Ithaca Energy Share Discussion Threads

[lonrho] 23/4/2024 19:41

Shud be a divi of over 20p per share for each of the next two years

[hpotter] 23/4/2024 18:43

23 April 2024



Ithaca Energy plc ("Ithaca Energy", the "Company" or the "Group")



Transformational Combination of Ithaca Energy and substantially all of Eni S.p.A.'s ("Eni") UK Upstream Oil and Gas Assets,

Accelerating Growth and Value Creation



· UK Continental Shelf ("UKCS") powerhouse producing 100,000 - 110,000 barrels of oil equivalent per day[1]

· Agility of an Independent and capability of a Major, implementing Eni's regional satellite model

· Highly cash-generative combination providing material dividend capacity with ambition for up to $500 million total dividends each year in 2024 and 2025[2]

· Complementary portfolio unlocks potential for material long-term organic growth

· Platform for further inorganic growth in the UK and internationally

Gilad Myerson, Executive Chairman, Ithaca Energy, commented:

"The transformational combination with Eni UK will further enhance Ithaca Energy's position as a leading UKCS production and growth company, with positions in 6 of the 10 largest UKCS assets in the basin[3].

The synergistic combination with Eni's highly cash-generative UKCS portfolio has the ability to unlock our long-life organic growth opportunities creating a combined entity with substantial scale and longevity.

With Eni as a significant, long-term and supportive shareholder, the enlarged group will benefit from increased financial strength to support the execution of our BUY, BUILD and BOOST strategy and gain access to Eni's world-class technical capabilities and operational support. The combination will create a solid platform which can underpin material shareholder distributions, including an ambition to pay special dividends in 2024 and 2025, as well as future organic and inorganic growth2."



OVERVIEW OF THE COMBINATION

Ithaca Energy, a leading independent oil and gas operator in the UK North Sea is pleased to announce it has reached an agreement on a proposed combination with Eni in relation to substantially all of the upstream assets of Eni in the UK (the "Eni UK Business") in exchange for the issue of ordinary shares in Ithaca Energy to a subsidiary of Eni, Eni UK Limited ("Eni UK") (the "Combination"), such that at completion of the Combination ("Completion"), Eni UK will be issued ordinary shares representing 38.5% of the enlarged issued share capital of Ithaca Energy.

The Combination is expected to create a strategic platform for long-term growth in the United Kingdom North Sea combining Ithaca Energy's portfolio of development projects and efficient operating model with enhanced production and cash flow from the Eni UK Business and Eni's world-class technical expertise. The combination of Ithaca Energy and the Eni UK Business (together the "Combined Group") has the underlying un-risked potential to organically grow production to 150,000[4] boepd by the early 2030s, whilst supporting ongoing shareholder returns. The Combination is expected to be accretive per share to EBITDAX, CFFO and Profit, providing a platform for enhanced shareholder returns.



The portfolio of the Eni UK Business includes operated interests in 1 producing field: Cygnus (38.75% working interest); and non-operated interests in 10 producing fields: Elgin Franklin Area including Elgin, Franklin, West Franklin (21.867% working interest) and Glenelg (8% working interest), J-Area including Judy, Joanne, Jasmine (33% working interest) and Jade (7% working interest), Seagull (35% working interest) and Tommeliten A (0.07% working interest). The Combination excludes Eni UK East Irish Sea assets and CCUS activities.



In 2023, the Eni UK Business generated $775 million of EBITDA[5].



