Ithaca Energy Acquires Majority of Eni's UK Oil and Gas Assets for £750 Million

Ithaca Energy, a leading independent oil and gas operator in the UK North Sea, has reached an agreement to acquire substantially all of Eni's upstream assets in the UK for approximately £754 million in an all-stock deal. The transformational combination will create a powerhouse in the UK Continental Shelf (UKCS), positioning the combined entity as the second-largest independent operator in the region by 2024 production.

Under the terms of the agreement, Eni, Italy's biggest energy company, will transfer its UK business to Ithaca in exchange for a 38.5% stake in the enlarged group, while existing Ithaca shareholders will own the remaining 61.5%. The combined company is expected to produce between 80,000 and 87,000 barrels of oil equivalent per day in 2024, with the potential to organically grow to 150,000 barrels per day by the early 2030s.

Ithaca's Executive Chairman Gilad Myerson stated, "The combination will create a solid platform that can support material shareholder distributions, including the ambition to pay special dividends in 2024 and 2025, as well as future organic and inorganic growth." The deal is expected to be accretive to Ithaca's EBITDAX, cash flow from operations, and profit, providing a platform for enhanced shareholder returns, including an ambition for up to £500 million in total dividends per year in 2024 and 2025.

Why this matters: The acquisition will establish Ithaca Energy as a major player in the UK North Sea, unlocking significant growth opportunities and enhancing energy security in the region. The combined entity's increased scale and operational synergies are expected to drive value creation for shareholders and contribute to the UK's energy supply.

The acquisition includes Eni's operated interests in the Cygnus field and non-operated stakes in several other producing fields in the UKCS, while excluding Eni's UK East Irish Sea assets and carbon capture and storage (CCUS) activities. The combined entity will have a material long-life reserves and resources base of 658 million barrels of oil equivalent, with stakes in 6 of the 10 largest UKCS fields.

Eni CEO Claudio Descalzi commented, "The combination with Ithaca represents an exciting opportunity to bring together complementary portfolios, establishing a material position on the UKCS with significant growth and optimization opportunities, and helping to address the key challenges of security, affordability, and sustainability of energy supply in the UK."

The transaction, valued at approximately £750 million, is expected to close in the third quarter of 2023, with financial reporting effective from June 30. Once completed, Eni will have the right to appoint two non-executive directors to the board of Ithaca, subject to conditions. The deal will allow Ithaca to improve shareholder returns while positioning the company for future organic and inorganic growth in the UK North Sea.

Key Takeaways

• Ithaca Energy to acquire Eni's UK upstream assets for £754M in all-stock deal.
• Combined entity to become 2nd-largest independent operator in UK North Sea by 2024.
• Combined production expected to reach 80,000-87,000 boe/d in 2024, with potential to grow to 150,000 boe/d.
• Deal expected to be accretive to Ithaca's financials, enabling shareholder distributions of up to £500M per year.
• Acquisition strengthens Ithaca's position and enhances UK's energy security.