Jefferies starts Ithaca Energy at ‘buy’

Jefferies initiated coverage of Ithaca Energy on Tuesday with a ‘buy’ rating and 245p price target.

Jefferies said this represents 38% upside for a company it believes to have the highest pro forma 2P reserves life among North Sea peers but which is now trading at almost a 20% dividend yield post-IPO on increased UK oil & gas taxation.

The bank estimates Ithaca’s pro forma 2P reserves at 16.3 years. This compares to Aker’s 14.9 years and Harbour Energy’s 8.5 years.

The bank said an additional tax hit is an unavoidable impact to all UK producers "but Ithaca's consistent, coherent strategy focused on growth and returns is a compelling proposition".

At 1245 GMT, the shares were up 3.3% at 183.81p.