Eni and Ithaca Energy in ‘potential transformational combination’

North Sea oil and gas operator Ithaca Energy has entered into an exclusivity agreement with Eni in relation to a potential transformational combination with substantially all of the company’s UK upstream assets.

The deal implies the recently acquired Neptune Energy assets, excluding certain assets including Eni’s carbon capture, utilization and storage (CCUS) and Irish sea portfolio.

Pursuant to the exclusivity agreement, Eni has granted Ithaca Energy exclusivity in respect of the assets for a period of four weeks. As part of the potential combination, Eni will contribute its UK business in exchange for the issuance of new Ithaca Energy shares, with the Italian oil & gas company anticipated to hold between 38% and 39% of the enlarged issued share capital of Ithaca Energy following completion.

According to Ithaca Energy, the potential combination would represent a value-accretive opportunity for its shareholders, supporting the delivery of its Buy, Build and Boost strategy. The company believes that the combination would “add significant scale and diversification” to its business, significantly growing pro forma production to above 100 kboe/d, creating the second-largest independent operator in the UKCS by production, and enhance its status as the largest independent operator by resource, holding stakes in six of the ten largest fields.

Ithaca also said that the potential combination would enable material future growth by boosting near-term cash flows to unlock growth from development projects while supporting shareholder returns, as well as create a long-term strategic partnership with Eni which would become a major shareholder in the enlarged group.

The discussions are at an advanced stage, however, Ithaca noted that there can be no certainty that a potential combination will occur, nor as to the final terms or timing on which it might be concluded.

To remind, Eni has an asset base across four key hubs, including Elgin Franklin, J-Area, Cygnus and Seagull, and Ithaca Energy is already a partner in the Elgin Franklin and Jade fields.

The North Sea oil and gas operator is actively working on expanding its portfolio which was demonstrated in July 2023 when the firm signed a sale and purchase agreement with Spirit Energy Resources to acquire the remaining stake in a gas discovery and three exploration licenses in the North Sea.

Following the signing of an agreement with Shell in May 2023, which defined a marketing process for the oil major’s working interest in the Cambo field, Ithaca agreed in September 2023 to acquire the remaining 30% stake in the field, consolidating its ownership to 100%.