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

Ithaca EnergyAnnouncement

28/05/2024 07:15

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RNS Number : 9622P  Ithaca Energy PLC  28 May 2024

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 EBITDAX(1) ($m)                      339.0    518.1
 Statutory net income ($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 expenditure(1) ($/boe)         22.9     20.3
 Adjusted net debt (1) ($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 day(2)

-     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 basis(3)

-     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 2025(4)

·    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
(https://gbr01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.investis-live.com%2Fithaca-energy%2F663b9a7dfc6d34130014853c%2Fjeyh&data=05%7C02%7Ckathryn.reid%40ithacaenergy.com%7C5cef1013cb8a4c00eab708dc703795b7%7C91145d135cbe4b90846cfe1cfea471ce%7C0%7C0%7C638508631761339994%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C0%7C%7C%7C&sdata=XQzn93sKl3yHLPZqTMdUECBp38VYCjqU0emH9XK7Es4%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: 857557

 

Bond Holders - Webcast link

https://www.investis-live.com/ithaca-energy/663b9d9cfc6d341300152f71/pneh
(https://gbr01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.investis-live.com%2Fithaca-energy%2F663b9d9cfc6d341300152f71%2Fpneh&data=05%7C02%7Ckathryn.reid%40ithacaenergy.com%7C5cef1013cb8a4c00eab708dc703795b7%7C91145d135cbe4b90846cfe1cfea471ce%7C0%7C0%7C638508631761366130%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C0%7C%7C%7C&sdata=lrm0rqYK6e2%2FWzsfxDcIxpg3a4spCsS8S9dAbfWgXKo%3D&reserved=0)

Bond Holders - 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: 869425

 

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 / Rosie Corbett                         ithaca@fticonsulting.com (mailto:ithaca@fticonsulting.com)

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-

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