Press release
28 May 2024
ITHACA
ENERGY PLC
("Ithaca
Energy", the "Company" or the "Group")
First
Quarter Update and Results for the Three Months to 31 March
2024
Continued
execution against strategy: Transformational Business Combination
with Eni UK
Delivery
of EOR Phase II project supporting long-term production
growth
Q1
performance in-line with expectation and reaffirming FY 2024
guidance
Ithaca Energy, a leading UK
independent exploration and production company, today announced its
unaudited financial results for the three months ended 31 March
2024.
Financial key performance indicators (KPIs)
|
|
|
|
|
|
|
Q1 2024
|
Q1
2023
|
Adjusted EBITDAX1
($m)
|
339.0
|
518.1
|
Statutory net income ($m)
|
42.7
|
158.4
|
Net cash flow from operating
activities ($m)
|
313.8
|
351.4
|
Available liquidity 1
($m)
|
1,249.9
|
650.4
|
Unit operating
expenditure1 ($/boe)
|
22.9
|
20.3
|
Adjusted net debt 1
($m)
|
461.1
|
899.6
|
Adjusted net debt/adjusted EBITDAX
1
|
0.30x
|
0.46x
|
|
|
|
Other KPIs
|
|
|
Total production (boe/d)
|
58,699
|
75,257
|
Tier 1 process safety
events
|
0
|
0
|
Serious injury and fatality
frequency
|
0
|
0
|
1 Non-GAAP measure
Q1
2024 Strategic Highlights
Transformative Business Combination with Eni
UK
·
Announced transformational Business Combination of
Ithaca Energy and substantially all of Eni S.p.A's (Eni) UK
upstream oil and gas assets in April 2024, creating a UK powerhouse
that provides the strategic platform for long-term growth in the UK
North Sea and internationally through the combination of
complementary portfolios.
-
UKCS powerhouse with estimated pro-forma 2024
production of 100,000 - 110,000 barrels of oil equivalent per
day2
-
Agility of an Independent and capability of a
Major, implementing Eni's successful regional satellite
model
-
Complementary portfolio unlocks potential for
material long-term organic growth with the capability to increase
the Combined Group's production to over 150,000 barrels of oil
equivalent per day by the early 2030s on an un-risked
basis3
-
Platform for further inorganic growth in the UK
and internationally
-
Highly cash-generative combination providing
material dividend capacity with ambition for up to $500 million
total dividends each year in 2024 and 20254
·
Following completion of the Business Combination,
Eni will be a fully committed, long-term and supportive shareholder
of the combined business
-
Based on the merger ratio, Ithaca Energy's
shareholders will own 61.5% and Eni will own 38.5% of the combined
entity
-
Sell down provisions have been put in place,
together with an Eni Call option, to maintain a free float of 10%
on completion
BUILD
·
Rosebank development project progressing as
planned to multi-year development timeline:
-
Petrojarl Rosebank FPSO docked in Dubai with
vessel upgrade work continuing
-
Q1 preparation work ahead of commencement of
Subsea, Umbilicals, Risers and Flowlines (SURF) activity in
Q2
·
Successfully awarded license extension from 31
March 2024 to 31 March 2026 for Cambo field on 19 March, supporting
the ongoing farm-in process to enable the future progression of
Cambo and Fotla towards FID, subject to fiscal and market
conditions
·
Continued progression of Captain Electrification
FEED study to support FID in due course, subject to fiscal and
market conditions
BOOST
·
Captain continues to deliver against a
high-activity plan in support of the Enhanced Oil Recovery (EOR)
Phase II project now substantially complete and in preparation for
turnaround activity in May. During the quarter, rig recertification
was successfully executed on plan and on budget in support of the
topside drilling campaign scheduled for Q3
·
Final verification activities completed supporting
milestone first EOR Phase II polymer injection into the subsea
wells during H1 2024, with the following activities completed in
the Q1:
-
Drilling: Completed drilling
operations of remaining three Area D polymer injection wells and
new production well B35 brought online
-
Subsea: Completed installation
of all remaining subsea infrastructure including flowlines,
umbilicals, subsea distribution units to enable EOR II
start-up
-
Facilities: Successfully
completed significant facilities maintenance scopes across power
generation, gas compression and oil export pumps
·
Preparation for W1 well workover at Erskine during
Q2, reinstating a fifth production well at the field
Q1
2024 Operational Update
