(Alliance News) - Ithaca Energy PLC on Wednesday said it is in talks to combine with Eni Spa's UK assets, in a deal which would see the Italian oil major take a near 40% stake in the North Sea operator in exchange.
Ithaca shares rose 2.8% to 146.20 pence each in London on Wednesday morning. Eni rose 0.5% to EUR14.48 in Milan.
Ithaca has entered into a four-week exclusivity agreement with Eni for "substantially all" of the Milan listing's UK offering, which includes recently-acquire Neptune Energy. The deal would exclude some of Eni's carbon capture, usage and storage operations, as well Irish Sea assets.
In return, Eni will receive Ithaca shares, owning between 38% and 39% of the company.
"Eni has a well-diversified asset base across 4 key hubs: Elgin Franklin, J-Area, Cygnus and Seagull; Ithaca Energy is already a partner in the Elgin Franklin and Jade fields. The potential combination would represent a value-accretive opportunity for Ithaca Energy's shareholders, supporting delivery of the company's buy, build and boost strategy," Ithaca added.
Ithaca said revenue in 2023 fell 11% to USD2.32 billion from USD2.60 billion in 2022. Its pretax profit tumbled 87% to USD302.0 million from USD2.24 billion.
Ithaca's bottom line was hurt by USD557.9 million worth of impairment charges, largely stemming from Greater Stella Area and Alba. It booked an impairment at GSA due to its decision to not pursue drilling at Harrier due to the UK energy profits levy. Falling gas prices also contributed to that impairment. At Alba, a hit was taken due to the reduction in estimate future output.
In 2022, it had also booked a USD1.34 billion gain on bargain purchase, which was not repeated last year.
"We have made material progress in 2023, executing against our buy, build and boost strategy including the milestone sanctioning of phase I of the Rosebank development," Interim Chief Executive Officer and Chief Financial Officer Iain Lewis said.
"I am pleased to share a strong set of financial results for 2023, despite the significant fiscal and political headwinds we have faced in the year. The energy profits levy continues to have a direct impact on investment in the UK North Sea, with projects across our operated and non-operated deferred or cancelled. The extension of the energy profits levy by a further year to a sunset date of March 2029, highlights the continued fiscal uncertainty our sector faces."
For 2024, it expects production in the range of 56,000 to 61,000 barrels of oil equivalent per day, a decline from 70,239 in 2023. The 2023 outcome landed in line with guidance of 68,000-74,000.
By Eric Cunha, Alliance News news editor
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