BACKGROUND TO AND REASONS FOR THE COMBINATION



Combination Highlights



The board of directors of Ithaca Energy (the "Ithaca Energy Board") believes the Combination represents a highly value-accretive opportunity for Ithaca Energy's shareholders, supporting delivery of Ithaca Energy's BUY, BUILD and BOOST strategy. The Combination:



Creates a UKCS powerhouse

- The 2nd largest independent operator in the UKCS by 2024 production[6]

- Stakes in 6 of the 10 largest UKCS fields3

- Pro-forma 2024 production of 100,000 to 110,000 barrels of oil equivalent per day1

- Forecast to be the largest operator in the UKCS by production in 2030[7], on an un-risked basis

- Material combined long-life 2P reserves and 2C resources base of 658 million barrels of oil equivalent[8]



Combines the agility of an Independent and capability of a Major

- Eni will be a fully committed, long-term and supportive shareholder in the Combined Group supporting the delivery of Ithaca Energy's BUY, BUILD and BOOST strategy

- Eni's successful strategic satellite structure will further enhance this UKCS powerhouse

- Technical services agreement with Eni will provide Ithaca Energy with access to leading technical expertise to drive future growth



Delivers material cash flow and optionality

- Substantial cost savings to be realised through operational and financial synergies

- Accretive per share to EBITDAX, CFFO and Profit, providing a platform for enhanced shareholder returns

- Expected to improve Ithaca Energy's credit rating from B+/B1 towards BB-/Ba, with a pathway towards investment grade

- Committed 2024 and 2025 dividend of 30% post-tax CFFO with an ambition for special dividends to increase total shareholder distributions to up to $500 million per annum2



Unlocks potential for material long-term growth

- Reinforces Ithaca Energy's status as the largest UKCS operator by reserves and resources[9]

- Enhanced cash flows unlock significant growth from Ithaca Energy's development projects, including the second largest undeveloped discovery in the UK North Sea - Cambo

- Organic growth potential to increase the Combined Group's production to over 150,000 barrels of oil equivalent per day4 by the early 2030s on an un-risked basis



Accelerates inorganic growth opportunities in the UK and internationally

- Increased scale, debt capacity and potential for lower cost of debt provides material firepower for growth

- Focused on opportunities for further inorganic growth in the UK

- Option to diversify internationally if the right opportunity is identified, leveraging Eni's global reach and capability

Overview of the Combined Group's Portfolio



- The Combination will create a UKCS powerhouse with 37 producing assets

- Provides increased non-operated exposure to the Elgin-Franklin and J-Areas and diversification within the UKCS through the operated Cygnus producing field and recently onstream Seagull field

- The current producing assets and the sanctioned Rosebank development are expected to sustain production for the Combined Group following Completion at greater than 100,000 barrels of oil equivalent per day until at least 2028[10]

- Combined 2P Reserve and 2C Resource base of 658 million barrels of oil equivalent8 with a resource life of 15 years

- Based on 2023 proforma production the Combined Group was split 51% liquids / 49% gas[11]



2024 Guidance for the Combination



All guidance below is based on a full year contribution from Ithaca Energy and inclusion of Eni UK from the economic effective date of 30 June 2024[12]:



- Expected 2024 combined production of 80,000 to 87,000 barrels of oil equivalent per day

- Net operating cost guidance range of between $650 million and $730 million

- Net producing asset capital cost guidance range of $410 million to $480 million (excluding pre-FID projects and Rosebank development)

- Net Rosebank project capital cost guidance range of $190 million to $230 million

- Cash tax guidance of $435 million to $455 million

- Ambition for up to $500 million total dividend in 20242



DETAILS OF THE COMBINATION



Key Transaction Terms



Based on the relative net asset valuations of Ithaca Energy and the Eni UK Business, agreed between Ithaca Energy and Eni, Eni will transfer the Eni UK Business to Ithaca Energy in exchange for the issuance of such number of new Ithaca Energy shares to Eni UK as is equal to 38.5 per cent of the fully diluted issued share capital of Ithaca Energy at Completion, subject to adjustment in respect of certain share option rights (the "Consideration Shares"), with existing Ithaca Energy shareholders owning the remaining 61.5 per cent of the share capital of the Combined Group (the "Merger Ratio").

