@Tamovv - congrats (again) on your timing.
I would wait for the updated CPR to be published. (currently they show EOY2022 report - https://www.ithacaenergy.com/operations/reserves) but they say they'll publish the updated version soon.
Yes it should recoup over the next few weeks !
Thanks forgot about Easter being in the way,still looks an attractive price though.
Yes hence the big drop in price
DIVIDENDMAX says this goes ex div today is this correct please???
132 good price i was going to but differ on it . However will do today if she hits 131/32 just for a trade
Bought this morning for 132,80 GBP (no investment advice!)
Will spend some work on my model over the prolonged weekend. Hopyfully others will join me supporting with some insights around UK taxation.
For me it currently seems like ITH carried forward tax losses could be sufficient to shield against corporation tax until March 2029 when the EPL hopefully ends. This combined with ramp-up of Rosebank investment (somewhat shielding against EPL) should lead to low nine digit cash tax charges and thus about 1 bUSD CFFO (after tax) / 300 mUSD annual dividend (given current production schedule and commodity prices, no hedging). All figures very very roughly from a very high level to make quick use of new information from yesterday. ENI not considered, all oldco standalone ITH as reported on yesterday.
So this year could mark the CFFO-bottom for ITH, similar situation to HBR -> burden from EPL 2023 tax charge combined with reduced own production given cancelled UK investments, but improvements from 2025 onwards (probable labour regime change obv. also not considered).
If 9% 2024 dividend yield marks the bottom for ITH this cycle, it seems very attractive to me.
Https://www.telegraph.co.uk/business/2024/03/27/israeli-owned-ithaca-energy-north-sea-oil/
Londoner7, thanks, I was rushing into my next morning appointment and only took a quick shot here.
I not only mixed up CAPEX with OPEX guidance, but also forgot to include the hedging effect and my sales assumptions was based on Brent price only, rather than applying a proper 2/3 1/3 oil vs. gas split.
Thus, this is me revised calculation:
Production (midpoint): 58 kboe/d
Sales (midpoint prod. at 85 USD/boe): 1.545 mUSD before hedging
Hedging (acc. to schedule against 85 USD/boe Brent and 0,70 GBP/therm) +115 mUSD
Total Sales (after hedging): 1.660 mUSD
OPEX (midpoint): 565 mUSD
Cash Tax (midpoint): 350 mUSD
Lease&Finance: 180 mUSD (my estimate)
CFFO 2024 (midpoint): 565mUSD
thereof 30%: 170 mUSD (which would result in a rather significant cut compared to 400 mUSD for 2023)
170 mUSD equals an about 9% forward dividend yield
However, I really linked the presentation which provided a lot of detail on various topics and some comments made during the conference call. Will comment on those as per separate post here.
PS: The 30% of CFFO (after tax) have been confirmed on slide 32, but we already expected them to apply the higher end of that range to satisfy investors given all the headwinds...
Tamovv, it looks like you've used the Capex number rather than the Opex number in your sum.
Hi Stumpy,
I don´t agree unfortunately, they didn´t say anything precise about 2024 dividend, but reaffirmed their 15-30% CFFO (after tax) guidance.
Given their new guidance:
Production (midpoint): 58 kboe/d
Sales (midpoint prod. at 85 USD/boe): 1,775 bUSD (compared to 2,3 bUSD in 2023)
OPEX (midpoint): 360 mUSD
Cash Tax (midpoint): 350 mUSD
Lease&Finance: 180 mUSD (my estimate)
CFFO 2024 (midpoint): 885 mUSD
thereof 30%: 265,5 mUSD (slightly better than my previous estimate despite the cut in production 2024)
Can´t tell how the market will react this morning. From an operational standpoint I am disappointed of the very weak 2024 production guidance in combination with Captain EOR II delays (Tornado, Londoner, etc. were hoping for contribution to H2-2024 production if I recall correctly).
On the other hand, the cambo development extension is some kind of stress relief, anything else would have been a desaster.
M&A to me looks "fairly balanced", not as good as the one HBR announced in December at a first sight. I have mixed feelings, maybe the stock market will like the reduction of Deleks ownership of the enlarged company and having Eni onboard as "counterpart". On the other hand, shareholders will not vote, Delek can decide on their own given their 90% ownership as far as I understood the press release (normally quite obvious, of course they can decide on their own as a 90% shareholder...). But maybe certain shareholders who don´t like the proposed transaction can´t do anything but sell this morning.
Looking forward to your thoughts Londoner/Tornado, will be listening to the call this morning.
No divi cut Tamovv as far as I can see. Good debt reduction and fcf, but reduced production in 2024 (56-61 kboe).
Hi guys,
Happy to see some activity here going on!
@asartara as stuGGTTH already pointed at, their initial plans (made prior to the EPL desaster) even stipulate a 5% dividend increase to 420 mUSD for 2024. This would result in more than 20% dividend yield. So I assume the market believes the dividend will be cut - I unfortunately Mr. market might be right this time ;) Please find one of my posts below, where I tried to come up with an early guess for 2024 CFFO (and thus the dividend).
As it can be seen in the prospectus and as it was repeated several times by management during past conference calls, ITH plans to distribute 15-30% of CFFO (cash flow from operations after tax) to shareholders, mostly dividend but theoretically also as buybacks. Unless something unexpected will be announced (i.e. M&A activity), I expect them to use the top end of the distribution range given the current low level of leverage well within their 1,5x EBITDAX threshold.
Actual January 2024 production seemed a little bit weak to me, on the other hand brent sits quite strong at 85 USD/boe or even higher with Russias decision today, so I just slightly reduce my CFFO estimate towards 850 mUSD resulting in a potential dividend of 200-240 mUSD (up to a 50% cut). Given the current yield of 22% I expect markets to expect a about 50% cut as well aiming for 9-11% target dividend yield.
In my opinion any positive news regarding the sale of Cambo project shares, CEO presentation, (positive M&A), or production above my 65 kboe/d guestimate resulting in higher CFFO und thus dividend could boost the shareprice on Wednesday. I´m not too experienced to have any concrete idea in mind why they decided to postpone the data release on short notice. However brent moved very nicely recently, hopefully they put some nice hedges in place as they have proven in the past.
Talk to you on Wednesday folks, I am sure we will at least get a 2024 production FC and hedging schedule so we can update our models, any dividend guidance would be a bonus in my opinion (potentially seeing them just reconfirming the 15-30% CFFO policy and calling for being patient to see how 2024 develops from an operational standpoint).
They mention dividends in the Prospectus, page 14....3.1.6 Dividend Policy
https://ithacaenergy-files.fra1.cdn.digitaloceanspaces.com/Documents/IPO-b2f4d6/Ithaca%20Energy%20plc%20-%20Final%20Prospectus.pdf
Although with final results on 27th it may be completely clarified
Stu
Is the dividend expected to be kept at current levels for next year?
Thanks, more than happy with the Dividend, awaiting their forecast for next year.
Me too...according to PR company, they have been put back to Wednesday 27th March.
We had the dividend news yesterday.
Current date for results is March 27: https://investors.ithacaenergy.com/news-events/financial-calendar
I thought the full year results were expected yesterday?