Ithaca Energy to join forces with Italian oil major in £750m deal

Ithaca Energy’s “transformative” combination with Italian oil major Uni will leave it “very well positioned” to generate growth and excellent returns for shareholders, analysts say.

The North Sea-focused group has agreed to buy the majority of upstream oil and gas assets owned by Eni UK for around £754 million, it told shareholders after the market closed on Tuesday.

The alliance, in which Eni UK will take a 38.5 percent stake, while the remaining shares will be held by Ithaca shareholders and its chairman Gilad Myerson, will be capable of producing up to 87,000 barrels of oil per day this year. . That number is expected to rise to 150,000 in the next decade.

Only recently has Ithaca reduced investment in projects in the United Kingdom, and the group blames Britain’s Energy Windfall Levy, which cost it $333.4 million last year alone.

Shrinking earnings have sent Ithaca shares down nearly 25 percent over the past year, and its value is now about 49 percent below its November 2022 trading price.

But analysts at Peel Hunt said the tie-up leaves Ithaca “very well positioned to deliver organic and inorganic future growth”, as it upgraded its “buy” rating with a price target of 214p, almost 80 per cent above from its current level.

They said: ‘The merger demonstrates Ithaca’s ambition to grow and diversify.

‘By combining portfolios, the enlarged business should benefit from long-term production cash flows with material growth from new developments.

‘Ithaca brings the growth potential of the development projects in Fotla, Rosebank and Cambo, and ENI brings the long-term, low-capex production cash flows to finance them.

“The net result is a balanced and expanded business, which should generate significant cash flows to support ongoing portfolio reinvestment, significant distributions to shareholders while maintaining a largely unleveraged balance sheet capable of making selective acquisitions additional”.