Using the number of Ithaca Energy shares outstanding as at 23 April 2024, 635,013,542 Consideration Shares would be issued to Eni UK to reflect the Merger Ratio. Based on the closing share price of Ithaca Energy of 118.8p on 23 April 2024, the Consideration Shares are worth c. £754 million, although it should be noted that the Merger Ratio was determined between the parties on a relative net asset value basis rather than with reference to market share price.

The key terms of the Combination are set out in the business combination agreement entered into between Ithaca Energy, Eni UK and Neptune Energy Group Holdings Limited ("Neptune"), both subsidiaries of Eni (the "Business Combination Agreement").

The economic effective date for the Combination will be 30 June 2024, with Completion expected in Q3 2024, subject to the satisfaction of certain regulatory and other customary conditions precedent. Certain customary financial adjustments will be made for, amongst other things, cash, financial debt and working capital, each as at the economic effective date, to maintain the agreed Merger Ratio.



Free Float



As a consequence of the issue of the Consideration Shares to Eni UK, and Ithaca Energy's existing shareholder structure, the Combination would result in the number of ordinary shares in public hands being approximately 7 per cent., and below the minimum 10 per cent. as required by the listing rules issued by the Financial Conduct Authority (the "FCA") (the "Listing Rules"). Therefore, in order to ensure that the number of ordinary shares in public hands remains at or above 10 per cent., Delek has undertaken to use reasonable endeavours to sell down such number of ordinary shares representing approximately 3 per cent. of the enlarged issued share capital of the Company (the "Delek Sell Down"), prior to Completion.



Delek will enter into a call option agreement with Eni UK pursuant to which Delek will have the option to require Eni UK to transfer to Delek such number of Consideration Shares as represents approximately 1 per cent. of the enlarged issued share capital of the Company (the "Call Option"). Once the Delek Sell Down is complete, 10 per cent. of Ithaca Energy's ordinary shares will be held in public hands. Following this and assuming the Call Option is exercised, immediately after admission of the Consideration Shares to the Premium Listing segment, Delek will hold approximately 52.7 per cent. and Eni UK will hold 37.3 per cent. of Ithaca Energy's ordinary shares.



Rule 9 waiver



As Eni UK will hold between 30 per cent. and 50 per cent. of the voting rights of Ithaca Energy at Completion, a mandatory offer would normally be required under Rule 9 of the UK Code on Takeovers and Mergers (the "Takeover Code"), however, given that Delek will still hold shares carrying more than 50 per cent. of the voting rights following Completion, the UK Panel on Takeover and Mergers (the "Panel") has granted a dispensation from Rule 9 pursuant to note 5 (b) of Rule 9 under the Takeover Code and no such Rule 9 waiver is required.



Class 1



The Combination constitutes a Class 1 transaction for the purposes of the Listing Rules for Ithaca Energy. Ithaca Energy will issue a circular to its shareholders, in due course, in order to convene a general meeting to seek shareholder approval for the Combination and the allotment and issue of the Consideration Shares to Eni UK. In addition, Ithaca Energy will publish and make available a prospectus in connection with the issue of the Consideration Shares.



The Profit Before Tax and Gross Assets the subject of the transaction for the year end 31 December 2023 were £444 million and £2,062 million respectively.



Lock-up



Eni UK's shareholding in Ithaca Energy will be subject to a 180 day lock-up period from admission of the Consideration Shares (subject to customary exceptions).





Relationship Agreements and Corporate Governance



Eni Relationship Agreement



At Completion, Eni will enter into a relationship agreement with Ithaca Energy (the "Eni Relationship Agreement") on substantially similar terms to the Delek Group Limited ("Delek") relationship agreement amended and restated on the date of this announcement with Ithaca Energy (the "Delek Relationship Agreement"). The Eni Relationship Agreement will entitle Eni, for so long as it directly or indirectly holds more than 20% of the Combined Group's issued share capital, the right to appoint two non-executive directors to the Ithaca Energy Board, for so long as it directly or indirectly holds greater than 10% (but not more than 20%) of the Combined Group's issued share capital, the right to appoint one non-executive director to the Ithaca Energy Board, and for so long as it holds greater than 25% of the Combined Group's issued share capital, to appoint one observer to the Remuneration Committee and the Audit and Risk Committee; and appoint one director, or failing which an observer to the Nomination and Governance Committee.

