Ithaca Energy has filled in the gaps in its deal to acquire Eni’s North Sea assets, but Jefferies is still perplexed by the move.
“We still remain somewhat puzzled by the decision to double down on the UKCS given the likely increased tax burden under a Labour government, when peers such as Harbour Energy are diversifying into new geographies to reduce their effective tax rates. “
Structured as a merger, with Eni taking a 38.5% stake in Ithaca, the deal has an implied value of US$754 million and adds 40-45kboepd and 100mmboe of 2P reserves, notes Jefferies.
However, due to the lack of a free float for Ithaca, shareholder Delek will be forced to sell around 3% of the shares to achieve the minimum 10% free float, with Eni also locked up for 190 days for their shares.
"Consequently, we see selling pressure likely to create a headwind for ITH for the next few months, despite the notionally accretive terms of the deal."
Ithaca shares were up slightly at 119p today.