Ithaca Energy earnings jump through third quarter

North Sea-focussed explorer and producer Ithaca Energy reported adjusted EBITDAX of $1.44bn in the first nine months of the year on Wednesday, up from $531m year-on-year.

The London-listed firm said its profit after tax was $1.39bn for the period through 30 September, with unit operating expenditure maintained at around $19 per barrel of oil equivalent.

Adjusted profit after tax was $391m, after excluding exceptional non-cash bargain purchase credits of $1.32bn and exceptional non-cash energy profit levy deferred tax charges of $323m.

A total of $100m was repaid against the reserves-based lending facility during the third quarter, and $192m was redeemed against the Nordic bond acquired through the acquisition of Siccar Point Energy.

That took net debt to $1.14bn as at 30 September, lowering the group's net debt-to-adjusted EBITDAX ratio to 0.6x.

As at 30 September, 14 million barrels of oil equivalent at 71% oil was hedged from the fourth quarter into 2024, at an average price floor of $65 per barrel for oil, and 174p per therm for gas.

The board said the introduction of the energy profits levy, enacted on 11 July, resulted in an exceptional material non-cash deferred tax charge in the three months ended 30 September of $189m.

On the operational front, Ithaca said it achieved production of 68,200 barrels of oil equivalent per day at 65% liquids, and averaged production of 71,300 barrels per day in the third quarter.

Its board confirmed the previously-provided guidance ranges for currently producing assets on short-term production for the fourth quarter of between 77,000 and 80,000 barrels per day, and 72,000 to 80,000 barrels per day for 2023.

In September, the Captain enhanced oil recovery stage one project reached a “significant” milestone of 10 million barrels of oil produced through the polymer flood enhanced oil recovery method, while on 20 October, first oil was achieved from the Abigail subsea tieback to the FPF-1 floating production unit in the Greater Stella area.

Development activity was continuing at Captain, with construction in support of the EOR phase two project, and platform drilling operations ongoing.

Pre-final investment decision work was continuing on the Cambo, Rosebank, Marigold and Fotla developments to validate costs, mature engineering and progress commercial and contractual frameworks.

Looking ahead, Ithaca confirmed its previously-provided guidance ranges for currently producing assets on short-term production, operating costs and capital costs.

The board added that it remained “committed” to its communicated dividend policy.

“2022 has been a transformational year for Ithaca Energy, with our listing on the London Stock Exchange and the completion of three acquisitions including Siccar Point Energy and the UK assets of Marubeni, positioning the Group as one of the largest independent oil and gas companies in the UK,” said executive chairman Gilad Myerson.

“Ithaca Energy has continued to demonstrate an unwavering commitment to the North Sea, with a clear strategy to buy, build and boost assets in the region.

“Beyond the group's material acquisition strategy, Ithaca Energy has made significant investments to develop organic resources around our infrastructure hubs such as the Captain EOR II project, Fotla and Abigail.”

Myerson said that with stakes in two of the three largest undeveloped discoveries in the UK North Sea, Ithaca was “proud” to play a “pivotal role” in meeting the current and future energy needs of the country.

“Following the chancellor's recent announcement regarding the increase in the energy profit levy rate and extension of the duration of the levy, we continue to assess the impact of the proposed changes in legislation on our development projects.

“We expect the new government to work with the industry to encourage the development of large fields that will increase domestic energy supply and long-term security, in line with the British Energy Security Strategy.”

At 0819 GMT, shares in Ithaca Energy were up 5.15% at 189.27p.

Reporting by Josh White for Sharecast.com.