Ithaca Energy reported bumper profits in the second quarter, as parent Delek Group looks to IPO the North Sea firm later this year.
Ithaca reported pre-tax profits of $854 million for the second quarter – a more than fourfold increase on the same period last year – boosted by the completion of its acquisitions of Summit Exploration and Production and Siccar Point Energy.
EBITDAX totalled $905 million, while Ithaca’s revenue amounted to $617m. However, completion of its acquisition of Siccar Point resulted in negative goodwill of $666m, considerably buoying the results.
It noted that this amount is non-taxable, due to Ithaca being able to recognise a deferred tax asset in relation to past tax losses that the Siccar Point was not able to do.
It brings total half-year pre-tax earnings to a robust $1.7bn as the company looks towards an initial public offering (IPO) later in 2022.
Reporting its own quarterly results last week, parent Delek Group (TA:DLEKG) said it was “making progress with the relevant authorities” in continuing with preparation for a listing of the North Sea player.
Estimates have not been given on the firm’s targeted market valuation.
As at the end of June 2022, Ithaca said net debt was $1.4bn, representing a leverage ratio of 0.9x. However, it added that “significant cash generation” after the quarter’s end had prompted even further declines debt reduction.
It also recorded a draw down of $750m from its reserves based lending facility to finance the acquisitions.
Production averaged 67,000 barrels of oil equivalent per day (boepd), 65% of which were liquids, while unit operating costs across the company were $19/boe.
Ithaca said 17 million boe (71% oil) is now hedged from Q3 2022 into 2024 at an average price floor of $63/bbl oil and 125p/therm gas.
“A number of these hedges are zero cost collars, giving an upside in addition to the floor price,” its statement added.
The group also began to examine the impact of the UK’s energy profits levy, adding in a note that: “The Directors have considered the impact of the Levy at the date of signing these financial statements and it is believed that the Levy will increase the deferred tax liability by $150.5 million.”
At the group’s Abigail development, Ithaca said the first phase of a subsea construction campaign had been completed, involving installation of a subsea manifold and subsea isolation riser base structure, along with phase two installation of production and gas lift pipelines.
First oil at Abigail is now planned for October 2022.
The company also confirmed that its chief financial officer David Crawford will be stepping down from full time employment as he heads towards retirement.
Iain Lewis, who joined Ithaca Energy in July this year, will assume the role of CFO as part of a managed handover.
Mr Lewis has 25 years of upstream oil and gas finance experience, and has held senior positions with EY, leading financial advisory and assurance engagements for upstream oil and gas companies ranging from small cap independents to supermajors.
For the past 13 years, he has occupied several executive roles in Abu Dhabi-based TAQA group including group deputy CFO and Europe CFO overseeing the UK and Netherlands upstream and midstream businesses.
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