Oil & Gas

Ithaca Energy posts huge $2bn profits in first results since IPO

North Sea producer Ithaca Energy (LON: ITH) has posted pre-tax profits of more than $2bn in its first set of results since its London debut.

The figures, for the first nine months of 2022, have more than quadrupled on the same period in 2021, when pre-tax income was $463.5m.

Ithaca is a growing North Sea independent, with stakes in six of the 10 largest fields in the UK, having made its initial public offering (IPO) in London earlier this month.

However, since then (November 9), shares have dropped 21%, with analysts pointing to decommissioning liabilities and a mature portfolio impacting the initial valuation.

Production in the year-to-date has been 68,246 barrels of oil equivalent per day, 65% of which is liquids, compared to 56,486 per day for the entirety of 2021.

Ithaca’s production costs were $19 per barrel of oil equivalent.

The firm has also been bolstered by milestones at its Captain Enhanced Oil Recovery project, stage one of which hit 10 million barrels.

The first production well at stage two also recently came online.

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Elsewhere, first oil was also celebrated from the Abigail subsea tieback field on October 20.

© Supplied by Petrofac
Abigail is a tie-back to the Ithaca Energy FPF-1 vessel.

That comes after several takeover deals bolstered the portfolio of Ithaca Energy, including that of Siccar Point Energy in Q2, and Marubeni and Summit Exploration and Production in Q1.

Looking ahead, Ithaca said pre-FID work is ongoing at for the Cambo and Rosebank fields West of Shetland, alongside the Fotla and Marigold projects in the North Sea.

The Shell Pierce project, which it has a stake in, is meanwhile undergoing recommissioning.

Ithaca Energy posted revenues for the year to date of $2bn, up from $954.2m in the same period last year.

It took an exceptional deferred tax charge of $323m as a result of the government’s windfall tax/ Energy Profits Levy.

For the year-end, management is issuing guidance of 72-80,000 barrels of oil production per day, $590-$680m of operating costs, and $450-$550m in capital costs.

The firm said it remains committed to its dividend policy, which includes $400m in payments next year.

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Ithaca energy © Supplied by Ithaca Energy
Ithaca Energy chairman Gilad Myerson.

Executive chairman Gilad Myerson said: “2022 has been a transformational year for Ithaca Energy, with our listing on the London Stock Exchange and the completion of three acquisitions including Siccar Point Energy and the UK assets of Marubeni, positioning the Group as one of the largest independent oil and gas companies in the UK.

“Ithaca Energy has continued to demonstrate an unwavering commitment to the North Sea, with a clear strategy to buy, build and boost assets in the region. Beyond the Group’s material acquisition strategy, Ithaca Energy has made significant investments to develop organic resources around our infrastructure hubs such as the Captain EOR II project, Fotla and Abigail.

“With stakes in two of the three largest undeveloped discoveries in the UK North Sea, Ithaca Energy is proud to play a pivotal role in meeting the current and future energy needs of the country. Following the Chancellor’s recent announcement regarding the increase in the Energy Profit Levy rate and extension of the duration of the levy, we continue to assess the impact of the proposed changes in legislation on our development projects. We expect the new Government to work with the industry to encourage the development of large fields that will increase domestic energy supply and long-term security, in line with the British Energy Security Strategy.”

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Chief executive officer, Alan Bruce, added: “I am very pleased with our performance in Q3 and YTD 2022. The Group has continued to grow production and cash flow supporting our disciplined capital program and attractive shareholder distributions. We continue to execute well on our strategy and during the fourth quarter production commenced from the Abigail field and the first well of the Captain EOR II project came online.

“I remain very confident in our forward trajectory and we remain on track to deliver our stated targets for the remainder of 2022 and 2023.”

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