REG - Ithaca Energy PLC Delek Group - DLEKG - Q3 2023 Financial Results

Ithaca EnergyAnnouncement

22/11/2023 07:00

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RNS Number : 1883U  Ithaca Energy PLC  22 November 2023

Press release

22 November 2023

ITHACA ENERGY PLC

("Ithaca Energy", the "Company" or the "Group")

 

Third Quarter Update and Results for the Nine Months to 30 September 2023

 

Continued delivery against BUY, BUILD and BOOST strategy, achieving milestone
FID at Rosebank;

 FY 2023 production guidance and $400m dividend reaffirmed; improved opex
guidance

 

Ithaca Energy, a leading UK independent exploration and production company,
today announced its unaudited financial results for the nine months ended 30
September 2023.

 

 Financial key performance indicators (KPIs)

                                               YTD       YTD

                                               9M 2023   9M 2022
 Adjusted EBITDAX(1) ($m)                      1,367.5   1,438.4
 Statutory net income ($m)                     238.5     1,392.2
 Adjusted net income(1) ($m)                   332.1     391.2
 Net cash flow from operating activities ($m)  1,021.2   1,467.9
 Available liquidity (1) ($m)                  912.6     399.4
 Unit operating expenditure(1) ($/boe)         21.1      19.3
 Adjusted net debt (1) ($m)                    677.4     1,143.6
 Adjusted net debt/adjusted EBITDAX (1)        0.37x     0.61x

 Other KPIs
 Total production (boe/d)                      71,048    68,246
 Tier 1 process safety events                  1         0
 Serious injury and fatality frequency         0         0

 

(1) Non-GAAP measure

 

Q3 2023 Strategic Highlights

BUY

·    Completed acquisition of remaining 40% stake in Fotla and announced
acquisition of remaining 30% stake in Cambo (subject to completion), both at
limited near-term cost, providing Ithaca Energy with full control over
pre-Final Investment Decision (FID) work and timing

·    Actively engaging with potential farm-in partners to enable the
future progression of Cambo and Fotla towards FID, subject to regulatory and
licensing approval processes (including the 31 March 2024 Cambo licence
milestone) and market conditions

BUILD

·    FID taken to progress Phase I of the Rosebank development, the UK's
largest undeveloped discovery

o  All major contracts awarded, including the integrated subsea engineering,
procurement, construction and installation (iEPCI™) contract, the drilling
rig contract and bareboat charter for the Petrojarl Knarr FPSO

·    Pre-FID work continues across the Group's high-value greenfield and
brownfield development portfolio including:

-        Captain Electrification FEED study matured to support FID

-        Marigold Unitisation and Unit Operating Agreement executed
with work progressing towards submission of the Field Development Plan in 2024

·    Exploration discovery at the K2 prospect and decision to proceed with
further appraisal

·    Appraisal drilling ongoing at Leverett (Ithaca Energy working
interest 12%)

BOOST

·    Captain Enhanced Oil Recovery (EOR) Phase II project now ~80%
complete, supporting first Phase II polymer injection into the subsea wells in
H1 2024, with the following activities completed in the quarter:

-        Drilling: Completed drilling operations of all three Area E
polymer injection wells and the commencement of drilling operations in Area D

-        Subsea: Completed laying and trenching operations of all
flowlines and umbilicals

-        Facilities: Turnaround successfully completed including
facilities upgrades in support of EOR II project

·    Infill drilling ongoing at Alba supporting production in the late
life phase of the field

 

Q3 2023 Operational Update

Year-to-date production of 71.0 thousand barrels of oil equivalent per day
(kboe/d), supporting reaffirmed full year 2023 production guidance of 68-74
kboe/d

·    Q3 production of 61.7 kboe/d reflects previously guided planned
turnaround activity across the Group's operated and non-operated base during
the quarter

·    Return to full production expected in Q4 following completion of
planned turnaround activities

