REG - Ithaca Energy PLC Delek Group - DLEKG - Third Quarter Update and Results

Ithaca EnergyAnnouncement

21/11/2024 07:00

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RNS Number : 0437N  Ithaca Energy PLC  21 November 2024

ITHACA ENERGY PLC

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

 

Third Quarter Update and Results for the Nine Months to 30 September 2024

 

Transformational Business Combination and debt refinancing completed providing
strong foundations to deliver long-term growth

Guidance and targeted 2024 dividend reaffirmed; $200m special dividend
announced

 

Ithaca Energy, a leading UK independent exploration and production company,
today announced its unaudited financial results for the nine months ended 30
September 2024 and a special dividend of $200 million.

 

 Financial key performance indicators (KPIs)
                                               YTD       YTD

                                               9M 2024   9M 2023
 Adjusted EBITDAX(1) ($m)                      758.5     1,367.5
 Statutory net income ($m)                     134.7     238.5
 Adjusted net income(1) ($m)                   181.9     332.1
 Basic EPS (cents)                             13.4      23.7
 Net cash flow from operating activities ($m)  792.5     1,021.2
 Available liquidity(1) ($m)                   990.9     912.6
 Unit operating expenditure(1) ($/boe)         28.9      21.1
 Adjusted net debt(1) ($m)                     543.1     677.4
 Adjusted net debt/adjusted EBITDAX (1)        0.49x     0.37x
 Other KPIs
 Total production (boe/d)                      52,501    71,048
 Tier 1 and 2 process safety events            0         1

(1) Non-GAAP measure

 

Yaniv Friedman, Executive Chairman, commented: "The completion of Ithaca
Energy's transformational Business Combination with Eni UK, creates a dynamic
growth player with significant organic and inorganic growth optionality, and
has been further bolstered by the Group's recent $2.25bn refinancing and
higher credit rating, reflecting the immediate benefits to the Group of the
combination. With production in Q4 reaching peak rates of above 120 kboe/d we
are well positioned to deliver estimated pro forma 2024 production for the
Combined Group of above 100 kboe/d and reaffirm our near-term guidance. Our
increased scale of operations and enhanced cash flows support the Group's
continued growth aspirations and material distributions to shareholders,
including the announcement today of a special dividend of $200 million
supporting our dividend target of $500 million for 2024."

Luciano Vasques, Chief Executive Officer, commented: "I am delighted to have
joined Ithaca Energy at such an exciting time for the Group following the
Completion of our Business Combination.  I am very pleased with the
operational rigor and safety culture I have witnessed since joining and I
share my commitment to excellent performance with a strict focus on safe and
efficient operations as we strive to become a higher performing organisation.
With significant optionality across our portfolio, a proven track record of
project execution and enhanced technical capabilities, the Group is ideally
positioned to create value both in the UK and through international
diversification."

Iain Lewis, Chief Financial Officer, commented: "Our enhanced balance sheet
following the successful conclusion of a $2.25 bn refinancing in October
offers significant liquidity to the Group as we continue to pursue our growth
aspirations. The immediate benefit of the Business Combination, with increased
scale, diversification and debt capacity was reflected in the demand for and
pricing of the refinancing."

 

YTD 9M 2024 Corporate highlights

·    $300 million of interim and special dividends announced and
reaffirming 2024 dividend target of $500 million(2)

·    Completion of transformational business combination of Ithaca Energy
and substantially all of Eni S.p.A's (Eni) UK upstream oil and gas assets
announced 3 October 2024 (the "Business Combination" to form the "Combined
Group")

-      Combination creates a dynamic growth player with the largest
resource base in the UKCS(3) (2P Reserves and 2C Resources of 632 mmboe)
providing significant growth optionality and strong foundations for organic
and inorganic long-term growth

-      Well positioned to deliver further consolidation in mature UKCS
basin and internationally, with a proven track record of value-accretive
M&A

-      Enhanced balance sheet and financial strength providing material
firepower for growth and a potential pathway to investment grade credit
rating, highlighted by recent refinancing and credit rating upgrades

-      Highly cash-generative Business Combination supports growth
trajectory and attractive and sustainable returns

 

YTD 9M 2024 Operational highlights

·    No tier 1 or 2 process safety events

·    Q3 Combined Group production of 91 kboe/d (including turnaround
activity in Q3), in line with 2024 pro forma estimated Combined Group
production of 100 - 110 kboe/d(4) with peak production rates post Business
Combination reaching >120 kboe/d during Q4

·    Combined Group production supports reaffirmed full year 2024
production guidance of 76-81 kboe/d (including Business Combination assets
from 1 July economic effective date)

·    Year to date September 2024 production for Ithaca Energy standalone
of 52.5 kboe/d

-      Q3 production of 51.5 kboe/d reflecting summer turnaround activity
(Q1 production of 58.7 kboe/d and Q2 production of 47.4 kboe/d)

-      Q3 production split 70% liquids and 30% gas

·    Operational issues across our non-operated joint venture (NOJV)
portfolio and non-operated infrastructure have substantially been resolved
with a return to full production expected in Q4, underpinning confidence in
full year 2024 guidance

·    Q3 production of >40 kboe/d from asset additions from the Business
Combination (post Business Combination economic effective date of 1 July), the
value from which will accrue to Ithaca Energy

·    Rosebank project continues to progress to multi-year development
timeline including successful completion of major subsea campaign with the
installation of all nine subsea structures ahead of schedule. Operator seeking
to maintain schedule to estimated 2026/27 first production date

