Ithaca Energy’s negotiations with Eni could make it the second-largest independent oil producer in the North Sea, amid challenges posed by the UK’s windfall tax and environmental concerns.
Ithaca Energy, based in London, is currently in exclusive negotiations with Italian energy giant Eni to acquire its UK upstream assets. This strategic move could elevate Ithaca to become one of the major independent oil producers in the North Sea, with an estimated deal value of around $1.1 billion. If successful, Ithaca’s production capabilities would surge past the 100,000 barrels of oil equivalent per day threshold, positioning it as the second-largest independent operator on the UK continental shelf.
Owned predominantly by Israel’s Delek Group, Ithaca Energy has navigated challenges since its London Stock Exchange listing in November 2022. The acquisition of Eni’s assets is described as “transformational” by Ithaca, potentially resulting in Eni securing a significant stake in Ithaca through the issue of new stock. This arrangement, however, would see certain Eni assets not being part of the transaction.
Eni has been active in expanding its portfolio, notably acquiring Neptune Energy recently. However, Ithaca’s expansion comes amidst financial pressures induced by the UK government’s windfall tax on oil and gas companies, prompted by rising energy prices due to geopolitical tensions. This has led to adjustments in Ithaca’s investment strategies and production forecasts for 2024.
The discussions also bring into focus Ithaca’s involvement in the Cambo and Rosebank oil fields, which have been contentious due to environmental concerns. Owning a majority stake in Cambo and a 20% interest in Rosebank, Ithaca plans significant investment in developing these fields, despite criticism linked to global climate objectives.
This potential deal between Ithaca and Eni marks a significant moment in the UK’s energy sector, potentially reshaping the landscape of oil and gas production in the region. Any agreement reached would not only underscore Ithaca’s ascension in the industry but also highlight the evolving dynamics of energy production in the face of environmental scrutiny and fiscal policy changes.