(Alliance News) - Ithaca Energy PLC on Tuesday said Eni SpA would take a large stake in the company as part of a "transformational combination" involving the two parties.
Ithaca, a leading independent oil and gas operator in the UK North Sea, said it would combine with Eni's UK upstream assets.
In return, Eni, the Rome-based energy company would take a 38.5% interest in Ithaca.
Ithaca said the deal would create a continental shelf powerhouse producing 100,000 to 110,000 barrels of oil equivalent per day.
It had the underlying un-risked potential to organically grow production to 150,000 boepd by the early 2030s, whilst supporting ongoing shareholder returns, Ithaca said.
The deal is expected to be accretive per share to earnings before interest, taxes, depreciation, amortisation, and exploration expense, providing a platform for enhanced shareholder returns.
Ithaca highlighted the potential for "substantial" cost savings through operational and financial synergies.
Ithaca said the combination would be "highly" cash-generative with an ambition for up to USD500 million total dividends each year in 2024 and 2025.
Ithaca's Executive Chair Gilad Myerson said: "The transformational combination with Eni UK will further enhance Ithaca Energy's position as a leading UKCS production and growth company, with positions in 6 of the 10 largest UKCS assets in the basin."
He believes the synergistic combination with Eni's highly cash-generative UKCS portfolio has the ability to "unlock long-life organic growth opportunities creating a combined entity with substantial scale and longevity."
The increased scale, debt capacity and potential for lower cost of debt provides material firepower for growth, Ithaca said, adding it would focus on opportunities for further inorganic growth in the UK.
There would be an option to diversify internationally if the right opportunity is identified, leveraging Eni's global reach and capability, it noted.
In 2024, expected combined production of 80,000 to 87,000 boepd is forecast, with a net operating cost guidance range of between USD650 million and USD730 million.
Ithaca gave a net producing asset capital cost guidance range of USD410 million to USD480 million plus cash tax guidance of USD435 million to USD455 million.
The deal is expected to be completed in the third quarter of 2024.
Shares in Ithaca Energy ended flat at 118.80 pence in London on Tuesday. In Milan, Eni rose 1.2% to EUR15.52.
By Jeremy Cutler, Alliance News reporter
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