Ithaca, the subsidiary of Fuel group , Is expanding its operations ahead of the initial public offering (IPO) of its shares on the London Stock Exchange. Today, Delek Group reported that Ithaca has signed an agreement to acquire the entire shares of Siccar Point Energy, which owns oil and gas producing assets and proven commercial discoveries in the North Sea region of the UK.
Ithaca is engaged in the production and sale of oil and gas, from reservoirs in the North Sea (near the United Kingdom), and serves as an operator in some of the marine reservoirs in which it is a partner. According to the Delek Group, the deal is being made as part of Ithaca’s preparations for an IPO in 2022, with the intention of increasing Ithaca’s daily production and securing its long – term reserves.
The consideration for the transaction amounts to $ 1.1 billion, and includes taking out a debt of $ 200 million from Sikar to its bondholders. Sikar’s bonds are due to be repaid in March 2026, but these bondholders will have the right to repay immediately following the transfer of control of the company.
The balance of the consideration in the amount of approximately $ 900 million will be financed by Ithaca through its existing credit facilities (RBL), from the cash that will accumulate in the Safe-Point fund starting in early 2022 and Ithaca’s cash balances. Ithaca estimates that, based on its production rate, current sales and its oil and gas price forecast, it will be able to repay the RBL framework that will be used to finance the deal within less than 12 months from the closing date.
According to the terms of the transaction, Ithaca will also be entitled to receive the cash accumulated in the Safe Point fund from 1.1.2022 until the date of completion. Delek Group, for its part, does not take any obligation when making the transaction.
The agreement also stipulates a contingent consideration of up to $ 300 million for the undeveloped announced discoveries, Cambo and Rosebank, which will be calculated, among other things, in the amount approved for production in each reservoir and will be subject to a binding investment decision as well as all required approvals. An additional contingent consideration of up to $ 60 million is contingent on oil prices within certain ranges defined in the agreement.
Ithaca’s total reserves will jump to 573 million barrels
According to Delek Group, Sugar Point’s oil and gas assets contain estimated oil and gas reserves (P2 and 2C) totaling approximately 255 million equivalent of barrels of oil (MMBOE), of which approximately 54 million are 2P barrels. Upon completion of the transaction, Ithaca’s total reserves (Type 2P and 2C) are expected to soar to a total volume of approximately 573 million barrels equivalent to oil (MMBOE), including assets from Rovani, whose purchase was completed last February.
The deal is expected to increase Ithaca’s daily production capacity by an average of 8,000-9,500 barrels per day, and put Ithaca’s daily production at the range of 75,000-85,000 barrels per day. Along with oil and gas assets, Secar Point also has accumulated tax losses of about $ 3 billion.
Sugar Point’s gas and oil assets include, among other things, rights in three North Sea producer reservoirs in which some of the world’s leading energy companies are partners, two of which – MARINER (Equine Operator) and Schiehallion (British Petroleum Operator) are among the ten largest reservoirs in the UK. Siker Point also holds two commercial discoveries: the Cambo database (when after the transaction is completed, Ithaca will serve as its operator) and the Rosebank database.
According to the Fuel Group, these discoveries are the largest oil and gas discoveries yet to be developed in the North Sea region, and their development is of very high importance, as part of the UK government’s effort to develop local energy infrastructure to ensure energy independence.
Will distribute a $ 135 million dividend in the coming year
The acquisition of Sikar Point is part of Ithaca’s strategy to expand and develop its operations in the North Sea in the UK and increase its production capacity and decentralization of assets. Ithaca intends to merge the activities of the acquired company and continue to develop the acquired assets as part of the assessments for an initial public offering (IPO) in 2022.
Ithaca estimates that as the deal is completed, given its production volumes and oil and gas price forecast, its EBITDAX (profit before financing expenses, tax, depreciation, amortization and exploration) in 2022 is expected to total about $ 2 billion. Ithaca also estimates that it will distribute a dividend of about $ 135 million in the coming year, and about $ 200 million each year, in the following years.
Idan Wells, CEO of Delek Group / Photo: Ron Kedmi
Wells Age, CEO of Delek Group, said that “this is an important business move as part of leveraging the momentum in the energy markets, which is advancing Ithaca towards an IPO in 2022, in line with the strategic goals we have set for ourselves. “Sikar Point is synergistic with Ithaca’s operations, and the deal guarantees Ithaca a stable, long and lasting production for many years to come.”
Gilad Myerson, Chairman of Ithaca, stated that “the acquisition continues Ithaca’s growth journey in recent years and the establishment of its position in the international energy market. We have acquired manufacturing and development assets of Chevron, Morovny, Mitsui, Sumitomo, and now the Sicar Point. In addition, we have made significant investments to develop oil and gas resources around our infrastructure hubs – Captain (EOR project), Alba (Potella drilling) and the Greater Stella area to maximize our production capacity. Siker Point has outstanding assets and we are excited to continue to create and develop them.
“We feel the responsibility of playing a significant and important role in securing the UK’s local energy supply, a responsibility that is gaining momentum in the light of the war in Ukraine. Ithaca is one of the largest and most powerful energy companies in the North Sea, both operationally and financially. “Over two decades, in which a cumulative EBITDA flow of more than $ 25 billion is expected.”