North Sea focused oil and gas firm Ithaca Energy is undervalued and likely to face more takeover bids, industry analysts said yesterday.
Global investment bank Jefferies said the firm, which highlighted its progress on the Greater Stella Area (GSA) development, was the most prone to merger and acquisition (M&A) activity among its North Sea peers.
The comments came as Ithaca said a key contract for the GSA development – upgrading the FPF-1 floating production unit – had been issued to the Remontova shipyard in Gdansk, Poland.
The oil and gas firm also said that drilling on the £630million project, using the Ensco 100 rig, had been delayed until the first quarter of next year because of hold-ups on work for other operators. The development is expected to produce about 30,000 barrels of oil equivalent per day (boepd), with 16,000boepd to Ithaca.
Jefferies added: “With initial field output estimated to reach 30,000boepd, this asset is the primary driver of what we believe will be a fourfold increase in Ithaca’s output over 2012-14.
“Ithaca continues to be the most prone to merger and acquisition activity among the North Sea exploration and production peer group, in our view.
“We believe Ithaca remains materially undervalued; the (failed) approach for Ithaca earlier in 2012 is unlikely to be the last.”
Ithaca said in March it had received unsolicited interest from several unnamed parties in a deal estimated to be worth £540million. Kuwait Foreign Petroleum Exploration was later reported to have walked away from takeover talks with the firm.
Analysts at corporate-finance firm Cenkos and RCBC Capital Markets said yesterday they were also of the view that the firm was undervalued.
Its third-quarter production rose 28% year-on-year at 5,061boepd thanks to Athena coming online.
Ithaca said production from Beatrice and Jacky was also strong, offsetting drops at Cook and Broom because of planned maintenance.
Third-quarter revenue increased to £26million, from £16.4million in the same period last year.
Pre-tax profits fell, however, to £1.1million against £10million in the same period last year.