From Completion, under the Delek Relationship Agreement, Delek will, for so long as it directly or indirectly holds at least 30% of the Combined Group's issued share capital, and until the later of the proposed CEO nominated by Eni ceases to be the CEO and 3 years from Completion, have the right to appoint three non-executive directors.

Eni will be entitled to recommend the nomination of the next proposed CEO of the Combined Group in accordance with the policies and processes of Ithaca Energy's Nomination and Governance Committee, such appointment to take effect from Completion.

The Ithaca Energy Board is committed to robust standards of corporate governance and to maintaining a sound framework for the control and management of the Group. As such, the Company is actively recruiting for additional independent non-executive directors to join the Ithaca Energy Board prior to or from Completion.



Conditions to Closing

Closing of the Combination is subject to, amongst other things:

· Ithaca Energy shareholder approval at a general meeting convened pursuant to an FCA-approved circular;

· FCA and London Stock Exchange approval of the admission of the Consideration Shares;

· satisfaction of certain regulatory approvals in the UK; and

· completion of certain pre-sale reorganization steps in relation to the Eni UK assets.



Key termination provisions

The Business Combination Agreement can be terminated in a number of limited circumstances. Eni UK and Neptune can terminate the Business Combination Agreement if the Ithaca Energy Board changes or withdraws its recommendation, or if Ithaca Energy shareholders do not approve the Combination, or if Ithaca Energy fails to publish the prospectus or circular once it has been approved by the FCA. All parties have customary termination rights for material breaches of certain interim period covenants and in circumstances where a third-party offer is made under the Takeover Code and is recommended by the Ithaca Energy Board.

Completion of the Combination is expected to occur in Q3 2024.



Ithaca Energy Board Recommendation and Undertakings



The Ithaca Energy Board have determined that the Combination is in the best interests of Ithaca Energy based on a number of factors and intend unanimously to recommend that shareholders vote in favour of the relevant resolutions at the shareholder meeting to be held to approve the Combination and the allotment and issue of the Consideration Shares to Eni UK, amongst other things.



Each of the members of the Ithaca Energy Board holding Ithaca Energy shares, has irrevocably undertaken that they will vote in favour of the relevant resolutions required to implement the Combination at the shareholder meeting in respect of their own beneficial holdings of Ithaca Energy shares, representing approximately 0.2 per cent. of the existing share capital of Ithaca Energy as at 23 April 2024, being the last practicable date prior to publication of this announcement.



Delek has irrevocably undertaken to vote in favour of the relevant resolutions required to implement the Combination at the Ithaca Energy shareholder meeting in respect of its holding of Ithaca Energy shares, representing 88.5 per cent. of the existing share capital of Ithaca Energy as at 23 April 2024, being the last practicable date prior to publication of this announcement.

[autumn] 22/4/2024 17:04

Kibes
The 4 week exclusivity agreement ends this week, so should hear if the ENI
deal is going to progress. Assets look good, not sure about the Irish
sea assets, haven't looked at those yet.
We are partners with ENI on both Elgin Franklin and Jade fields already.
I'm sticking to a 12p dividend this year, until we have full details of agreement,
should it complete. Even then it may not be finalized until later this year/next
year.
I think 20p/share dividend sounds a bit rich, but can live in hope.
ENI first quarters results are out this Wednesday 24th, worth a read to see how
these assets are proforming.

[kibes] 22/4/2024 11:50

autumn - I like the look of it at this price but I can't say whether the ENI assets deal is a good one or not, or what effect it may have on the dividend. Analyst consensus seems to be around 20p/share dividend for 2024 but I don't know whether that is realistic really.