·    Q3 production split 66% liquids and 34% gas

·    Non-operated assets performing in line with expectations in the
quarter with the exception of Pierce, where operational issues related to the
vessel mooring system have temporarily shut down production from the field

-        Operator Bluewater Energy Services is working to resolve
issues with the mooring system. Rectification timeline highly dependent on
weather but expected in H1 2024

 

 

YTD 9M 2023 Financial Highlights

·    YTD adjusted EBITDAX of $1,367.5 million (YTD 2022: $1,438.4 million)

·    YTD adjusted net income of $332.1 million (YTD 2022: $391.2 million)

·    YTD net cash flow from operating activities of $1,021.2 million (YTD
2022: $1,467.9 million)

·    YTD realised oil prices of $86/bbl before hedging and $84/bbl after
hedging (YTD 2022: $104/bbl before hedging and $91/bbl after hedging) and gas
prices of 99p/therm before hedging and 153p/therm after hedging (YTD 2022:
213p/therm before hedging and 155p/therm after hedging)

·    Continued strong cost control, delivering YTD operating costs of $409
million ($21.1/boe (YTD 2022: $19.3/boe)) and YTD producing asset capex of
$293 million

·    Balance sheet remains strong with further deleveraging in the period

o  Adjusted net debt of $677.4 million at 30 September 2023 (31 December
2022: $971.2 million; 30 September 2022: $1,143.6 million)

o  Group leverage position of 0.37x adjusted net debt to adjusted EBITDAX (30
September 2022: 0.61x)

·    Second interim 2023 dividend of $133 million paid in September 2023,
taking the total year-to-date dividend payment to $266 million

·    Significant build on hedging book during the quarter, with 10.3
million barrels of oil equivalent (68% oil) hedged from Q4 2023 into 2025 at
an average price floor of $77/bbl for oil and 140p/therm for gas at 30
September 2023, with attractive winter collar ceilings of approx. $88/bbl for
oil and over 300p/therm for gas for the six month period to 31 March 2024

·    Building on the PROTECT arm of our Capital Allocation Policy, Foreign
Exchange hedges of $200 million placed at an average rate of $1.23: £1 (of
which $150 million was placed following period-end)

 

FY 2023 Management Guidance

·    Management reaffirms previously provided guidance ranges for full
year 2023 (FY 2023):

-        Production guidance of 68-74 kboe/d; and

-        Producing asset capital cost guidance of $390- $435 million

·    Management lowers operating cost guidance range for FY 2023 from
$560-$610 million to $525-$575 million reflecting lower forecasted operating
costs as result of strict cost control, improved FX rates and a reduction in
planned activity

·    Targeted total dividend of $400 million reaffirmed for financial year
2023, with remaining $134 million payment payable following the end of the
2023 financial year

·    Following the Rosebank FID, management estimates that the Group's
capital expenditure on the project in FY 2023 will be in the range of $90-$110
million (YTD 2023: $64 million)

 

Executive Chairman, Gilad Myerson, commented: "I am delighted that we have
once again reported a quarter of strong strategic progress and continued
financial delivery. The decision to progress with Phase I of the Rosebank
development alongside Equinor represents a significant milestone for Ithaca as
we continue to deliver against our BUY, BUILD and BOOST strategy. We continue
to constructively engage with UK government to help shape future energy policy
to create a supportive environment for further investment in the UK North Sea
and welcome the recent announcement on annual North Sea licensing rounds."

Chief Executive Officer, Alan Bruce, commented: "We continue to focus on
maximising value from our portfolio, with targeted investment in high quality
assets such as Captain and Rosebank. We are pleased to reaffirm today our
previously stated production, capex and dividend guidance for Full Year 2023,
while our strong cost control has allowed us to lower our opex guidance.
Ithaca is in a strong financial position and our long-life assets provide the
basis for consistent execution of our value proposition - growing free cash
flow, reducing emissions intensity and returning capital to shareholders."

