North Sea explorer and producer Ithaca Energy has confirmed its intention to list in London as it seeks to capitalize on renewed interest in the region fueled by soaring oil and gas prices.
Ithaca, which is owned by Tel Aviv-listed Delek, declined to provide details on when or how big the float would be, but said in a statement on Tuesday that the money raised would help it become a “key player for ensuring the UK’s energy security”. at a time when Russian gas supply cuts are causing shortages in Europe.
The company has become one of the largest in the North Sea, with holdings in six of the 10 largest oil and gas fields on the British continental shelf, including Cambo and Rosebank. In August, Ithaca said pre-tax profits rose 570% to £1.45bn in the first half.
Soaring gas and oil prices are sparking a new wave of exploration interest on Britain’s continental shelf, after years of falling investment.
The UK government wants to boost domestic fossil fuel production and the controversial Cambo oilfield in Ithaca was included in a list released last month of priority infrastructure projects ministers want to fast-track.
Although the government has imposed a windfall tax on oil and gas producers, which it hopes will bring in £5billion this year, it has offered a generous subsidy for new investment, meaning that “Investing £100 in the North Sea will only cost companies £100. 8.75, with the rest paid by the government,” according to the Institute for Fiscal Studies.
Ithaca’s planned IPO follows a wave of acquisitions and rapid growth at the company, which has been owned by Delek since 2017.
In April it bought Siccar Point Energy, the company behind the Cambo field, from private equity groups such as Blackstone and Bluewater in a deal worth almost $1.5 billion. dollars.
Ithaca said it expects to produce around 74,000 to 80,000 barrels of oil equivalent per day in 2023 and believes it has enough medium-term development opportunities to increase production above 100,000 bbl. d. Gas represented 35% of its production during the first nine months of the year.
It plans to pay a dividend of $400 million in 2023 to reach $420 million in 2024. As part of the listing, Delek will reduce its stake in Ithaca but will remain the controlling shareholder.
Panmure Gordon analyst Ashley Kelty said opportunities for organic growth were limited because Ithaca had a number of mid-life and end-of-life assets. “Although the expected dividend yield has not been declared, I anticipate that investors will be more attracted to this as a dividend play, as significant growth only seems possible through mergers and acquisitions.”
Ithaca was founded in Canada in 2004 and has been operating in the UK since 2008. It traded on the AIM Junior Market and the Toronto Stock Exchange before being acquired by Delek.