·    Continued high levels of activity at Captain, following on from the
successful completion of the Captain Enhanced Oil Recovery (EOR) Phase II
project, with commencement of a topside drilling campaign in Q3 with the
campaign extending over a two-year duration targeting three new production
wells, an injector well and two well workovers

·    Completed W1 well workover at Erskine during July, reinstating the
fifth production well at the field

YTD 9M 2024 Financial highlights: Refinancing completed October 2024

·    Special dividend of $200 million declared today, payable on 20
December to shareholders on the register on 29 November 2024. $300 million of
dividends declared to date, with the Group targeting total distributions of
$500 million for 2024. The Group remains committed to delivering attractive
returns to its shareholders

·    Successful refinancing completed post-period end enhancing balance
sheet strength, including $750 million Senior Notes Offering at a rate of
8.125% due 2029 and $1.5 billion amended and restated floating rate Reserve
Based Lending (RBL) facility maturing in 2029, with the proceeds used to
redeem the Group's existing $625 million 9% Senior Notes due 2026, repay
amounts drawn under an existing loan from bp and pay refinancing related fees
and expenses

·    Credit rating upgrades, post-period end, reflecting the Group's
increased financial strength following the completion of the Group's Business
Combination:

-      Fitch Ratings upgraded credit rating of BB- from B Flat and issuer
credit rating for 2029 Senior Notes of BB-/RR4 from B+/RR3

-      S&P Global Ratings initiated coverage with a credit rating of
BB- and assigned an issuer credit rating of BB-/RR4 to the 2029 Senior Notes

-      Moody's Ratings upgraded corporate rating of Ba3 from B1 and
upgraded the Senior Notes rating to B1 from B3

·    Robust balance sheet with adjusted net debt at the end of the period
of $543.1 million (2023: $677.4 million) and a leverage ratio of 0.49x (2023:
0.37x)

·    YTD adjusted EBITDAX $758.5 million (YTD 2023: $1,367.5 million)

·    YTD statutory net income $134.7 million (YTD 2023: $238.5 million)

·    YTD adjusted net income $181.9 million (YTD 2023: $332.1 million)

·    YTD realised oil prices of $84/bbl before hedging and $83/bbl after
hedging (YTD 2023: $86/bbl before hedging and $84/bbl after hedging) and gas
prices of 73p/therm before hedging and 110p/therm after hedging (YTD 2023:
99p/therm before hedging and 153p/therm after hedging)

·    Strong focus on costs with YTD operating costs of $415.3 million (YTD
2023: $408.9 million)

·    YTD producing assets capex of $272 million (YTD 2023: $293 million)
and Rosebank capex of $141 million (YTD 2023: $64 million)

·    Robust net cash flow from operating activities of $792.5 million (YTD
2023: $1,021.2 million)

·    Significant build on hedging position during the quarter. Post period
end material gas hedges have been placed reflecting the increased gas mix of
the Group's portfolio following completion of the Business Combination. As at
19 November, the Group had 22.7 million barrels of oil equivalent (31% oil)
hedged from Q4 2024 into 2026 at an average floor price of $80/bbl for oil
swaps, $75/bbl for oil puts/collar floors and 99p/therm for gas swaps, and
82p/therm for gas puts/collar floors

FY 2024 Management Guidance

·    Management reaffirms its dividend commitment for 2024 of 30% post-tax
CFFO, and target for 2024 distributions of $500 million(2)

·    Q3 combined production of 91 kboe/d post effective date and peak
production of >120kboe/d achieved in Q4 supports pro forma 2024 combined
production estimate of 100 -110 kboe/d

·    Management reaffirms previously provided guidance ranges for the full
year 2024 (FY 2024) on a Combined Group basis (as detailed below on a pro
forma basis from economic effective date) and its standalone guidance ranges,
except for cash tax guidance which is expected to fall below the previously
provided guidance ranges:

-      FY 2024 Combined Group production of 76-81 kboe/d

-      FY 2024 Combined Group net operating cost guidance range of
$650-730 million

-      FY 2024 Combined Group net producing asset capital cost (excluding
pre-FID projects and Rosebank development) guidance range of $410-480 million

-      FY 2024 net Rosebank project capital cost guidance range of
$170-195 million with capital cost forecast to fall at the top end of the
range following significant progress on the project

-      FY 2024 Combined Group cash tax guidance of $390-410 million.
Management notes that cash tax is forecast to fall below the bottom end of the
range due to the timing of Eni UK tax payments but expected to be offset by
working capital adjustments as part of the Business Combination completion
mechanics

 

Ithaca Energy will host a virtual presentation and Q&A session for
investors and analysts at 09:00 (GMT) today, 21 November 2024, accessible via
our website: https://investors.ithacaenergy.com/

 

 

Notes:

(1) Non-GAAP measure

(2) All dividends are subject to operational performance and commodity prices
and availability of distributable profits

(3) 2024 pro forma production - 2024 production guidance from Ithaca Energy,
NSAI Ithaca Energy CPR in relation to Ithaca Energy and NSAI Eni CPR in
relation to the Eni UK Group, each as at 30 June 2024

(4) Business Combination Economic effective date of 1 July 2024. Legal
completion of Business Combination occurred on 3 October 2024

 

 

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                                         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 three transformational acquisitions in recent years, including
the recent Business Combination with Eni UK. Today, Ithaca Energy is one of
the largest independent oil and gas companies in the United Kingdom
Continental Shelf (the "UKCS"), ranking second largest independent by
production with the largest resource base.

 

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 ahead of targets set out in the North Sea Transition Deal.

 

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

 

ENDS-

 

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