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

Ithaca EnergyAnnouncement

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RNS Number : 4924J  Ithaca Energy PLC  21 May 2025

 

21 May 2025

ITHACA ENERGY PLC

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

 

First Quarter Update and Results for the Three Months to 31 March 2025

 

Record quarterly production and adjusted EBITDAX

reflecting the operating capacity of the Group's enlarged portfolio

 

Ithaca Energy today announced its unaudited financial results for the three
months ended 31 March 2025.

 

Key Q1 2025 highlights- record quarterly production and adjusted EBITDAX:

·    Record quarterly production of 127.4 kboe/d (Q1 2024: 58.7 kboe/d),
supporting FY 2025 production guidance

·    Q1 2025 opex per barrel of $16.5/boe (Q1 2024: $22.9/boe)
demonstrates the continued high netback capability of the Group's enlarged
portfolio

·    Record quarterly adjusted EBITDAX of $653.2 million (Q1 2024: $339.0
million) reflecting the impact of the transformational Business Combination
with Eni UK and operational efficiency

·    Material hedge position from 2025 through 2027, protecting cash flows
in a lower commodity price environment

·    Low pro forma leverage position of 0.38x with significant available
liquidity of $1.1 billion, providing material financial firepower for growth

·    Continued execution of Ithaca Energy's consolidation strategy in the
UKCS, with:

-      Acquisition of JAPEX UK E&P announced March 2025 with an
estimated completion date of 1 July 2025, increasing the Group's stake in the
high-quality Seagull field, which began production in November 2023 from 35%
to 50%

-      Acquisition of a further 46.25% stake in the Cygnus Field from
Spirit Energy announced 20 May 2025, increasing the Group's operated WI in the
high-margin, high-quality gas field from 38.75% to 85%

·    Third interim 2024 dividend of $200 million paid in April 2025,
taking total 2024 dividends to $500 million

·    Management reaffirms all previously provided guidance ranges for FY
2025 and targeted 2025 dividend and updates guidance to reflect the
acquisition of an increased stake in the Cygnus gas field

Executive Chairman, Yaniv Friedman, commented: "Our Q1 results demonstrate the
transformational nature of the Eni UK combination, the successful integration,
and operational efficiency across the portfolio. In the period we increased
our interest in the high-quality, long-life Seagull asset to 50% via the
acquisition of JAPEX UK, in line with our low-risk inorganic strategic growth
ambitions. Yesterday, we announced a further acquisition of a 46.25% stake in
the Cygnus field from Spirit Energy taking our operated working interest to
85%, increasing the gas weighting of our portfolio and strengthening our
position as one of the largest gas producers in the UKCS. With a strong
balance sheet, a record quarterly EBITDAX of $653.2 million and material
hedging in place through to 2027, we are well placed to continue to grow the
business and support shareholders through continued shareholder returns."

  Financial key performance indicators (KPIs)
                                                   Q1 2025  Q1 2024
 Adjusted EBITDAX(1) ($m)                          653.2    339.0
 Profit before tax ($m)                            367.2    136.5
 Adjusted net income ($m)                          69.1     43.9
 (Loss)/profit for the period ($m)                 (258.7)  42.7
 Net cash flow from operating activities ($m)      435.3    313.8
 Unit operating expenditure(1) ($/boe)             16.5     22.9

                                                   Q1 2025  Q4 2024
 Available liquidity (1) ($m)                      1,107.6  1,015.1
 Adjusted net debt (1) ($m)                        792.4    884.9
 Adjusted net debt/pro forma adjusted EBITDAX (1)  0.38x    0.45x

 Other KPIs
                                                   Q1 2025  Q1 2024
 Total production (boe/d)                          127,373  58,699
 Tier 1 & Tier 2 process safety events             0        0
 Serious injury and fatality frequency             0        0

(1) Non-GAAP measure

 

Q1 2025 Strategic Highlights

Continued strong execution across the Group's strategic pillars, maximising
value and returns for shareholders.

