Ithaca profits slump on UK tax levy; Sees lower output in 2024

27th Mar 2024 07:29

(Sharecast News) - North Sea oil and gas producer Ithaca Energy on Wednesday said it was looking at a potential tie-up with Italy's largest energy firm Eni covering its UK assets and reported a slump in annual profits blaming the British government's energy tax and project impairments.

Ithaca said it had been given a four-week exclusivity period from Eni to make a potential offer for its UK upstream assets.

The company said it will buy Eni UK in exchange for its own shares, with Eni becoming a major shareholder by holding 38-39% of the enlarged issued share capital.

A potential offer for Eni's UK assets includes its recently acquired Neptune Energy assets, but excludes its carbon capture, utilisation and storage and Irish sea assets, Ithaca said.

Buying Eni's UK assets could add a further 40,000-45,000 boe/d to output, taking the total to more than 100,000 boe/d, it added.

Meanwhile, it reported a plunge in full-year profit to $215.6 from $1.03bn. Production came in at 70,239 barrels of oil equivalent per day (boe/d) in 2023, lower than the previous year's record 71,403 boe/d but in line with guidance of between 68,000 and 74,000 boe/d.

Ithaca said it expected 2024 production in a range of 56-61 kboe/d reflecting a reduction in investment in near-term projects as a direct result of the energy profits levy including deferred or cancelled projects at the Greater Stella Area, Montrose Arbroath Area, Elgin Franklin Area and Alba fields.

Ithaca, owned by Tel Aviv-listed Delek Group, incurred a $557.9m pre-tax impairment charge and paid a $333.4m bill under the levy, which was extended for a year by Finance Minister Jeremy Hunt in his budget earlier this month.

"The energy profits levy continues to have a direct impact on investment in the UK North Sea, with projects across our operated and non-operated deferred or cancelled. The extension of the levy by a further year to a sunset date of March 2029, highlights the continued fiscal uncertainty our sector faces," said interim chief executive Iain Lewis.

Reporting by Frank Prenesti for Sharecast.com