 

 

Webcast and Conference call

Ithaca Energy will host a virtual presentation and Q&A session for
investors and analysts at 09:00 (GMT) today, 22 November 2023, and a further
presentation and Q&A session for Bond Holders only, which will be held at
14:00 (GMT) today, 22 November 2023. Details of both sessions are accessible
via our website.

Investors and Analysts - Webcast link

https://www.investis-live.com/ithaca-energy/654a5da9464d140d008d31a0/mfdo
(https://gbr01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.investis-live.com%2Fithaca-energy%2F654a5da9464d140d008d31a0%2Fmfdo&data=05%7C01%7Ckathryn.reid%40ithacaenergy.com%7Cca655fc58362401014eb08dbdfafc3d4%7C91145d135cbe4b90846cfe1cfea471ce%7C0%7C0%7C638349718227482168%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=muXitd7ZLBpqiwAkdtdt4xnwClc5LI6a7TnXu97MNVE%3D&reserved=0)

Investors and Analysts - Conference call

Operator Assisted Dial-In: United Kingdom (Local): +44 20 3936 2999 United
Kingdom (Toll-Free): +44 800 358 1035 (tel:+448003581035) Global Dial-In
Numbers Access Code: 143591

 

Bond Holders - Webcast link

https://www.investis-live.com/ithaca-energy/654a5f3f464d140d008d9e15/lwjn
(https://gbr01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.investis-live.com%2Fithaca-energy%2F654a5f3f464d140d008d9e15%2Flwjn&data=05%7C01%7Ckathryn.reid%40ithacaenergy.com%7Cca655fc58362401014eb08dbdfafc3d4%7C91145d135cbe4b90846cfe1cfea471ce%7C0%7C0%7C638349718227482168%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=b0adl6q3h99NjkMhYSCGm%2BvcfckmK1e6MOLeWBA5yQI%3D&reserved=0)

Bond Holders - Conference call

Operator Assisted Dial-In: United Kingdom (Local): +44 20 3936 2999 United
Kingdom (Toll-Free): +44 800 358 1035 (tel:+448003581035) Global Dial-In
Numbers Access Code: 507833

 

Enquiries

 

 Ithaca Energy
 Kathryn Reid - Head of Investor Relations, Corporate Affairs &      kathryn.reid@ithacaenergy.com (mailto:kathryn.reid@ithacaenergy.com)
 Communications

 FTI Consulting (PR Advisers to Ithaca Energy)                       +44 (0)203 727 1000
 Ben Brewerton / Nick Hennis / Rosie Corbett                         ithaca@fticonsulting.com (mailto:ithaca@fticonsulting.com)

 

 

About Ithaca Energy plc

 

Ithaca Energy is a leading UK independent exploration and production company
focused on the UK North Sea with a strong track record of material value
creation. In recent years, the Company has been focused on growing its
portfolio of assets through both organic investment programmes and
acquisitions and has seen a period of significant M&A driven growth
centred upon two transformational acquisitions in recent years. Today, Ithaca
Energy is one of the largest independent oil and gas companies in the United
Kingdom Continental Shelf (the "UKCS"), ranking second by resources.

 

With stakes in six of the ten largest fields in the UKCS and two of UKCS's
largest pre-development fields, and with energy security currently being a key
focus of the UK Government, the Group believes it can utilise its significant
reserves and operational capabilities to play a key role in delivering
security of domestic energy supply from the UKCS.

 

Ithaca Energy serves today's needs for domestic energy through operating
sustainably. The Group achieves this by harnessing Ithaca Energy's deep
operational expertise and innovative minds to collectively challenge the norm,
continually seeking better ways to meet evolving demands.

 

Ithaca Energy's commitment to delivering attractive and sustainable returns is
supported by a well-defined emissions-reduction strategy with a target of
achieving net zero by 2040.

 

Ithaca Energy plc was admitted to trading on the London Stock Exchange (LON:
ITH) on 14 November 2022.

 

-ENDS-

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