[lord gnome] 18/4/2024 16:26

Thanks Autumn. The current share price would certainly make more sense if the '24 divi was to be just 12p. It stays on the watch list for now. One to buy if a summer pullback coincides with the necessary cash in the ISA.

[autumn] 18/4/2024 11:56

Kibes/Lord Gnome

Next years production estimate 56/61 form 70.2 bopd for 2023. Opex increasing to
$540/590 form $524, also Rosebank capex increasing from $97 to $190/230.
I've pencilled in dividend of $150 million/£120 million, so around 12p per share.
That's still 9.5/10% at current share price.
Production increasing form 2026/27, Rosebank capex reducing. Opex per barrel $20
or below.
Think I'm being pessimistic with my dividend forecast, however from 2025 onwards
could return to around current levels.
Bought a few more myself this week, around £1.16.

[lord gnome] 17/4/2024 11:42

Best estimates that I can come up with are from Stocko. Free cash flow this year was circa 80 cents per share. Assuming the same next year, then 30% of this would be 24 cents per share total dividend for the year. Stocko or whoever, agrees with my reasoning as they are predicting total dividends of 24.8 cents for 2024. Near as damit is to swearing, I make that 20p, so another two dividends of 10p each. Might not be totally accurate, but it is a good working estimate. Currently debating with myself as to whether to buy a few and see how it goes.

[kibes] 12/4/2024 11:44

But what is post tax CFFO going to be in 2024? I don't see any estimates.

[peterlowen] 04/4/2024 13:21

From full year results:-

· Reaffirming dividend policy for 2024 targeting dividend at the top end of our capital allocation policy range of 15 - 30% post-tax CFFO

[kibes] 04/4/2024 07:55

If the dividend is going to remain at 10p paid quarterly that is 40p/year for a share currently worth 120p. That doesn't look viable to me so either a) Ithaca is grossly undervalued by a factor of at least 3 times or b) they will cut the dividend. I don't know which is the case. And a lot of fuss is made about UK taxes now running at 75% but in fact in Norway they have always been 78% and nobody complains?

[cowie19] 02/4/2024 17:35

Timing could have been better - hindsight is a wonderful thing.

[cowie19] 30/3/2024 22:13

Bought more Thursday

[r9505571] 28/3/2024 19:12

Ithaca Energy and Hargreaves Lansdown were all weaker as they traded without entitlement to the dividend.

[s34icknote] 28/3/2024 08:34

Ex div today ?

[hpotter] 27/3/2024 16:48

Dividend is quarterly.

[36redhill] 27/3/2024 16:12

New to this share. Can't seem to find out if the dividend is quarterly or half yearly.Regards all

[kenmitch] 27/3/2024 15:03

Here’s the accurate date information on the next dividend:-



Unusually ex dividend day is not a Thursday. The gap to April 2nd for record date is almost certainly because the market is closed from the end of tomorrow until next Tuesday.

Fabulous 7.3% (just over 10p) dividend yield just on that next dividend!

[reallyrich] 27/3/2024 14:43

only going on what the ithaca website says?

[lonrho] 27/3/2024 14:23

watch it drop at open tmrw .

[reallyrich] 27/3/2024 13:50

2nd of April

Ithaca Energy is pleased to announce its third interim dividend of $134 million, representing $0.1321 per ordinary share. The third interim dividend will be paid on 17 April 2024 to shareholders on the share register on 2 April 2024.

The dividend is payable in cash in Sterling to holders of the ordinary shares. Sterling dividends payable will be converted from US dollars at the average of the mid-point of the market exchange rate on 27 March, 28 March and 2 April 2024. Accordingly, the Group will confirm the foreign exchange rate and the amount of the Sterling dividend payable in pence per share on 4 April 2024.

[lonrho] 27/3/2024 13:10

Ex dividend date is 28th march, 2nd of april is next tuesday, shares always go ex dividend on a thursday in UK.

[fletcher270] 27/3/2024 12:44

Check the news alert on this site at 21st March it's 2nd April