The Mariner A platform - North Sea

Ithaca Energy gains access to two of the largest undeveloped discoveries in UK North Sea

North Sea-focused Ithaca Energy, owned by Israeli Delek Group, has reached an agreement to acquire Siccar Point Energy, the operator of the Cambo oil project off the UK, for a price tag of nearly $1.5 billion. This is Ithaca’s second expansion of the North Sea portfolio in a little over one month.

The Mariner A platform. (Credit: Michal Wachucik/ Equinor)

Ithaca Energy announced the acquisition on Thursday, saying it will accelerate its growth, positioning it as one of the leading E&P operators in the UK North Sea through the addition of four of the UK’s largest oil and gas fields to its portfolio.

The consideration of the agreement includes an upfront payment of $1.1 billion and a series of contingent payments totalling a maximum of $360 million with $300 million linked to future developments and $60 million linked to short term realised commodity prices. The Siccar Point team and the operatorship of key UK assets will transfer to Ithaca on closing.

North Sea growth opportunities abound

Siccar Point’s portfolio contains valuable North Sea assets. The addition of the Schiehallion and Mariner fields, both currently in the top 10 UK producing fields, will not only add immediate production but also add significant room for growth through future drilling for Ithaca. Also included is an interest in the producing Jade gas field, where Ithaca is an existing partner, offering further near-term drilling exposure.

Additionally, the transaction will include the Cambo and Rosebank fields, two of the largest undeveloped and most strategically important discoveries in the UK North Sea.

As recently reported, partners in the Cambo project, Shell and Siccar Point Energy, have received a two-year extension of licences containing the Cambo field development.

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Before that, late last year, the Cambo oil field project was suspended both by Shell and a bit later by Siccar Point.

Offshore Energy has also recently reported on the Equinor-operated Rosebank project, the plans for which have been moving forward over the last months.

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The acquisition of Siccar Point’s assets across the West of Shetland, Northern North Sea, and Central North Sea, will add significant production, material growth potential, and a long-life cycle to the company’s portfolio. The acquisition will also double Ithaca’s recoverable reserves and support production of at least 80,000 – 90,000 boe/d through the next decade, with the potential to increase this through further portfolio opportunities.

According to Ithaca, the assets being acquired have a lower carbon intensity than both the UKCS and global averages. In particular, development of the fields will be undertaken using the latest technology to reduce emissions and operated without the need for routine flaring or venting of hydrocarbons. This approach will mean that the new developments will have a carbon intensity of less than half of the average UK field, Ithaca explained.

UK’s energy security

The announcement comes right after the UK government revealed its energy security strategy, which includes accelerating the deployment of wind, new nuclear, solar and hydrogen, whilst supporting the production of domestic oil and gas in the nearer term.

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As emphasized by the company, this focus on emissions is in line with its current environmental programmes which aim to reduce CO2 output by 25 per cent by 2025.

When it comes to two of the largest undeveloped oil and gas projects in the UK North Sea – Cambo and Rosebank – for Ithaca, they represent an opportunity to develop fields that will contribute significantly to the UK’s energy security. The Cambo field on its own is anticipated to deliver up to 170 million barrels of oil equivalent during its 25-year operational life, materially helping to reduce the need for the import of more carbon-intensive alternatives and increasing the UK’s energy independence through the energy transition.

With a Final Investment Decision expected for both fields next year, they represent a near-term opportunity to enhance the local and wider UK economy through the creation of a significant number of employment opportunities directly and across the supply chain, Ithaca explained.

Alan Bruce, CEO of Ithaca Energy, commented: “The development of the Cambo and Rosebank fields is a huge opportunity to not only help secure the UK’s energy future for at least another quarter of a century, but also to create thousands of direct and indirect jobs in the process.”

Gilad Myerson, Executive Chairman of Ithaca Energy, pointed to the company’s rapid growth journey over the past three years, which included the acquisition of producing and development assets from Chevron, Mitsui, Marubeni, Sumitomo (to be completed) and now Siccar Point.

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As recently reported, Ithaca has signed an agreement to acquire 100 per cent of the share capital of Summit Exploration and Production, which was based on an enterprise value of $148 million. The company has also revealed it is expecting to produce the first oil from a subsea tie-back to its FPF-1 facility later this year.