Ithaca sees lower production in 2024 due to UK govt windfall levy

Ithaca Energy said it expected lower production levels next year in response to the UK government's windfall tax, despite reporting a strong rise in first half profits as higher production and falling costs offset lower oil and gas prices.

Adjusted core earnings rose 8% to $979.7m. The company said its annual operating cost guidance had narrowed to $560-$610m from $560-$630m supported by stringent focus on ongoing cost control.

Production for the six months to June 30 was 75.8 thousand barrels of oil equivalent per day (kboe/d), up from 66.7 kboe/d.

Ithaca said the Energy Profits Levy on oil and gas companies “continues to have a direct impact” on investment in the UK North Sea and the company’s own investment programme. Shares in the firm were down almost 5% on Wednesday.

“We continue to constructively engage with the UK government to highlight the impact of the current fiscal regime to the industry's outlook and to the UK government's stated energy security and Net Zero ambitions," it added.

This FTSE 250 outfit said it had taken a $223m from the Energy Profits Levy and expects to cut output and investment in projects in the second half of this year.

"Until the fiscal regime is improved, as a direct result of the EPL, investment across our operated and non-operated portfolio has and will reduce, including the deferral and cancellation of certain 2023 and 2024 projects, impacting medium-term production outlook, with production in 2024 expected to be lower than 2023 levels," Ithaca said.

Reporting by Frank Prenesti for Sharecast.com