Organic growth

·    Material ongoing activity at Captain including the platform drilling
campaign with well C73 completed and online and workover activity completed in
well C45 in the period

·    Good progress made through Q1, in readiness for the Flotel Safe
Caledonia's arrival at Captain WPPA at the end of May to support optimisation,
maintenance backlog reduction and asset life extension projects

·    Cygnus infill well campaign commenced with arrival of the Valaris
Norway on 22 March

-     Two firm wells to be drilled in 2025 with the first well due to spud
in Q2 2025

·    Rosebank development project progressing as planned to multi-year
development timeline with 2025 Subsea infrastructure installation campaign
commencing in April 2025

·    Cambo project technical refresh nearing completion, utilising
technical capabilities of Eni, and supporting farm-out process and progression
towards Final Investment Decision, subject to fiscal and regulatory certainty

·    NSTA approval received for Fotla Development Concept with draft Field
Development Plan submitted to the NSTA during April. Awaiting Environmental
Impact Assessment guidance ahead of issuing an Environmental Statement

 

Inorganic growth

·    Strategy to pursue consolidation in core UKCS basin, reflected in
acquisition of JAPEX UK E&P Limited (JUK) announced 25 March 2025 and the
acquisition of a further 46.25% stake in the Cygnus Field from Spirit Energy
announced 20 May 2025:

 

Acquisition of Japex UK E&P:

-     Increased stake in well understood, high-quality, long-life Seagull
field from 35% to 50%

-     Acquisition expected to add 4-4.5 kboe/d to the Group's production
base

-     Transaction includes JUK's material tax losses of
approximately $215 million in both RFCT and SC tax as well as
approximately $105 million Energy Profit Levy losses as at the effective
date of 1 January 2024, reflecting JUK's material investment in the field

-     Acquisition equates to a valuation of ~$10/boe (excluding tax
losses)

-     Estimated completion date of 1 July 2025

 

Acquisition of 46.25% stake in the Cygnus Field from Spirit Energy:

-     Increased stake in high-margin, low-emission operated Cygnus gas
field, adding additional gas production to our portfolio

-     Attractive investment metrics achieved, equating to a valuation of
< $7/boe per 2P Reserves

-     Ongoing infill drilling in area, with further upside potential

-     Adding circa 12.5 - 13.5 kboe/d net production on a pro forma basis,
and circa 4 kboe/d net annualised increase assuming a targeted completion date
of 1 October 2025, subject to NSTA consent

-     Effective date of 1 January 2025 for determining total consideration

Value creation and shareholder returns

·    Third interim 2024 dividend of $200 million paid in April 2025,
delivering total 2024 dividends of $500 million, in line with the Group's 2024
target

·    Reaffirming dividend policy for 2025, targeting dividend of 30%
post-tax CFFO, at the top end of our capital allocation policy range of 15-30%
post-tax CFFO, with a target of $500 million for FY 2025

Q1 2025 Operational Update

·    Continued strong process safety performance with zero Tier 1 or Tier
2 events recorded in the quarter

·    Record Q1 production of 127.4 kboe/d (Q1 2024: 58.7 kboe/d),
supporting full year 2025 production guidance ahead of summer shutdown period
and reflecting the operating capacity of the Group's enlarged portfolio

-     Q1 production split 59% liquids, 41% gas and 40% operated, 60%
non-operated

·    Achieved improved levels of production efficiency in Q1 across the
Group's operated asset base (higher than 2024 average of 80%)

·    Record Q1 production reflects:

-     Q1 production efficiency consistently above basin average and 2024
actual through the quarter with strong delivery at the operated Captain and
Cygnus assets as well as the non-operated Elgin Franklin, Seagull, GBA,
Schiehallion and Mariner assets

-     Production performance at operated Captain field, underpinned by
strong base well performance and infill well programme together with polymer
response from EOR Phase II

-     First production from Jocelyn South in the J Area in March 2025,
less than three months from field discovery, with robust production rates
above pre-drill expectations

 

Q1 2024 Financial Highlights

·    Record quarterly adjusted EBITDAX performance achieved with Q1 2025
EBITDAX of $653.2 million (Q1 2024: $339.0 million)

·    Q1 2025 profit before tax of $367.2 million (Q1 2024: $136.5 million)

