Ithaca Energy confirms intention to float in London

North Sea-focused independent Ithaca Energy confirmed today that it plans to float on the London Stock Exchange.

The company, which is wholly owned by Israeli conglomerate Delek, intends to float at least 10pc of its issued share capital and expects up to a further 15pc to be made available to investors. Ithaca's directors see an initial public offering (IPO) as "a natural progression" for the company that would enable it "to grow organically, return capital to shareholders and pursue a value accretive M&A strategy". It will help the company pay back existing debt in the near term and give access to a wider range of capital-raising options in the future, they added.

"Our strategy is simple — by buying, building and boosting assets we aim to increase value while generating attractive and sustainable returns to shareholders. Our track record of value creation is exceptionally strong and we have a deeply experienced team in place who will continue to deliver," Ithaca executive chairman Gilad Myerson said. "Our strategy is aligned with the UK government's Energy Security Strategy and we are proud to be investing in the UK at a time when domestic energy security could not be more important."

In April this year, Ithaca bolstered its North Sea presence by agreeing to acquire fellow independent Siccar Point Energy for $1.46bn. Ithaca said at the time that it expected the acquisition to support oil and gas output of some 80,000-90,000 b/d of oil equivalent (boe/d) over the next decade, up from 56,500 boe/d in 2021. Current production is estimated by management to be around 76,000-81,000 boe/d.

The Siccar Point deal gave Ithaca minority interests in the undeveloped Rosebank field and the producing Schiehallion, Mariner and Jade fields. It also provided a 70pc stake in the controversial Cambo field, the focus of protests during the run-up to last year's Cop 26 UN climate talks partly due its location in the UK's relatively underdeveloped west of Shetlands region. The North Sea Transition Authority, which regulates offshore oil and gas activity in the UK, granted a two-year extension to the licences that cover Cambo in March.

In today's IPO announcement Ithaca's directors highlighted the company's "material cash flow generation", noting that the company generated operating cash flow of almost $1bn in January-June from production of 66,700 boe/d. But Ithaca's heavy exposure to the UK offshore sector makes it vulnerable to windfall taxes, at least in the short term. The windfall tax on oil company profits announced by the UK government in May is set to have an outsized effect on Ithaca compared to its peers as its entire portfolio of assets is located in the UK offshore. At the time the levy was estimated to equate to as much as 15-20pc of Ithaca's earnings before interest, taxes, depreciation and amortisation, according to ratings agency Fitch.

Delek acquired just under 20pc of Ithaca in 2015 and purchased the remaining shares in 2017 as part of a strategy to broaden its exposure beyond Israel. Ithaca was de-listed from London's junior Aim market following the takeover.

By Jon Mainwaring