Ithaca Energy is being brought back to London five years after its takeover by Israel’s Delek Group, but it will return as a much larger North Sea player.
A float is expected to raise fresh capital, issuing new shares to new investors, and it is also expected to see Delek sell some of its existing shares.
Delek in 2017 paid AIM shareholders some US$646mln for Ithaca’s equity, giving the business an enterprise value of US$1.2bn.
At that time, Ithaca was newly a producer after starting up the Stella oil field; however, Delek later added significant scale – buying stakes in 10 North Sea fields from Chevron for US$2bn in 2019, before picking up 70% of the Shell-operated Cambo field in April this year for US$1.5bn.
US banks Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS) have been hired by Ithaca’s owners to act as co-ordinators for the London float, with Jefferies, Merrill Lynch, and ING also working on the equity sale.
In its ‘intention to float’ documents, the company said it has delivered a 5.4x increase in its equity value between 2018 and 30 June 2022.
Coming to market amidst peak energy prices, the company could potentially realise the growth attained whilst in private hands. It is, meanwhile, notable that the float and growth plans come as North Sea producers are now benefitting from additional tax incentives built into Britain’s Energy Price Levy (the windfall tax introduced in May by chancellor at the time Rishi Sunak).
Ithaca said it is positioned to play an important role in the UK, as it plans to “utilise its significant reserves and operational capabilities to play a key role in delivering security of domestic energy supply from the UKCS”.
The company believes it has sufficient development opportunities within its portfolio to grow its production to over 100,000 barrels of oil equivalent per day, from 76,000 to 81,000 boepd (guidance for the current half-year period).
It highlighted that it presently holds interests in “six of the top 10” largest fields in the North Sea (technically, the UK Continental Shelf), including Cambo and Rosebank which it describes as the UK’s two largest undeveloped discoveries.
In this morning’s statement, Ithaca said it intends to grow further by building projects, maximising existing production operations and acquiring “value accretive assets across the asset lifecycle”.
"I am incredibly proud of the transformation Ithaca Energy has undergone over the past three years to become one of the UK's leading independent oil and gas companies,” said executive chair Gilad Myerson.
“Our strategy is simple - by buying, building and boosting assets we aim to increase value while generating attractive and sustainable returns to shareholders. Our track record of value creation is exceptionally strong and we have a deeply experienced team in place who will continue to deliver.”
Ithaca intends to pay out some 15-30% of annual net cash to shareholders as dividends, with US$400mln expected in 2023 rising to US$420mln in 2024.
The size of the IPO raise and how much of the company will be retained by Delek have yet to be announced, albeit the company does say it intends to have a free float of at least 10% and expects that it would be eligible for inclusion in the FTSE UK indices.