2024-03-28 13:37:00
Delek Group published reports yesterday (Wednesday) showing that it ended 2023 with revenues of approximately NIS 12.3 billion, an increase of 2.5% compared to 2022. The net profit in 2023 amounted to approximately NIS 1.6 billion, compared to a net profit of approximately 2 billion shekels in 2022, after neutralizing one-off gains and adjustments for deferred taxes recorded in 2022.
Simultaneously with the publication of the company’s annual reports, the Ithaca subsidiary company informed that it is in advanced negotiations for a business combination deal with the international energy company ENI. Ithaca, which operates in the North Sea (and is currently 88.55% owned by the Delek Group) said that the deal, if completed, would be done by combining ENI’s producing assets in the North Sea into Ithaca in exchange for the allocation of shares amounting to approximately 39% of the merged company , where the Delek Group will continue to be the controlling owner with holdings ranging from 53% to 55% of the joint venture. ENI gave Ithaca 4 exclusive weeks to draw up a final agreement.
If the deal is completed, Ithaca’s daily production capacity will increase significantly to over 100,000 barrels per day and Ithaca’s total reserves will also jump.
Ithaca ended 2023 with revenues of approximately $2.3 billion, compared to revenues of approximately $2.6 billion in 2022. In the fourth quarter of 2023, revenues totaled approximately $500 million, compared to revenues of approximately $597 million in the corresponding quarter for 2022, and this is mainly due to the drop in gas and oil prices during the report period compared to the corresponding period and the increase in production costs. Part of the impact of the drop in energy prices on revenues was reduced thanks to hedging transactions on gas and oil prices, which resulted in an increase in Ithaca’s revenues last year in the amount of approximately 250 million dollars.
Ithaca’s net profit in 2023 amounted to approximately $287 million, compared to a net profit, excluding one-off gains and adjustments for deferred taxes, of approximately $421 million in 2022 (without excluding the aforementioned adjustments, the profit in the corresponding period was approximately $1 billion).
A decrease in Ithaca’s production is expected this year
The average daily output of Ithaca in 2023 was approximately 70.2 thousand barrels of oil equivalent compared to 71.4 thousand barrels of oil equivalent in 2022. The company explained that the decrease in output was mainly due to the initiated production stops that were in some of the reservoirs, due to planned maintenance works that were mainly during the third quarter of the year, as well as spot breakdowns that occurred mainly in the fourth quarter, in reservoirs not operated by Ithaca.
The deal, if it goes through, generates benefits for both parties. ENI has more natural gas assets while Ithaca has more oil producing assets (about 70% of total production) so that additional diversification will be created that reduces risks for both companies. In addition, Ithaca estimates that in 2024 it estimates that it will produce an average of about 60,000 barrels per day in 2024 (Ithaca is expected to increase production amounts to about 80,000 barrels per day only starting in 2027), so the connection with ENI will increase production amounts to about 105 A thousand barrels immediately.
In addition, the connection will create for both parties a stronger and more significant platform that will generate a significant cash flow in the immediate time frame, which will probably allow Ithaca to distribute more dividends that will go, among other things, to the Delek Group. At the same time, the company’s growth possibilities will expand due to the connection to an international energy giant.
ENI brings to the deal proven reserves of about 100 million barrels of oil in its reservoirs. Ithaca has proven reserves of about 270 million barrels so the connection with ENI would create reserves of about 370 million barrels.
A connection that may generate the entry of additional investors
The value of ENI’s assets in the North Sea is estimated at approximately 1.6 to 1.8 billion dollars. The value of Ithaca is about 1.7 billion dollars. A merger would create a combined entity worth more than $3 billion in assets and if the trading of Ithaca shares also increases, the next step could be another sale of shares or the integration of another large entity.
Market sources point out that the goal at the end of the day is for Ithaca to get a significant strategic partner that increases its cash flow, increases marketability, and generates new value. This is actually a necessary move since in the North Sea in general you see a consolidation of players in recent times. The merger will create a body that will be worth more than each body is worth separately.
The merger will also likely lower oil and gas production costs for Ithaca, as ENI’s production costs at its four North Sea assets are lower than Ithaca’s. At the same time, production will be able to increase due to ENI’s capabilities.
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And the stock is stuck
Understands interest 03/28/2024 16:31
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With all the profits, and all the predictions. And another article and another article. And a huge diddidand. But the stock didn’t move like that for several months. Why.
closed
#Ithacas #giant #deal #ENI