·
Q1 production of 58.7 thousand barrels of oil
equivalent per day (kboe/d), supporting full year pro-forma 2024
production guidance issued 23 April
·
Q1 production split 69% liquids, 31%
gas
·
Q1 production reflects previously guided
operational issues across our non-operated joint venture
portfolio:
-
Non-operated Pierce field production impacted as
the vessel remained off stream for the entirety of Q1. The issue
has now been resolved and field production is ramping up
-
Non-operated Schiehallion field production
impacted by weather related downtime and outages caused by the
Ocean Great White rig being off station, which will also impact the
timing of production wells later in 2024
-
Compressor issues at Erskine's host facility
(Lomond) impacting production in Q1
Q1
2024 Financial Highlights
·
Adjusted EBITDAX of $339.0 million (Q1 2023:
$518.1 million)
·
Statutory net income of $42.7 million (Q1 2023:
$158.4 million)
·
Robust net cash flow from operating activities of
$313.8 million (Q1 2023: $351.4 million)
·
YTD realised oil prices of $88/bbl before hedging
and $87/bbl after hedging (Q1 2023: $83/bbl before hedging and
$81/bbl after hedging) and gas prices of 65p/therm before hedging
and 119p/therm after hedging (Q1 2023: 137p/therm before hedging
and 192p/therm after hedging)
·
Continued strong cost control, delivering Q1
operating costs of $122 million ($22.9/boe (Q1 2023: $20.3/boe))
with Q1 producing asset capex of $93 million and Q1 Rosebank capex
of $43 million including the ongoing modifications to the
FPSO
·
Balance sheet remains very strong with further
deleveraging in the period
·
Adjusted net debt of $461.1 million at 31 March
2024 (31 December 2023: $571.8 million; 31 March 2023: $899.6
million)
·
Group leverage position of 0.30x adjusted net debt
to adjusted EBITDAX (31 March 2023: 0.46x)
·
Further interim dividend for 2023 of $134 million
paid in April 2024, taking the total 2023 dividend payment to $400
million
·
Significant build on hedging book during the
quarter, with 7.4 million barrels of oil equivalent (69% oil)
hedged from Q2 2024 into 2025 at an average price floor of $77/bbl
for oil and 125p/therm for gas at 31 March
2024
FY
2024 Management Guidance
·
Management reaffirms all previously provided
pro-forma guidance ranges for full year 2024 (issued 23
April)
Interim Chief Executive Officer, Iain
Lewis, commented: "Ithaca Energy
continues to deliver against its BUY, BUILD and BOOST strategy,
announcing the transformational Business Combination with Eni UK in
April that positions the Company as the largest resource holder in
the UKCS with the potential for further material organic and
inorganic growth. The Company's Q1 performance was in line with our
expectations and factored into our full year guidance set towards
the end of March, following a number of operational issues across
our non-operated joint venture portfolio that have now been
resolved."
Webcast and Conference call
Ithaca Energy will host a virtual
presentation and Q&A session for investors and analysts at
09:00 (GMT) today, 28 May 2024, and a further presentation and
Q&A session for Bond Holders only, which will be held at 16:00
(GMT) today, 28 May 2024. Details of both sessions are accessible
via our website.
Investors and Analysts - Webcast link
https://www.investis-live.com/ithaca-energy/663b9a7dfc6d34130014853c/jeyh
Investors and Analysts - Conference call
Operator Assisted Dial-In: United
Kingdom (Local): +44 20 3936 2999 United Kingdom
(Toll-Free): +44 800 358 1035 Global Dial-In Numbers Access Code: 857557
Bond Holders - Webcast link
https://www.investis-live.com/ithaca-energy/663b9d9cfc6d341300152f71/pneh
Bond Holders - Conference call
Operator Assisted Dial-In: United
Kingdom (Local): +44 20 3936 2999 United Kingdom
(Toll-Free): +44 800 358 1035 Global Dial-In Numbers Access Code: 869425
Enquiries
Notes:
1 Non-GAAP measure
2 2024 pro forma production - 2024 production guidance from
Ithaca Energy, NSAI Top-Up Report in relation to Eni UK and ERCE
CPR in respect of Neptune, each as at 31 December 2023
3 Wood Mackenzie, Ithaca Energy (NSAI CPR), Eni UK CPR (prepared
by NSAI dated 25 March 2024) and ERCE CPR, as of 31 December
2023
4 All dividends are subject to operational performance and
commodity prices as well as Combined Group refinancing and
availability of distributable profits
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-