·    Q1 loss for the period of $258.7 million (Q1 2024: profit of $42.7
million) reflecting primarily a one-off, non-cash deferred tax charge of
$327.6 million due to the two-year extension of EPL to 31 March 2030

·    Q1 2025 adjusted net income of $69.1 million (Q1 2024: $43.9 million)

·    Q1 2025 realised oil prices of $78/bbl before hedging and $79/bbl
after hedging (Q1 2024: $88/bbl before hedging and $87/bbl after hedging) and
gas prices of 110p/therm before hedging and 106p/therm after hedging (Q1 2024:
65p/therm before hedging and 119p/therm after hedging)

·    Q1 2025 operating costs of $189.0 million (Q1 2024: $122.4 million)
and Q1 unit operating expenditure of $16.5/boe (Q1 2024: $22.9/boe)
demonstrating the high netback capability of the portfolio post Business
Combination

·    Q1 2025 producing assets capex of $121 million (Q1 2024: $93 million)
and Rosebank capex of $53 million (Q1 2024: $43 million)

·    Operating cash flow before movements in working capital of $625.2
million (Q1 2024: $329.9 million)

·    Net cash flow from operating activities of $435.3 million (Q1 2024:
$313.8 million) reflects an increase in underlift during Q1 of $160.7 million,
substantively all of which is expected to reverse through the course of FY
2025

·    Adjusted net debt at end of the quarter of $792.4 million (31
December 2024: $884.9 million)

·    Pro forma leverage ratio at 31 March 2025 of 0.38x (31 December 2024:
0.45x)

·    Available liquidity at 31 March 2025 of $1,107.6 million (31 December
2024: $1,015.1 million) providing significant financial firepower for growth

·    Material hedge position protecting cash flows in a lower commodity
price environment. As at 16 May 2025, the Group had 27.5 million barrels of
oil equivalent (29% oil) hedged from Q2 2025 into 2027 at an average floor
price of $73/bbl for oil swaps, $71/bbl for oil puts/collar floors and
99p/therm for gas swaps, and 83p/therm for gas puts/collar floors

 

FY 2025 Management Guidance

·    Management reaffirms all previously provided guidance ranges for full
year 2025 (issued 26 March 2025) and upgrades guidance to reflect the
acquisition of an additional 46.25% stake in the Cygnus gas field from Spirit
Energy, assuming a completion date for the transaction of 1 October 2025:

-     FY 2025 production in range of 109-119 kboe/d

-     FY 2025 net operating cost guidance range of $780-860 million

-     FY 2025 net producing asset capital cost guidance range of $580-640
million (excluding pre-FID projects and Rosebank development)

·    Following the completion of the acquisition of Japex UK E&P and
the additional 46.25% stake in the Cygnus gas field expected 1 July and 1
October respectively, the Group expects a production exit rate at the end of
2025 of circa 135 kboe/d

 

Webcast and Conference call

Ithaca Energy will host a virtual presentation and Q&A session for
investors and analysts at 09:00 (BST) today, 21 May 2025. Details are
accessible via our website.

Investors and Analysts - Webcast link

https://www.investis-live.com/ithaca-energy/6814c73b75e117000f6cde0d/edvs
(https://gbr01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.investis-live.com%2Fithaca-energy%2F6814c73b75e117000f6cde0d%2Fedvs&data=05%7C02%7Ckathryn.reid%40ithacaenergy.com%7C167c535ef0d84e28285f08dd897e5f1b%7C91145d135cbe4b90846cfe1cfea471ce%7C0%7C0%7C638817898414693343%7CUnknown%7CTWFpbGZsb3d8eyJFbXB0eU1hcGkiOnRydWUsIlYiOiIwLjAuMDAwMCIsIlAiOiJXaW4zMiIsIkFOIjoiTWFpbCIsIldUIjoyfQ%3D%3D%7C0%7C%7C%7C&sdata=kbcCN4WP8HGnoOeZKR%2Fom456hiSSBPLQntMoz6402%2Fg%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: 055304

 

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)

Notes:

 

(1) Non-GAAP measure

( )

About Ithaca Energy plc

 

Ithaca Energy is a leading UK independent exploration and production company
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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